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Equant Does DSL

Light Reading
News Analysis
Light Reading
2/24/2003

High-end service provider Equant (NYSE: ENT; Paris: EQU) has decided to extend its DSL services to the little people as well –- or at least, little people with connections in high places.

Starting tomorrow, small branch and remote offices of multinational corporations will have the opportunity to sign up for the carrier’s new secured DSL access service in seven countries worldwide: Australia, Canada, China (Hong Kong only), Italy, Singapore, the U.K. and the U.S. Equant, which offers IP VPN services in 140 countries, says it expects to add France and Germany to that list shortly. It hopes to extend the number of countries where the DSL service is available to as many as 16 by the end of 2003 (see IP VPNs -- A Case Study).

The service, which is built on Equant's network technology from CoSine Communications Inc. (Nasdaq: COSN) and managed Cisco Systems Inc. (Nasdaq: CSCO) routers, targets customers that are looking for more bandwidth than they get from dial-up, but that can’t afford a dedicated T-1 line. The DSL traffic for each customer travels over dedicated VPNs, and can reach speeds as high as 1.5 Mbit/s, according to Equant’s senior vice president of data services, Gopi Gopinath. The price tag, however, could be up to 50 percent less than a T-1, he says.

"It could be much less expensive, depending on the speeds you require," he says, pointing out that the faster connection customers want, the more they save. The cost savings will also vary from country to country.

The company says it has already signed up four multinational customers for the service, including a large British automotive company.

“This is a good move,” says i2 Partners LLC analyst Andrei Jezierski. “Offering IP VPN with DSL could provide them with a much richer monthly bill.”

So what’s the catch? Equant may be offering high-speed, always-on connections for corporate VPNs, but since the carrier doesn’t control the access portion of the offering, it has no way of guaranteeing the speed or reliability of the service.

“The biggest issue is quality of service,” says Erin Dunne, director of research services at Vertical Systems Group. “They can’t offer service-level agreements, since they’re not in control of the access points.”

“We can’t provide SLAs,” Gopinath admits, but he insists that this isn’t an issue for Equant's target customers. “This service is for non-mission-critical sites with non-mission-critical traffic.”

To deliver the service, Equant has found different service provider partners for each country. In the U.S., for example, the company has teamed up with SBC Communications Inc. (NYSE: SBC) and Covad Communications Inc. (OTC: COVD). This creates another potential worry: With so many different partners, Dunne warns, the company could run into some serious management issues. “And if somehow Equant’s customers lose connectivity,” she says, “the finger-pointing begins.”

Instead of worrying about the complexities of dealing with different service providers in each individual country, Gopinath insists that Equant's large DSL footprint will make life easier for its customers. He points out that Equant's service allows multinationals to deal with a single DSL provider at most, if not all, of their locations.

“We have a significantly bigger footprint than our competitors,” Gopinath boasts. “We are considering several countries, [and] we intend to move right along on this front… We should maintain our lead for quite a while.”

Of course, other service providers, such as AT&T Corp. (NYSE: T), Sprint Corp. (NYSE: FON), and WorldCom Inc. (OTC: WCOEQ), also offer DSL access services to their IP VPN customers, but observers agree that Equant’s offering probably covers the most ground so far.

— Eugénie Larson, Reporter, Light Reading

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