The Bedminster, New Jersey-based carrier is the result of last year’s acquisition of long-distance and international operator AT&T Corp by the Houston, Texas-based RBOC, SBC Communications Inc, which is keen to show that the merged entity is ready for business without any of the paralysis that can ensue from bringing two large companies together. However, the two businesses were largely complementary rather than competing, so there wasn’t much overlap to deal with, unlike say, the HP-Compaq acquisition.
Even so, AT&T, like the other big competitor to emerge from an RBOC buying a long-distance player, Verizon (the result of Verizon buying MCI), is publicizing its focus on the multinational business customer and backing its claim with significant capex. The $8bn-$8.5bn earmarked for this year represents a 16%-23% increase in the combined capex of legacy AT&T and SBC for 2005 ($1.5bn for AT&T and $5.4bn for SBC). Of the total, 15% will go on the company’s IPTV project for residential customers in the US, but a good chunk of the remainder will be spent on network expansion in the international arena.
AT&T plans to triple the number of countries in which Ethernet access to its global MPLS core is available, from six today to 20 by the end of the year. Similarly, it will double the number of countries in which DSL access is offered, from 12 today to 25 by December.
Both these forms of access are delivered via a tail AT&T leases from another carrier. The provider varies by country, so part of the capex is on setting up the interconnect between the local provider and AT&T and creating the end-to-end processes to deliver, install, maintain, and bill for them as a seamless service to the customer, said Bill Archer, president of AT&T for the EMEA region. He said direct Ethernet connectivity to the AT&T network is an option to traditional leased lines (T1/E1 or OC3, for instance) that some customers prefer connecting major hubs or concentration points such as a data center offering greater flexibility and ease of management. Meanwhile, DSL is suitable for branch offices or SMBs.
Archer said the carrier’s global WiFi hotspot network will grow from some 15,000 sites at the moment to 35,000 by the end of 2006. Again this growth will be through agreements with hotspot aggregators, so AT&T will be investing in the back-end systems required to enable customers to log on and use any of the hotspots, with the amount owed for the time online being charged to his or her corporate bill, rather than requiring immediate payment in local currency. AT&T has just unveiled a deal with aggregator WeRoam to include 5,500 hotspots to the AT&T Remote Access footprint in EMEA, as well as 6,000 McDonald’s locations around the US.
There is also the issue of cellular connectivity where there are two initiatives underway. AT&T last year struck deals with mobile operators in Germany, Belgium, New Zealand, and Australia to enable its business customers armed with a laptop and GPRS data card to connect to their networks. Usage is not, however, centrally billed, so they must settle with the host carrier separately. Archer said AT&T is already looking at other countries for similar access deals with mobile operators.
More significantly, AT&T recently announced a deal with Cingular Wireless, the US mobile operator in which it owns a 60% stake, to offer access to its HSDPA (3.5G) network for corporate customers in the US, with consolidated billing as on the WiFi service. The interesting aspect there is that Cingular has already been developing relationships with mobile carriers in other parts of the world, such as Orange in Europe and Rogers in Canada, not only to enable roaming, but also the facility whereby its corporate customers enjoy discounts on their US bills in exchange for usage on these partner networks.
Among its international competitors, BT Infonet and Equant last year launched SLAs for specific applications, offerings they are able to make thanks to optimization and acceleration technologies they have deployed from Packeteer and Ipanema respectively. Archer said AT&T uses acceleration technology to underscore its WAN services, but does not offer app-specific SLAs, though he said it is planning to embellish its offering with an announcement perhaps this year.