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Feb 15, 2005

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Who knows

SBC purchased AT&T to access their blue-chip Enteprise customers and their global network. AT&T still makes money off of long distance voice calls.
Verizon reacted in kind by purchasing MCI. MCI has the best Internet Service Provider (reputed) and a global network. It kind of even things out. Without Verizon purchasing MCI, it would be left to build the customer base and a global networkto match SBC's AT&T purchase. It's coming down to a duopoly of two tier 1 service providers in domestic telecom. MPLS-based IP-VPN network simply is an attempt to replace frame relay and ATM service to connect disparate remote locations. Allegedly, Frame relay service has a higher margin than IP-VPN service but I wonder if they're referring to the investment in the IP-VPN network or that to incent large Enterprise customers to migrate to IP VPN and dumping ATM or frame relay service, margins must be reduced. But the potential is that IP-VPN service may provide value-added service which customers may purchase or choose not to for various reasons since IT shops tend to like their job security. IP-VPN is a bit harder as customer now have to look at prioritizing data and VoIP traffic.

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