Brand-Name Carriers May Not Rule Globally

FRAMINGHAM (06/26/2000) - Thanks largely to a 1998 World Trade Organization agreement on telecommunications that introduced competition into dozens of foreign markets, prices for international voice and data connections have started to drop dramatically. In some cases those prices are far below what they were just two years ago.

That trend makes it especially notable that two long-standing but not very high-profile international carriers have grown their revenues 81 percent and 50 percent, respectively, in the past year. These are not the hyped global ventures with names like Concert Communications Co. and Global One Communications Inc. that attract attention more for their games of alliance musical chairs than for services.

Take a look at Infonet Services Corp. and Equant Network Services Inc., two companies with decades of experience creating dedicated and dial-up connections with on-the-ground back-office and customer support, keyed off of long-established relationships with national carriers.

While AT&T Corp., WorldCom Ibc, and Sprint Corp. have struggled to find the right international partners, Infonet and Equant - both largely emphasizing ATM and frame relay connection, but also now pushing IP - have been responding enthusiastically to requests for proposal and winning lots of bids.

Last year, Infonet inked multinational deals with leading ad firm Saatchi & Saatchi, specialty packaging company Sealed Air, health care firm Allegan and Leading Hotels of the World, and others. Equant has long-standing deals with Xerox Corp., Reuters and others.

The irony is both companies appear to have embarked on partnership deals of their own that may result in a challenge to the better-known, major-carrier alliances.

The first thing you see when you look at both carriers is a real global network instead of a lot of network-to-network interfaces between carriers that allied for strategic rather than engineering purposes.

Even at that, Infonet changed its basic network architecture about 12 to 18 months ago. The company used to run essentially a flat global network based on implementation of 150 to 200 Nortel Passport ATM switches, says Bob DaGiau, Infonet's vice president of global intranet services marketing. Then it introduced a core switching layer, currently based on Marconi (formerly FORE Systems) ATM switches, while retaining user-to-network interface ports on the Passport switches, which also support frame relay.

If Infonet decides to move to a global SONET or wave-division multiplexing core, it could do so without affecting its access layer, DaGiau says. Even though Infonet has its own switching architecture worldwide, it tends to lease transport capacity from legacy or next-generation carriers wherever it can find the bandwidth. As bandwidth costs have dropped, Infonet has moved to buy fat pipes from whoever's digging them, although "there still are numerous spots around the world where lease is the only option," DaGiau says.

Perhaps Infonet's top priority is to build out a domestic U.S. network. That's one of the reasons for its recent alliance with megaregional Bell company SBC Communications, which gains the right to become a sales agent for Infonet services. In return, Infonet gets access to the nationwide broadband U.S. network of another SBC partner, Williams Communications. Infonet will concentrate its customer traffic from Williams switching locations back to a number of Infonet super-nodes in the U.S.

Equant also has built its network in recent years with more than 1,000 Passports. Equant is the successor to a long-established airline network called SITA, which built its fame by installing an earlier Nortel X.25 platform called DPN-100 at more than 1,000 airports worldwide, and which Equant still maintains in its net.

Using that platform, Equant has emphasized converged services recently, with its Integrated Voice and Data service introduced in 1998. It was one of the first genuinely converged services offering a choice of frame relay or ATM access.

Infonet has a different approach to convergence. Its current main voice-and-data service, called Global Multimedia Service, is akin to a managed frame relay access device program, although Infonet officials avoid labeling it voice over frame relay. Customer voice traffic is sent over a single frame relay access pipe, but Infonet maintains four classes of service in its backbone network - three for data and one for voice. The intracompany voice traffic can be purchased for a fixed monthly cost, while traffic dumped off to the worldwide public telephone network is charged a traditional per-minute toll, DaGiau says.

In the works is a variation of the same idea employing frame relay-to-ATM interworking. The Infonet service, now called Global ATM, will be announced soon, DaGiau says. It will offer a range of access options from 9.6K-bps to 155M-bps, with the bandwidth options below 2M-bps carried over frame relay, and the options from 2M-bps and above on ATM.

Next up for both carriers is Multi-protocol Label Switching (MPLS), an emerging standard that has recently been employed by AT&T and WorldCom in their domestic U.S. networks for hybrid IP/ATM networks. Using Cisco routers at the edge of Infonet and Equant's networks, MPLS enables software in carrier switches to carve multiple intranets and extranets out of a user-to-network interface (which can be frame relay) from each customer site by attaching VPN tags to each user's traffic.

Equant hopes to announce an MPLS-based service in a few months, says Laurence Huntley, executive vice president of marketing. DaGiau says Infonet is also looking at an MPLS implementation within the year.

While Infonet has been allying with pure telecom partners, many of Equant's partnership initiatives involve vertical-industry customer partnerships with an eye toward industry extranets.

Still, Equant is looking at the possibility of hooking up with a brand-name carrier for marketing muscle - offering its far-flung switching network to carriers that have often boasted of global capability but lack a true global network of POP. For example, Global Crossing and France Telecom - now the sole owner of the former Sprint affiliate Global One - have recently talked to Equant about a possible purchase, according to sources.

Global Crossing broke off the talks after the asking price reached $10 billion, according to published reports. But WorldCom is expected to make one of its next attempted acquisitions in the international arena, and Equant is likely to remain in play.

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