Baby Bells crawling to network applications
lantimes.com
By Polly Sprenger
They already offer call waiting; why not offer
backup and network management as well?
Following the lead of long-distance carriers such as
AT&T, MCI Communications Corp., and Sprint
Communications Co., Baby Bells US West and Bell
South are running after the lucrative networking
services and applications market. Although users
question the telcos' reputations with enterprise
offerings, and systems integrators are bristling at the
new competition, representatives say they're ready
to deliver "value-added services."
Earlier this year, US West announced that it was
working with a number of software companies, such
as Oracle, Novell, Microsoft, and Sun
Microsystems, to put together a bundle of hosted
applications that small and medium-size businesses
can access remotely through a high-speed
connec-tion. Last week, the telco also announced a
new online backup service licensed from Connected
Corp., a vendor of online backup products and
services.
US West, analysts say, is one of the more
aggressive telcos chasing the enterprise networking
market. In mid-July, the company also announced
that it had acquired a minority interest in USI
(USinternetworking Inc.), an IT company in
Annapolis, Md. USI is developing a global IP
network to deliver a portfolio of services to en-
terprise end users. US West said it will use the
agreement with USI to begin offering a suite of
high-end business applications by the third quarter of
1998.
Bell South, another Baby Bell with big plans for
enterprise networking services, announced in
mid-July that it will offer Business E-mail Service.
Representatives of Bell South say this service, which
will let network administrators outsource
management of E-mail servers, is only the first in a
long line of service and product offerings from the
telco.
Both US West and Bell South say they hope to
shore up those products with additional offerings
such as security, virus protection, application
management, and other tools for network
administration and protection.
The telcos say that in the future, they will be
one-stop shops for networking services and
products, providing everything from networking
infrastructure to systems integration and business
applications.
But historically, network managers haven't jumped
at the idea of trusting telcos to do anything more
than transport data. In 1994 AT&T introduced its
ill-fated Network Notes, a customized version of the
Lotus product hosted on its own server farm. The
system let IS managers provide E-mail services
without having to maintain the infrastructure
themselves.
"AT&T was a little bit early in the game with
[Network Notes]," said Phil Sipowicz, an IT
consultant with Collective Technologies Inc. in
Cambridge, Mass., which provides MIS outsourcing
to midsize companies.
But the concept of outsourcing applications is an
idea whose time has come, said Sipowicz, and Baby
Bells may be perfectly poised to offer that service.
"There's a market difference now from 1994.
People recognize that the management of their
systems is as important as the systems they put in
place. The Baby Bells will have a difficult time, but
they have the resources [to be competitive]."
Bell Atlantic, a Baby Bell in the Northeast, has been
active as a systems integrator since 1995. BANI
(Bell Atlantic Network Integration Inc.) is now a
thriving part of Bell Atlantic's business.
Bell Atlantic reports that its data services business is
growing more than 25 percent a year on a current
base of nearly $2 billion in revenues, which includes
more than $200 million annually from BANI.
Company representatives say the group is planning
to soon roll out applications geared toward vertical
industries. The first of these, a series of intranet and
extranet applications for the financial services
industry, is in trial.
The telcos argue that their expertise in networking,
coupled with partnerships with software companies,
will be valuable to network managers struggling to
keep expertise in-house.
"We've been doing networking for a hundred years,"
said John Stuhrenberg, vice president of business
products at Bell South.net in Atlanta. "We're used to
running enormous programs in our central offices
and our operating systems."
He added that although Bell South has announced
only E-mail service to date, a complete networking
solution is a logical extension. "We're convinced that
managed-network applications are a part of
providing a complete solution to a customer for their
networking needs," he said.
The telcos have their work cut out, however, to
convince customers to trust them for services and
applications rather than just bandwidth and
infrastructure.
"In many cases, we're the new kids on the block in
this market," Stuhrenberg said. "We don't expect to
have complete success instantly; we have to earn
that on a customer-by-customer basis."
US West representatives say their job isn't to learn
networking applications from the ground up, but
rather to find the best products on the market and
repackage them. "We're not inventing this stuff," said
Steve Archuleta, the company's executive director
of new product development.
"We are pulling together people who already have
these [products and services]. We find out the
requirements of a particular customer, and then we
can go out and meet those requirements through our
partners."
But some customers are saying they would rather
get those services and applications from software
vendors and systems integrators. "I'm inclined to buy
telecommunications services from a telecom
company," said Carey Goldson, manager of systems
design implementation at Lifetime Entertainment
Services, a television content provider in New York.
"The telephone companies [may] have been running
a network for longer than most businesses, but I
want more of what they're doing now."
Even if they can offer products that organizations
demand, telecos face another hurdle: convincing
business customers that they can deliver high-quality
service. Saddled with a legacy of bureaucratic
organization and a reputation for poor service, the
telcos have a long way to go to prove they can
deliver a positive experience. "I don't think that any
of the telephone companies enjoy a remarkable
reputation for service," said Goldson. "What I need
is quality service."
Differentiating
Systems integrators are hoping responsiveness and
flexibility will allow them to differentiate themselves
from the telcos entering the market, said Gaston de
Zarraga, president of GDZ Computer Services, a
systems integrator for the maritime shipping industry
in Coral Gables, Fla. "They're probably going to
offer a generic solution, and we don't feel that is
really the level of service that our customers are
accustomed to." Because he provides service to a
specific vertical industry, de Zarraga said, he is not
worried about competition from the Baby Bells. But,
he added, more-broad-based systems integrators
definitely have cause for alarm.
Courtney Munroe, director of business network
services at IDC Research in New York, agrees.
"The traditional value-added service providers will
be at risk, as well as the systems integrators," she
said.
In addition, noted Munroe, the Baby Bells need to
prepare for competition with one another. Network
administrators don't need to buy networking services
based on the geographic location of the vendor, as is
the case with telecom services.
As yet, these products and services are still an
embryonic offering from the Baby Bells. The early
products, such as online backup from US West and
E-mail management from Bell South, are a way for
the telcos to ease into the market and test how those
offerings are received.
"There are elements of the technology that are very
comfortable to us on the networking side," said Bell
South's Stuhrenberg. "But on the software side, we
have some lessons to learn."
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