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AT&T gears up for business customers

The long distance company plans to announce a new business services aimed at wrapping voice and data products into a single package to compete with Sprint and MCI WorldCom.

AT&T will announce a new set of business services tomorrow aimed at wrapping voice and data products into a single package, in an effort to compete with similar offerings from Sprint and MCI WorldCom.

Like competing services, AT&T's new product is expected to combine voice and always-on high-speed data offerings on a single network.

The service, which initially will support up to 40 voice calls along with 512 kilobits per second of data, will be called the Integrated Network Connect service.

AT&T has lagged behind its rivals in offering this kind of service, which allows voice and data to use the same phone lines simultaneously through packet-switched technology--similar to what is used for Internet transmissions.

Sprint's ION, or Integrated On-Demand service, has been rolling slowly to market since its introduction last June. The company started taking orders for the service January 2, after beta testing for a handful of companies for the last several months.

MCI WorldCom sells a service called On-Net, which touts the company's ability to keep corporate customers' calls on a single network for local, national, and international calls.

But despite competitors' head start, analysts say AT&T still has time to catch up.

"ION isn't fully blown out yet," said Yankee Group analyst Matthew Kovar. "There's plenty of time yet."

All the companies need to perform significant upgrades so their infrastructures can handle packet-switched voice and data calls. Sprint's ION network uses ATM, or asynchronous transfer mode technology. AT&T's new system also is expected to be based on this technology.

But this requires upgrading much of the companies' existing circuit-switched networks with equipment able to handle the packet-switched technology. This effort has been underway for some time at all the big telcos, but is an expensive undertaking.

In order to serve individual businesses with the always-on services, the companies must lay fiber connecting the telcos' central offices with the customers' offices, or else strike deals with the local telephone companies to lease existing lines. Either option can be expensive and time consuming.

Nevertheless, businesses--and even some homes and home offices-are increasingly demanding services such as ION or AT&T's new offering, which in turn are driving the carriers' investments, Kovar noted.

Much of the talk about these networks has been marketing hype so far, analysts say. But once they begin rolling out in earnest, they are likely to live up to much of their promise.

"The technology is still in the process in the process of being developed," Kovar said. "But once you've got that pipe in place, and you can keep reselling it to customers for different services, it's no longer marketing hype. It's actually a product that benefits both customers and the company."