Williams refocuses on wholesale market: Carriers plans follow-up Internet offer

Williams unveiled plans last week to offer nationwide switched voice services to the wholesale and reseller markets by June 1999. The announcement comes 11 months after a non-compete clause with WorldCom expired.

"We will become a full service wholesale-only provider, and that doesn't include local service," said Ron Harden, vice president of sales and marketing at Williams. By the end of this year, transit services will be available. The company will introduce voice switches into its network in June 1999 and will unveil dedicated Internet and dial-up services separately.

Williams intends to stay focused on its service provider customers, Harden said. "We're not interested in buying a customer base."

The strategy should pay off, observed David Cooperstein, senior analyst of telecom strategy at Forrester Research. "As long as Williams stays true to their wholesale business model, they will be successful," he said. "The applications like voice that they are selling are ways to fill theirbandwidth in the short term, while fatter applications like application hosting and video distribution become more commonplace over time."

The move to wholesale switched minutes opens revenue opportunities at a particularly opportune time as the industry moves toward converged networks. Williams has the right skill set for a unified network model: hardware, software, bandwidth, system integration and network management, said Warren Williams, vice president of the Eastern Management Group. "It gives them a major step up in the value proposition that they can offer. They become much more than a vendor, much more like a partner."

The challenge is not alienating current customers by playing too closely to the retail space. "If you build a network and have it paid for by your wholesale customers, you don't want to short-shrift them by getting into the business prematurely," said Brad Bradshaw, a director with The Yankee Group.

Bradshaw wonders if Williams' ultimate goal is to become a supercarrier, a facilities-based provider of voice, video and data in all markets. "That is a vision toward which AT&T, Qwest and MCI WorldCom are all heading. Is Williams going to stay in the background as a carrier's carrier, or will they move down to provide retail service? This is an affirmation of their march down the value chain."

Williams has purchased equity stakes in two long-distance resellers, which might signal a move to the retail market, Bradshaw added. Through its PBX business, Williams has "intimate relationships with an extensive array of Fortune 1000 companies, [but] they cannot diffuse their focus away from building their national network."

Qwest is making a similar mistake by offering retail services and thwarting the potential to add wholesale customers, Bradshaw said.