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Verizon Expands Enterprise Reach

Light Reading
News Analysis
Light Reading
1/24/2006
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Verizon Communications Inc. (NYSE: VZ) declared its retooled enterprise division “open for business” Monday, announcing a deeper portfolio of services including new wireless broadband for businesses. (See Verizon Business Opens and Verizon Unveils Business Unit.)

The “Verizon Business” portfolio, the carrier says, is the “integration” of the former MCI and Verizon enterprise services offerings. The portfolio also rolls in more wireless services from Verizon, taking advantage of a far-reaching distribution platform in MCI's global IP network. (See Yankee Ranks Wholesale Providers.)

“We’re combining the wireless capabilities of the Verizon network with the IP backbone of the MCI network,” Verizon Business president John Killian told analysts Monday. That IP backbone was one of the main reasons Verizon acquired MCI last year. (See Verizon's 'Beachfront Property'.)

Because of its new global reach, Verizon’s business services are now available to enterprises in 2,700 cities in 150 countries, the company says. “I think that’s going to be a key differentiator for them,” says Heavy Reading senior analyst Stan Hubbard. “That’s going to be how they battle AT&T Inc. (NYSE: T) as they go after some of these larger enterprise customers.”

"The combination of the two companies gives us reach around the world,” Verizon Business chief marketing officer Ed McGuinness said during a conference call Monday. “We’ll be competing throughout the U.S. with AT&T and anybody else that participates in the industry.”

Verizon's enterprise services now include data and IP networking, managed WAN and LAN, MPLS-based private IP, customer premises equipment (CPE), applications such as IP PBX and VOIP, and long distance, among many others.

The Verizon Business division also announced its first wholly new set of products Monday, a suite of wireless services featuring EV-DO (Evolution-Data Optimized) wireless broadband service. Verizon says the services are based on MCI's remote access suite, and leverage the MCI IP backbone and Verizon’s wireless expertise. The wireless broadband services are now available in 181 U.S. cities, the carrier says.

As a sign of the rapid adoption of VOIP in the enterprise, Verizon said Monday it expects to triple the capacity in its network for VOIP this year. “I think this highlights all the activity in the industry around VOIP right now,” says Heavy Reading’s Hubbard. (See Verizon Wins Tussle for MCI and Does VOIP Business Add Up?)

To go with the new network capacity, the carrier says it is rapidly developing its VOIP service offerings for enterprises. Those services now include IP PBX, contact center services, PC-based telephony, and conferencing services.

Verizon's Killian told analysts he expects Verizon’s enterprise business to generate revenue of more than $20 billion a year.

Monday’s conference call also provided analysts with a progress report on the consolidation of Verizon's voice networks with the MCI backbone network. Roughly 15 percent of the carrier's long-haul voice traffic has already been moved to the MCI backbone, McGuinness says, and the rest will migrate during 2006.

That consolidation, Verizon believes, will result in a 25 percent increase in the combined voice traffic moving over the network this year. (See FCC Clears Megamergers.)

Before the MCI acquisition, Verizon relied on several regional and national wholesale networks to route its voice traffic, an arrangement that will soon not be necessary.

Hubbard believes that shift could have effects far outside Verizon.“I think the way to read that is it translates into bad news for operators providing that wholesale long-distance service to Verizon, but good news for the equipment vendors supporting that backbone.”

According to the Verizon Business Website, the division employs around 35,000 people worldwide. It is headquartered in Basking Ridge, N.J.

— Mark Sullivan, Reporter, Light Reading

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