Global connections: Telcos take different tacks as they vie for a growing worldwide market

Worldwide telephone connections are certainly nothing new, but the globalization of other industries, combined with technological leaps in data transport, is driving the industry to a new level of global connectivity.

Concert is perhaps the most high-profile example of this wave of evolution. The company, which originated as a partnership between BT and MCI and now is moving forward as a BT/AT&T venture, plans to partner with local carriers around the world. Concert provides the global infrastructure and services, and the local companies-referred to as "alliance partners" by Concert-sell the package to their customers.

Peter Manning, Concert's president and CEO, said the two-tiered structure delivers better service and a better relationship with the service provider for end users who buy global connections through Concert.

"It's important to look at what's important from the customer perspective," Manning said. Those priorities include reliable service, quick response times to problems and requests, accurate service provisioning, and accurate billing. Those issues are efficiently handled by allowing the end user to buy the service from a company in the user's home country.

Other carriers are taking a different tack, building global networks via construction, acquisitions and capacity swaps. FaciliCom International is following that model. The company recently completed a deal with Qwest Communications under which FCI will pay Qwest for U.S. capacity and Qwest will gain use of capacity that FCI owns in Europe. FCI also has bought capacity on the Southern Cross cable for connections to some Asian markets in the latter half of this year. Such deals are examples of how FCI is building its global business.

By building a self-contained network rather than a network of partners selling a brand, FCI has positioned itself to outmaneuver competitors such as Concert, said President Walt Burmeister.

"Where we compete with [Concert and other partnerships], we've won away a lot of large accounts," he said. "We can make decisions and move quickly."

William Vogel, a chartered financial analyst who follows international telecom for NationsBanc Montgomery Securities, believes that carriers such as FCI will emerge as the model for international telecom. As for companies with partnership structures, "That's dead on arrival," Vogel said. "Those models don't work."

Vogel said such partnerships have a couple of factors working against them. First, the services are aimed at large, multinational corporations, he said, and such companies will negotiate for deals that will make the services very low-margin offerings. The second flaw is common to partnerships in any industry: the sometimes difficult process of getting all parties to agree on decisions.

Manning is confident that Concert's approach works fine. There are only two main partners, and Manning said the people at BT and AT&T are excited about and committed to a common vision of global networking and services. And the company holds quarterly "stewardship program" meetings with its alliance partners to ensure that all is well between Concert and its partners-and between the partners and the targeted end users.

"It's not just processes and systems," Manning said of Concert's keys to success. "It's people."

Having the network and services and the salespeople under one roof is a better model, said Burmeister. It's easier to serve customers' needs at competitive prices. "If we can become facilities-based on both ends of a route, we can control the quality [on that route] and our cost base will be as low as anybody on that route," he said.

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