Sifting through Convergence Providers Becomes Difficult

Providing IP integrated networks is a heated market for networking companies. If it wasn't apparent with the $7 billion acquisition of Bay Networks by Nortel Networks ( last June, then it should be obvious now with Lucent Technologies Inc.’s agreement to merge with Ascend Communications for an estimated $20 billion.

Competition is rampant, despite the narrowing of the field to six big-time competitors. Cisco Systems Inc., Nortel and Lucent are the names known in the corporate space, but consumer-driven telcos such as AT&T, MCI/Worldcom and Sprint want a piece of the action.

An interesting facet of this dynamic, however, is that not one of these companies has developed an offering that comes close to the promises that the marketing people claim will be available -- such as making all calls using Internet protocol -- at least none that are economically feasible. There have been some viable aspects, however, that approach the goal of integrated IP telephony, says Lisa Pierce, director of telecommunications services and carrier analysis at Giga Information Group (

But before a company runs to adopt one of these early strategies, the first thing any IS manager should do is benchmark existing services. Get the latest figures on cost and performance so that they can be compared with any new options.

Then, an IS manager should develop some strategies to enhance the company’s position for when fully integrated IP telephony becomes available. One option cited by Pierce is to bundle services with one carrier that will provide the value-added services such as IP telephony when it's cost-efficient. Another step is to analyze office size. Pierce says it is more cost effective to implement voice and data services over a T1 connection if an office has 30 or more employees.

One problem existing in the IP convergence arena is compatibility. Some telephony solutions may not be interoperable with others. For instance, a large corporation, along with its suppliers, may have IP telephony solutions laid in for effective Web-based call centers. A business-to-consumer call center, however, would have a difficult time taking advantage of the service because practically no consumers use IP telephony. The basic lesson is to use the technology only where it can benefit the business.

IP telephony can be useful for companies with international offices. This technology, with its dedicated lines of communication, cuts long distance expenses enormously. "The issues about doing [IP telephony] right now should only be based on price," Pierce says.

Nortel, however, hopes it can capitalize on the potential of the combined voice and data communications market. "Everybody's making the move towards this merge of voice and data. … We're moving forward to bring these products to market," says Mike Deshaies, director of Nortel Corporate Communications.

Over the next few months, Nortel will release its Unified Networks, the first combined product from Nortel and Bay. Since the deal was finalized this past September, the companies have been mostly tapping each other's expertise to add value for existing customers.

Unlike the smooth acquisition of Bay by Nortel, the Lucent and Ascend merger may be more difficult. There have been reports of stockholders that plan to sue to block the deal, which may not be finished for another five months.

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