The Internet battleground awaits

Until now, content has been the Internet story. But as 1996 wrapped up, strategic thinking about the Internet on the part of carriers began to shift.

The Internet, it turns out, is what everyone who's wanted a common platform for data services has been waiting for. The Internet represents one of the best ways carriers can exploit the growing demand for the multitude of data communications services and technology, not only for purely residential and business Internet connections, but for the integration of intranets and electronic commerce among large business customers.

This epiphany is leading to the first big battle of the competitive era. Forget cable telephony, forget ventures such as Tele-TV and Americast. Blood will be spilled this year in Internet-based services.

The major interexchange carriers are already telegraphing their intent to use Internet-based data services as the battering ram into the local loop. Among the best examples is the WorldCom/MFS/UUNet Technologies acquisition string.

At the New York Internet World show in December, MFS/UUNet unveiled the "Extranet" concept, which, at its heart, is a plan to tie the ubiquity and open access of the Internet with the high security and reliability of corporate intranets-or more broadly speaking, leased lines, wide area networks and virtual private networks.

In light of these developments, a number of industry observers, including analysts such as Mark Bronfman, an associate partner with Andersen Consulting, will tell you that entrenched carriers are going to have to mount an Internet offensive to keep customers who may be lured away by new offerings from IXCs or large Internet service providers.

In UUNet's case, they're being called Extranets. Bronfman calls them "industrial-strength" Internets. What it comes down to is the integration of corporate networks, electronic commerce, World Wide Web business and Internet service provision all together on a highly secure platform.

In addition to UUNet, AT&T and MCI are also making serious moves on this front.

The industrial-strength Internet, says Bronfman, will allow for a high level of messaging privatization, transport of multimedia files and, perhaps most critical, a high level of information reporting so users can have a sense of how the network is performing.

Infrastructure remains the key question, however, as the components for services this robust are not in place and there's a steep learning curve.

Already it's seen as a shaky business, and no one yet has developed a sterling reputation. The ISPs are perceived as Internet connectivity specialists. There's no question that they know the technology of the Internet. But most still have problems with overcapacity on their access connections, buggy software and help desks that are anything but helpful.

Carriers, on the other hand, are, in a loose sense, intranet specialists. Certainly their strength is in their networks. But carriers-local exchange carriers in particular-despite their ability to move massive amounts of information, are still seen as Internet newbies. With the exception of Pacific Bell, which has seized on the Internet business in California, there is a strong thread of skepticism about whether the telcos really grasp the Internet's potential. Only within the last two weeks did Ameritech begin offering dial-up Internet access, when its original schedule called for availability in the third quarter of last year.

Perception will be important right out of the box because, if the Internet is the first battlefield in the post-monopoly era, then the first territory to conquer will be user mindshare. One good aspect of all this is that customers are open to using the Internet as a business tool. What they want is a good sales pitch that can demonstrate the true value that Internet-based data services offer an organization and a sufficient comfort level that their data will be safe and their service provider responsive.

It's the same old story, of course, but in this case the stakes are alarmingly high. The Internet is going to be the basis on which telecom service providers of all types build their future. There's really no option to sit this one out. But with so many players, the market will be far less forgiving of mistakes. With that in mind-cry havoc and let slip the dogs of war.