AT&T and British Telecom are collaborating on building a new global communications network that officials say will transmit everything from telephone conversations to videoconferences to Web pages.
The companies, which announced the deal on Sunday, say the new global network will be capable of using Internet Protocol and facilitate a rapid transition to global data networking. But despite the ambitious claims, analysts are still taking a wait-and-see attitude.
"Those technologies are still emerging," said Karin Narsu, an analyst with Giga Information Group. "To state that they will have a business-ready network, with technologies that haven't been tested themselves -- is optimistic at best. Overall, we've got to see it to believe it."
Mad about IP
With the explosive growth of the Internet, embracing everything from IP-based corporate "intranets" to headline-making consumer Web sites, IP has become the preferred technology for telecommunications companies, analysts say.
The protocol -- a set of rules governing how different devices carry or interpret data -- is good at allowing a variety of devices to communicate with one another.
But more importantly, IP is an open standard, a fact that has figured significantly in the rapid rise of the Internet. And now telecommunications companies are hoping IP will similarly help them realize fast growth.
"IP is the natural choice. It's become the lingua franca of new applications," said John Ryan, principal and founder of Ryan Hankin Kent Inc., a San Francisco Bay Area telecommunications research firm. "Particularly as the new venture is focused on multinational corporations: the corporate networks are moving toward being IP, so it makes sense that the glue between them is also IP-based."
AT&T and BT say that once they complete the construction of the new network five years from now, big companies will be able to set up or alter international corporate telephone systems more quickly than currently possible. The network will be controlled via a simple, PC-like graphical user interface.
Who is doing what?
Sprint recently cast its lot with the Internet networking standard.
Its ION system, which will aim to do domestically what the AT&T-BT venture plans to do internationally, will also use IP. Such communications companies as Sprint and especially WorldCom are considered to be well-positioned in the Internet world because, unlike AT&T or BT, they are major Internet service providers.
"We're looking at rolling this out in two to five years, and by then, all the debate will be over," said Tom Rowbotham, British Telecom's director of technology. "We've put our bets on IP."
IP is also more efficient than the traditional circuit-based system, especially for the transmission of data -- which experts predict will make up more than half of all network traffic by early in the next decade.
If there is little debate over the protocol's merits, however, no one has yet created an international, IP-based network reliable enough to handle telephone calls as well as data transmission. "The software platform today simply doesn't exist," admits BT's Rowbotham.
One problem is that IP is not innately adapted to carry voice traffic. The present telecommunications network opens a dedicated circuit carrying continuous information back and forth.
IP, on the other hand, breaks the information into "packets" that are carried separately across the network and re-assembled at the other end.
This works well for data, which typically comes in bursts, but it poses a problem in trying to sustain a continuous two-way connection without delays or loss of information. If the network is congested, a packet of data might be slowed down or lost, but that is unacceptable for a voice transmission.
"The quality of service is extremely important, as is traffic prioritization," said analyst Narsu. "A voice call has to have higher priority than downloading a file. Standards are emerging to do that, but they are very immature."
Another complication is the relative lack of Internet experience in either of the companies.
"Neither AT&T nor BT is a top-tier Internet service provider today," said analyst James Freeze of Forrester Research Inc. "Their Internet expertise is thin."
Even so, the business prospects for the joint venture are good -- partly because the IP aspect of the new company will not be as important, in the short term at least, as the creation of a seamless international presence catering to large corporate customers.
"The business prospects look pretty good," said analyst Ryan. "The most important things are the technology and the revenues [AT&T and BT] have committed to [the joint venture]. IP is actually, it's first in the headlines, but second in the story."