Companies Debate Path of Network Convergence

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

Armstrong said customers also want to be able to extend that network
worldwide. “To do that, you’ve got to own the facilities end-to-end, in
order to be enable that seamlessness to extend around the globe,” he said.
In the absence of local phone service, AT&T will use its recent
acquisition of cable firm Tele-Communications Inc. to provide an
alternative route to consumer homes.

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

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

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.

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