VPN Deals Prove Qwest Still Viable

Officials at Qwest Communications , one of the four incumbent
telephone companies in the U.S., announced Wednesday more than $100 million
in advanced networking service deals.

Big-name deals with companies like Petco Animal Supplies Inc., and
Alliance Gaming Corp. for virtual private networking (VPN) services prove
that while the telephone company might have serious financial hurdles to
overcome, they won’t be going out of business anytime soon.

VPNs give businesses with multiple facilities secure transmission routes
over public telephone lines using encryption and other security
means. This lets companies pass sensitive information, like employee
information and payroll accounts, between its nodes without fear of compromise.

According to Shaun Gilmore, Qwest executive vice president of global
accounts, his company is one of the “founding fathers” and market leaders
in the corporate VPN industry. The deals announced Wednesday only give
credence to their claims, he said.

“Our comprehensive suite of Internet protocol-based VPN, firewall and
managed security solutions enables Qwest to accommodate almost any
business’ wide area networking or security requirement, he said. “Qwest is
the technical and market leader for VPN, supporting customers on five
continents.”

According to market research company International Data Corp. (IDC), VPN
services in the U.S., which has to date a relatively slow adoption rate in
corporate America, will surge from $5.4 billion in sales last year to $14.7
billion in 2006 overall.

The economic downturn, a recent study released by the analysis firm
reports, attributed to slow deployment in 2001 and will likely keep VPN
sales in 2002. Telephone companies like Qwest will see increased gains in
2003, ultimately growing into sales of $5.3 billion in 2006.

Steve Harris, IDC senior analyst for network and VPN services, said the
fact Qwest has been offering this service for years will pay dividends for
the company down the road for the troubled carrier.

“Internet protocol VPN services are one bright spot despite the challenging
telecommunications market,” he said. “Qwest’s long presence with IP VPN
services makes it one of the more experienced carriers in the U.S.
marketplace.”

That’s good news for Qwest, which has been under a firestorm of bad
publicity following the defection of its
short-term creditors
while looking for $4 billion in credit relief.

Since then, Joseph Nacchio, Qwest chairman and chief executive officer, has
been making the rounds on TV talk shows like CNN’s MoneyLine with Lou Dobbs
and others to reassure jittery investors as he steers his company towards
profitability.

The carrier spent much of 2001 and the first month of 2002 streamlining its
operations, including a highly-publicized
deal
which gave MSN management of its digital subscriber line (DSL)
business, one of its least-profitable (though popular) divisions. Qwest
also assimilated
its independent outsourcing company Qwest Cyber.Solutions, bringing it
under the umbrella of its hosting division.

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