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The IP Opportunity

The new AT&T has the right assets to capitalize on the fast-growing demand for converged IP services.

For the communications industry, big change is coming. In fact, it's already here.

The transition to IP-based communications services literally changes everything for communications users and providers. With the benefits and efficiencies that converged, IP-based services offer, many larger companies are already in the midst of transitioning to the new technology today, and smaller businesses and consumers aren't far behind.

The primary service transition in this new era of communications is for voice services, which are evolving from traditional circuit-switched service to Voice over IP, which uses the same IP networks that support data services like e-mail and Web access. For consumers, video services will also transition to IP, enabling anytime, anywhere access to a range of services on any device.

According to a Yankee Group survey released earlier this year, 39 percent of large businesses have already deployed Voice over IP in at least a small portion of their operations, though only 5 percent of these businesses have fully deployed VoIP. Of the companies that have not yet deployed VoIP, 61 percent had plans to test or begin deployment within 12 months. At the same time, Yankee Group predicts 17.5 million consumer VoIP users by 2008.

According to IDC, by 2009 the IP data market will be a more than $50 billion opportunity.

This rapid move toward IP services has created demand for a new breed of communications provider. To succeed in the IP-powered future, providers must be able to:

  • Deliver voice, data and video services over IP.
  • Carry tremendous amounts of IP traffic across the U.S. and the globe to support these services.
  • Deliver this traffic to customers via wireline and wireless connections.
  • Back IP services with top-notch service quality, security, and customer service.
  • Manage services for business customers and provide help with every element of service planning, design and implementation.

For providers able to meet these needs, an unprecedented opportunity presents itself. The vast majority of enterprise businesses in the nation will transition their communications technologies to IP over the course of the next few years. This transition will set the telecom competitive landscape on its ear, as customers gravitate toward the providers that can fully deliver on the promise of IP-based converged services.

As is often the case with new technologies, IP services will be adapted for small business and residential use. Just as PCs and wireless communications expanded from the corporate office to the home, the proliferation of IP-based services in the enterprise will be adapted for wider use as well.

SBC Communications Inc. was one of the first companies to realize the extent of capabilities needed to succeed in an IP-based world, as well as the short window of opportunity for providers to capitalize on this unprecedented technology shift. This realization led to the SBC decision to acquire AT&T, which will now enable the combined company to deliver an unsurpassed range of capabilities to lead the IP revolution.

The SBC acquisition of AT&T established a model for the next generation of communications providers, a fact that was reaffirmed as others in the industry scrambled to follow the SBC lead in building the right assets to compete in this new arena.

The new AT&T family of companies will have the dual advantage of an ideal combination of assets as well as first-mover advantage in assembling these assets to quickly deliver converged IP services. These key benefits will enable the combined company to take full advantage of the IP opportunity, and to quickly deliver the benefits of IP to customers.

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