Verizon to Edge Into Enterprise Data Arena

Verizon last week announced plans to enter the enterprise data market via the incremental deployment of a national IP network.

Verizon Communications Inc. last week announced plans to enter the enterprise data market via the incremental deployment of a national IP network. But long-distance veterans such as AT&T Corp. scoffed at the plans.

Anticipating a green light from the Federal Communications Commission to offer long-distance services to customers in all its local territories by early next year, the New York-based local exchange carrier plans to begin linking its networks into a regional system. It will start with the Northeast corridor, covering enterprises from Virginia to Boston and, over the next two years, connect them to more cities, beginning with Dallas, Los Angeles, Seattle and Tampa, Fla.

The package, dubbed Enterprise Advance, includes network management and data storage, business recovery, security, remote access, voice, and data networking services. Calling the long-distance opening an "opportunity of a lifetime," Eduardo Menascé, president of Verizon Enterprise Solutions Group, said the services are a logical extension of what the local exchange carrier does today.

"We are going to compete in the long-distance market for those services we already have a strength in locally," Menascé said.

Verizon CEO Ivan Seidenberg said the company will reallocate existing funds rather than incur major new expenses in building the infrastructure for the new services. Asserting that Verizon has more facilities in place than people realize and that purchasing connectivity among major cities is inexpensive, Seidenberg said the company will expand the network as demanded.

But Mike Jenner, vice president of Global IP Network Services at AT&T, questioned why Verizon is not confident that demand will materialize to support a full-scale deployment. Jenner charged that delivering services on a nationwide basis requires more expertise than linking local services.

"The economics of this market are centered on scale," said Jenner, in Bridgewater, N.J. "If youre not prepared to make a commitment to gain a lot of customers based on scale, then good luck. Either youre in it and fully committed, as we are, or youre not."

The initial regional focus limits the services appeal to large enterprises, which usually have a national or international presence and rely on far-flung partners, Jenner said.

Jenner predicted that if Verizon is able to make inroads into the enterprise data market, it will be at the expense of the Competitive Local Exchange Carrier industry but will not pose a threat to veteran long-distance carriers.

"I would be doubtful that they would take share from AT&T," Jenner said.

Meanwhile, Verizons fellow Regional Bell Operating Company, SBC Communications Inc., of San Antonio, is pursuing a similar strategy to take a piece of the lucrative enterprise data market. SBC also must receive FCC approval to offer long-distance services—voice and data—to customers in its local territories.

The company plans to finish the initial phase of an IP backbone by the middle of next year.