World Telecommunication Day 1999 |
When it comes to telecommunications services, the somewhat overused concept of ''convergence'' no longer applies only to the supporting network technologies or the applications being carried over them. Increasingly, the convergence idea also defines the types of companies that are becoming major players in providing communications services and supporting the networks that carry them.
Categorizing telecommunications service providers used to be easy, because there were just a handful of significant players that dominated the landscape in each region. Since the global telecommunications environment caught deregulation fever, however, those same landscapes have become battle zones in which factions of all shapes and sizes are facing off.
As competition becomes more varied, companies that previously staked their claims primarily in the computer hardware and software markets are finding ways that they, too, can get in on the competition.
And since, for better or worse, every trend must have a buzzword, the term ''co-opetition'' seems to be establishing itself as the popular way of defining this phenomenon.
For example, Microsoft Corp.'s intention to make its software and server platforms a part of telecommunications has been well known for years. Over the past year, the company has been injecting money directly into several different service provider organizations in an effort to get more directly involved in communications services.
Microsoft's telecommunications-related investments have run the gamut in terms of size, but the clear winner in scale is the company's $5 billion investment in AT&T Corp., which provided an important link between the kingpins of the communications and software sectors and helped secure Microsoft an important position in interactive-television services.
In addition to sizable entities like AT&T, Microsoft is eyeing opportunities in the hotly competitive local communications markets. The company has invested $30 million each in NorthPoint Communications Holdings Inc. and Rhythms NetConnections Inc., both competitive U.S. local-exchange carriers that are focusing on providing ''last mile'' data links to business and residential customers.
The strategy behind these investments transcends the financial aspect, however: Microsoft, an Internet service provider itself through its Microsoft Network unit, has options on purchasing hundreds of thousands of high-speed data lines from NorthPoint and is forging a portal branding alliance with Rhythms. Microsoft has also taken a $200 million stake in Qwest Communications International Inc., one of the upstart communications network operators that have quickly emerged as a formidable threat to entrenched incumbents.
Another Microsoft communications strategy is to form partnerships with carriers under which the computing company provides the back-office support for business services the carriers offer. Microsoft announced such a deal with Sprint Corp. earlier this year. Sprint will base its Business Flex offerings on Microsoft's BackOffice Small Business Server.
Sprint and MCI Worldcom Inc. have announced plans to merge.
Similarly, Cable & Wireless HKT Ltd. and Microsoft have partnered to offer broadband voice, video and data services based on Microsoft platforms to customers in Hong Kong.
Microsoft's international efforts are growing in number. This fall, the company contributed its name and backing to an undersea-cable joint venture in and around Asia with fiber network operator Global Crossing Ltd. and Softbank Corp.
Hewlett-Packard Co., meanwhile, is active in lending its computing platform support to communications carrier initiatives, particularly in the areas of electronic commerce and Web hosting. For example, HP provides support for MCI WorldCom's managed-services initiative, offering project management and customer premises equipment deployment functions for MCI WorldCom's business customers.
Earlier this year, HP spun off its measurement business in a corporate realignment. Like its former parent, the new subsidiary, Agilent Technologies Inc., is heavily involved in the Internet and communications, selling testing equipment to telecommunications service providers and equipment makers, including Sprint, AT&T, Cisco and Lucent, and to computer-chip makers, such as Intel and Samsung. Agilent's other divisions are life sciences and health care.
HP filed for an initial public offering of Agilent common stock in August.
For its part, Motorola is focusing on its fellow equipment developers and the wireless telecommunications sector in an effort to unite and conquer.
The company has a development deal with Sun Microsystems Inc., for example, that gives Motorola a resource for rolling the Internet Protocol (IP) platform into its wireless network equipment - an important function in today's data- and Internet-focused communications environment. Motorola's similar arrangement with Cisco Systems Inc. is intended to accelerate both companies' positions in IP-based wireless data.
Likewise, Motorola and Alcatel SA have teamed up to develop next-generation wireless network equipment based on the CDMA standard for digital wireless transmission.
Companies in other industries with experience in managing communications networks are also becoming service providers. The defense and aerospace company Lockheed Martin Corp. formed a subsidiary, Lockheed Martin Global Telecommunications, last year to offer services to business customers and telecommunications operators.
Jason Meyers