AT&T spins its Net strategy into business
The telecommunications giant opens a new page in its ambitious Web business strategy, announcing plans to offer high-speed Internet access across the country over both cable and telephone lines.
The moves fill what had been a large hole in the company's overall business strategy, in a market that increasingly has attracted AT&T's large competitors and other start-up companies that offer their own high-speed Net services.
"I think that like other [long distance companies], AT&T is saying, 'I will get to the customer any way I can, and any way the customer wants,'" said Jeanne Schaaf, an analyst with Forrester Research. MCI WorldCom and Sprint are also using several different technologies to reach their customers, she noted.
According to company executives, AT&T will immediately began offering high-speed Internet access over telephone digital subscriber line (DSL) service in 17 markets across the country, and ultimately expand this to more than 100 markets by the end of 2000. The company will initially buy its DSL service from Rhythms NetConnections and Covad Communications, two of the leading high-speed Internet start-ups focused on business service.
DSL is a technology that allows high-speed Internet service over the same telephone wires that are used for voice traffic.
AT&T also will begin trials of a cable-based high-speed Internet access service for business customers in six markets by the end of this year. It plans to offer this service more widely by the middle of 2000.
Some analysts say the cable offering is to fill gaps in areas where AT&T's DSL service is unavailable or too expensive to be a viable product. Unlike DSL, cable networks can't provide guaranteed speed for Internet access. This speed of access on a cable line varies with the number of users on network--the more people on a network, the slower download speeds become for any single user.
"We continue to be skeptical of the viability of using cable in the business market," said Joe Laszlo, telecommunications analyst with Jupiter Communications. "It's extremely hard to guarantee quality of service with the cable network using today's technology."
AT&T executives note that they are giving customers a choice between two technologies with different advantages and costs--and in most cases, DSL will be available in the same locations as cable.
"The idea is to be able to offer customers a suite of products that fits their individual needs," said Tracy Hollingsworth, an AT&T spokeswoman. "They can choose whatever they want."
Today's announcements also mark a potential new source of tension between AT&T and Excite@Home, the cable Internet access service in which AT&T owns a dominant stake.
Excite@Home already operates a division that offers high-speed DSL and cable access to small- and medium-sized businesses, dubbed @Work. AT&T says it will be working "in cooperation" with @Work through its cable trials, but has not committed to using the @Home service's brand for the new business access push.