A bold Qwest takes IP to heart

Qwest Communications is perhaps the most prominent example of a service provider focusing on Internet protocol services.

The company first came to public and industry attention when it started building a nationwide fiber network and cutting sales, leasing and exchange deals with other carriers. It became known as a carrier's carrier, one that was expected to deal strictly at the wholesale level with service providers that needed additional fiber.

But the company, headed by former AT&T executive Joe Nacchio, had other plans.

In the fourth quarter of 1997, the company began to make those plans public. It would offer IP-based services over its OC-192 backbone, primarily to business customers at first, but including a 7.5 cents-a-minute long-distance service called Q.talk.

The long-distance service is reminiscent of the early days of toll competition, with users dialing an access number and a personal identification code to connect to the network.

Qwest doesn't expect such inconveniences to be a problem, though. At the time the initial nine-city Q.talk rollout was announced in February, the price, which is expected to remain stable, was attractive, says Rick Weston, Qwest's consumer products marketing director. The ability to program the gateway access number and security code into a speed-dial number adds a degree of ease not available to the early users of competitive toll services, Weston says.

Even though the company's focus is on delivering IP services via an OC-192 backbone, it hasn't turned its back on the realities of competing in the market today. IP may be growing, but frame relay and asynchronous transfer mode are still the dominant data traffic media. To address that market, Qwest in early May announced new OC-48 frame relay/ATM services for virtual private networks. Qwest decided that it should not exclude itself from that market even though it believes that IP services are the wave of the future.

Establishing the frame relay/ATM business is a critical aspect of Qwest's business plan, says Michael Fair, Qwest's product marketing director.

"We are IP-based," Fair says, "but there's a very large market for frame relay/ATM. [Frame relay/ATM] is a growing, maturing marketplace, and we want to be a major player in those segments."

Because it kept quiet about its retail service plans until it was nearly ready to offer services, Qwest was miscast as strictly a carrier's carrier. There may still be misunderstandings about Qwest's intentions even as it continues to develop its retail portfolio.

There is some talk that the company is trying to position itself as a ripe plum for a takeover bid. But if President and CEO Nacchio is to be believed, that is far from the truth. In a fall 1997 interview, Nacchio told Telephony that the company wants to make a lasting impression on the telecom industry.

"I want Qwest to have the same impact in the 21st century that AT&T had in the 20th century," he said.