Carriers Pinning Hopes On IP

Amid falling revenues, products packaged with VOIP could loom large

It is an axiom in the trans- portation business that when a bus line is losing riders, supervisors should resist the urge to cut routes and retire vehicles, and instead add more stops and perhaps some lights and benches. A similar philosophy is taking hold in the telecommunications industry, where carriers, seeing increasingly diminished revenue from their old voice transport services, are championing new data services for the enterprise.

Amid a cloudy economic forecast, plummeting telecom stock prices and a growing roster of laid-off telecom employees, the ComNet conference here last week focused on finding silver linings. For some, the imperative for carriers to discover ways to deliver new value-added services is a bright spot.

"Given the economic climate in the service provider space, theres price pressure on providers, and they want to get more revenue from each enterprise customer by offering more services," said David Flynn, vice president of marketing for NetScreen Technologies Inc., of Santa Clara, Calif., which builds application-specific integrated circuit-based Internet security systems and appliances. Last week, NetScreen teamed with Riptech Inc., a managed security services provider, to deploy NetScreen devices as part of Riptechs solutions for service providers, data centers and enterprise customers.

Long-distance carriers, which stand at a particularly critical juncture as voice prices approach zero, are touting IP services that can be integrated into existing infrastructure. And they are banking on a belief that customers will want enhanced IP-based offerings packaged with VOIP (voice over IP).

AT&T Corp., of Basking Ridge, N.J., unveiled its first VOIP retail services for business, which lets companies combine voice, fax and data traffic on one IP connection, and it added VOIP to its Managed Internet Service and Managed Router Service.

The long-distance company also rolled out an OC-48 dedicated Internet access device, a new hosting bundle for content providers and a managed service to extend PBX capabilities to telecommuters.

No one expects businesses to update traditional networks to IP-based systems overnight. Rather, carriers point to 2002 as the milestone year—if enterprises see and embrace the value. For example, migrating from a traditional frame relay system to an IP-based virtual private network enables any-to-any connectivity, improved performance, simplified administration and automatic rerouting for disaster recovery.

Earth Tech Inc., an environmental engineering company, recently upgraded its frame relay network to an IP-based network provided by AT&T. "Before, you could see latency in the network, and every time we bought a company we had to revamp the network," said Jim Wiggins, director of technology services at the Long Beach, Calif., company. "Nothing changed for us in terms of hardware; it just became easier."