Companies Debate Path of Network Convergence
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The Gartner Group this week brought together many of the kingpins of networking and telecommunications, along with a few upstarts and they all swore allegiance to Internet technologies.
At Gartner's Symposium/ITxpo, AT&T Corp. Chairman and CEO Michael Armstrong, GTE Corp. Chairman and CEO Charles Lee, Ameritech Corp. Chairman and CEO Richard Notebaert, and Level 3 Communications Inc. President and CEO James Crowe argued over who was best positioned to provide integrated voice, data, and Internet connectivity. In a separate appearance, Cisco Systems president and CEO John Chambers explained why they ought to do it with his network hardware.
The overriding trend everyone was talking about was convergence of all networking around a single infrastructure based on Internet protocols. AT&T's Armstrong said converging all data types on IP (Internet protocol) networks has the same kind of potential as the standardized hardware architecture that made the PC revolution possible. Although he sees gaps in the standards for supporting voice-over-IP connections, Armstrong said he was determined to make it work.
Gartner, an information technology research service, says the majority of its IT customers consistently express the desire to have a single provider of voice and data networking services, ideally over a single connection.
Lee, of GTE, agreed that customers want an integrated voice and data infrastructure but questioned whether they really want to give all of their business to a single provider. "If I was Citicorp, I wouldn't put it all in one vendor. I'd have backup," he said.
Level 3's Crowe agreed with the demand for a single network provider, but said it may not be one of the old-line phone companies. They don't understand the constant investment in new hardware and software that the Internet requires, he said. That will provide openings for upstarts like his firm, which is building a new telecommunications infrastructure entirely on IP. "We're going to see whole new companies whose names we probably didn't know three or four years ago come up and start offering services," he said.
Ultimately, the dividing lines between telephone and computer networks will disappear, Ameritech's Notebaert said. "It means the Internet goes away anyway, and you're just going to be online all the time. You're not going to have to go through the routine you do now with your modem," he said.
Gartner analyst David Smith said he thought that was an exaggeration, however. "You may do more voice connectivity over IP. Sure, that will happen. But it will still be the Internet," he said. Nor will the convergence of many data types on a single network happen overnight, he said.
Cisco's Chambers said the need for telecommunications firms to invest in IP infrastructure will help sustain the growth in his sales even in the face of Asia's economic crisis and the threat of recession in the U.S. Traditional voice networks will be replaced by networks that carry mostly data, and voice will be a commodity -- maybe even something that gets thrown in for free, he said. Established phone network providers are facing challenges from upstarts like Level 3 as well as from the cable companies, and that means they can't afford to stand still, he said.
"What was a competitive advantage today will become a commodity in the future," Chambers said. "In the short-term, they will make some money providing data, voice, and video on the same line, but then merely providing the connection will commoditize." Just as cable companies today make money off premium channels and pay per view programming, future network providers will need applications to escape from low-margin commodity sales, he said.
Competition between phone and cable companies has accelerated the drive toward putting the high bandwidth connections into the home, Chambers said. As a result, he disagreed with Gartner's prediction that business-to-business transactions will continue to dominate e-commerce for the foreseeable future. Although business-to-business accounts for about 80 percent today, business-to-consumer will catch up by 2001, he said.
Chambers said he also believes his partnerships with Microsoft Corp. and other application vendors will make a difference, given that Web performance is determined by client and server platforms and applications as well as bandwidth. "If companies don't work together, you're not going to be able to solve this problem, and the frustration of consumers -- the perception that it's too slow -- is going to be with us for a long time," Chambers said.
Cisco and Microsoft are particularly pooling their energies on accelerating the standardization and popularization of voice-over-IP technology, Chambers added.