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Telcos roll out new business services

Seeking to shore up declining profits in the consumer market, AT&T and MCI WorldCom announce new sets of services geared at winning over the most profitable business customers.

Seeking to shore up declining profits in the consumer market, the two biggest national long distance companies today announced new sets of voice and data services geared at winning over the most profitable business customers.

With a new service dubbed Integrated Network Connect, AT&T joins Sprint and MCI WorldCom in offering a way to keep corporate voice, data, and Internet services on a single network.

The company touted the new service, which will be based on packet-switched ATM (asynchronous transfer mode) technology, as a way to add capacity cheaply to existing networks, along with new services such as video transmission.

"AT&T is allowing customers to add traffic to their networks at a lower incremental cost than was previously possible," said Tim Murray, the company's vice president of business network services, in a statement.

The service is now being tested in several facilities, and will be rolled out for sale in the second half of the year. In its initial phases it will carry voice, data, and Internet traffic, but will later expand to offer more advanced services, such as video.

In its integration of voice and data over the single network, the INC service follows in the footsteps of Sprint's ION, or Integrated On-Demand Network. Sprint announced that service last June, and started taking orders on January 2 this year. MCI has a similar service, called On-Net, which was announced last fall.

AT&T also announced today it would offer a new set of corporate virtual private network services. The system will combine frame relay and Internet protocol, a mix that the company said would decrease network delay times by 25 percent to 30 percent.

Meanwhile, MCI WorldCom said today it would speed up its rollout of digital subscriber line (DSL) service for businesses, expanding its use beyond Internet access.

DSL is a technology that uses existing copper phone lines for high-speed Internet access and voice service, allowing the two to operate simultaneously.

Like AT&T's service, the DSL move is intended to woo businesses into integrating their voice, data, and Internet requirements into a single system. The new rollout will help keep corporations on the MCI network without installing costly new fiber optic lines into business offices.

To help speed its DSL rollout, MCI WorldCom said it would take a $30 million minority stake in remote networking company Rhythms, as well as its subsidiary ACI, a data carrier that focuses on DSL for business.

The investment is the first major outlay from the MCI WorldCom fund, a $500 million investment fund created in November to finance technology startups.

MCI has been one of the most aggressive carriers in rolling out DSL. As part of its initial rollout, the company will have close to 600 points of presence across the United States by March, and has started consumer trials with America Online and EarthLink.

The companies' announcements come a day after AT&T reported fourth-quarter earnings with falling consumer revenues, but increasing profits on its business side.

Analysts say that telcos need to invest even more heavily in integrated services like these, which are increasingly in demand by businesses, in order to keep their profit margins up as competition cuts into traditional voice revenue.

"Business have a real need the have the greatest amount of flexibility in their local connection," said Mathew Kovar, a Yankee Group analyst. "That's what's driving these providers to offer these services."