RealTime IT News

Concert Ends Without Encores, Ovations

It's official. Concert, a $10 billion joint venture of AT&T Corp. and British Telecom focused on offering a broad range of global communications migrating customer networks to an IP-based environment, is finished.

The two partners announced Tuesday that they officially unwound the venture Monday, and that its assets and customer accounts have been distributed back to the parent companies. Concert had been losing about $800 million annually.

The two companies said they have entered into commercial inter-working agreements that will allow them to honor all existing customer contracts and service level agreements for three years.

Both companies have intentions of continuing the business as separate entities.

"AT&T is now aggressively expanding its global network to provide services to business customers via a single integrated architecture worldwide," AT&T said Tuesday. "By the end of 2002, AT&T will have invested $300 million to enhance and extend the global network, which already includes more than 2,500 dial-up points of presence and dedicated access from more than 850 cities in 60 countries."

Not to be outdone, BT announced similar plans.

"Ever since we announced our intention to unwind the joint venture last October, our primary objective has been to ensure that our customers continue to enjoy the service that they have come to expect," said Tim Smart, former chief operating officer of Concert and president of the BT Ignite Global business. "With the return of former Concert employees, BT now has over 9,000 experienced people in 29 countries outside the U.K. and is well positioned to deliver market leading account management and customer service to multinational customers."

He added, "In addition, the integration of the Concert global network with BT's extensive pan-European network enables us to provide customers with IP VPN, Internet and broadband connectivity in all the key commercial centers in Europe, North America and Asia."

After proposing the global joint venture in 1998, AT&T and BT decided to unwind it in October 2001, citing over-capacity in transport developed and the sharp fall in the prices of international calls and data services. Also, many of the emerging carriers that were expected to be Concert's customers and suppliers encountered financial difficulties.

As part of the venture's dissolution, AT&T picked up ownership of the Asia/Pacific frame relay assets that BT originally contributed. It plans to combine the assets returned from Concert with the global data network business it acquired from IBM in 1999.

AT&T recorded a third quarter 2001 charge of $3.5 billion related to the unwinding of the venture, including an agreement with BT to assume the British company's stake in AT&T Canada and certain obligations. BT took a $1.7 billion charge, including a $435 million write-off for goodwill.