WorldCom steals a lead with U.S.-European ATM [more details]
totaltele.com
Updated Monday, 20 July 1998. Next update Monday, 10 August 1998.
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From CommunicationsWeek International. CWI is part of Emap Media, a subsidiary of Emap Business Communications, one of the United
Kingdom's leading publishers.
CWI News Listing for Issue 208, Monday, 20 July
1998
London
By David Molony
WorldCom Inc. has trumped European rival BT again. Last year the U.S. carrier stole MCI from under the nose of the U.K. national operator.
Now it has has repeated the trick by launching international ATM services ahead of competitors.
With months to go before BT or Global One launches European cross-border ATM services (CWI, 29 June), WorldCom is this week announcing international ATM services across Europe and the United States. Corporate customers will be able to buy switched
broadband services based on a single monthly rate between cities on the WorldCom network in Europe, and a single rate for links between any city in the United States and Europe.
WorldCom claims the new service will make international private leased circuits (IPLC) and frame relay data services all but obsolete in areas covered by its network because telecoms managers will be able to put all their voice and data traffic into one network platform.
"Telecoms managers have reached the top of the frame relay ladder," said Toby Young, WorldCom's international ATM project manager. "Now they can carry on (from 2 megabits per second) ... up to 45 Mbps and 155 Mbps, stopping wherever they want ... and they don't need to reach for another IPLC."
And for the first time, corporate users will be able to get international broadband capacity across the United States and Europe based on a single transmission standard, which means data traffic will not get held up crossing from one network to the other.
Analysts said WorldCom is maintaining its record of competitiveness, although its network for delivering cross-border ATM is not as extensive as BT's. "WorldCom is really leading the pack at the moment," said Barry Flanigan, consultant at Ovum Ltd. of London. "They have kept a step ahead of the market."
Embracing ATM
Other analysts say the new pricing and facilities standards could prompt telecoms managers to convert wholesale from frame relay to ATM as their network standard.
"Business telecoms managers want integrated voice and data from a single service
provider," said Alan Lyons, telecoms analyst at London-based ABN Amro Bank Ltd.
"Compared with ATM, frame relay is really no more than an overlay network."
But some industry watchers say many corporates may be reluctant to replace existing
frame relay data networks with ATM straightaway. They point out that network managers
will need ATM access devices between their local area networks and the carrier network.
"The sheer cost of changing technology (in the corporate network) could be significantly
offputting," said Howard Lowday, consultant at Mace Corp Ltd., of Surbiton, England.
WorldCom's Young indicated that agreements with access equipment vendors will follow later this year. But in the meantime, he said the main targets in the corporate sector would be high-technology companies that have already done some conversion to ATM.
'Clear bandwidth'
WorldCom's international ATM tariffs start with a flat rate of $15,000 per calendar month for a constant bitrate (CBR) 2-Mbps link. This is, according to WorldCom, equivalent to
"clear bandwidth" - a private leased circuit. This service, because it is uninterrupted, will
allow corporate users to send voice traffic from their local area networks without paying
per call, as well as video traffic. This rate will apply for links between Amsterdam,
Brussels, London and Paris, the five cities to which the WorldCom network currently
extends. Frankfurt and other cities are being added later this year.
A similar link from any one of WorldCom's U.S. cities to any connected European city will cost $26,000 per month.
WorldCom's international ATM services will also be offered at variable bitrate (VBR) and available bitrate (ABR) contracts, under which the user accepts some periodic slowdown
in traffic at times when the carrier network is busy, in return for pricing at respectively 45%
and 30% of the CBR tariff.
Some analysts said these rates would offer the strongest incentive for corporate users to replace their IPLC and frame relay data connections with ATM managed services.
"The rates have been carefully set," said Ovum's Flanigan. "With the (constant bitrate) tariff they are giving voice and video priced very close to their existing leased line services. And
with (available bitrate) and (variable bitrate) they are offering discounts that will make
ATM interesting even to users who only want data transport."
Transparent costing
But some industry analysts say users will want to know more about the exact costs of running ATM services before they decide whether it is worth replacing frame relay-based
systems. "(ATM) shouldn't be marketed like a leased line," said David Brown, senior
consultant at Schema Ltd., of London. "Here we've got a packet technology pretending to
be a leased line. The tariff is not distance-related, but it's not volume- or content-related
either."
Brown explained that corporate users would try to value ATM services as much according to what they are being used for as for what speed they get from them.
It is not just in scale that WorldCom is challenging international competitors.
Analysts say WorldCom's network services will be different from those BT plans to offer later this year because the WorldCom network extends across both Europe and the United
States, and is wholly owned by the operator.
Those operating advantages include being able to provide a uniform speed for traffic traveling from one continent to the other. Currently, leased lines in Europe run at 2 Mbps,
the so-called E1 rate, while the U.S. equivalent, T1, runs at just 1.5 Mbps.
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