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Verizon Communications Inc. announced with a flourish Monday its plans to enter the enterprise data market via an incremental deployment of a national IP network. Long-distance veteran AT&T Corp. scoffed at the debut.
Anticipating a green light from the Federal Communications Commission to offer long-distance services to customers in all of its local territories by early next year, the New York 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 new 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 Monday in a teleconference with reporters.
Verizon CEO Ivan Seidenberg said the company will re-allocate existing funds rather than incur major expenses in building the infrastructure for the new services. Asserting that Verizon has more facilities in place than people realize and that purchasing connectivity between major cities is inexpensive, Seidenberg said that the company would expand the network as demanded.
Mike Jenner, AT&T vice president of Global IP Network Services, questioned why Verizon is not confident that demand will materialize to support a full-scale deployment. He charged that delivering services on a nationwide basis requires more expertise than linking local services together.
“The economics of this market are centered on scale,” Jenner said. “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.
“That immediately eliminates them from the Fortune 50,000 market,” he said. “The top businesses in this country very often demand national and global infrastructure. From a supply standpoint, youre sourcing from wherever your lowest costs are.”
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, not the veteran long-distance carriers.
“I would be doubtful that they would take share from AT&T,” Jenner said. “I can assure you that we will sleep easy tonight.”