News

Firm Offers One-Stop Telecom Shopping- Global Internetworking Caters to Businesses

Suppose a Manhattan Internet service provider wants to sell a high-speed line to a small business in Moab, Utah. As many as 859 combinations of local and long-distance networks could be used to complete the order, which means the cost could run from $3,649 to $10,604 a month.

By Yuki Noguchi
Washington Post Staff Writer

Faced with that many choices, it pays for a business to comparison-shop. That’s the idea behind Global Internetworking Inc., a private company in Vienna that’s trying to become the price-comparison guide and matchmaker of the telecommunications universe. It can contract with 1,300 carriers across the United States and has developed software that can calculate the cheapest route. Global Internetworking then sells the network, pays its vendors to get the circuit up and running, and bills the customer under its own brand name.

The 20-person firm has been profitable for more than three years, said president and chief executive Michael Keenan, and its revenue has been growing by more than 50 percent every year. The company, founded in 1998 using Keenan’s personal funds, has about 120 customers, whose contracts range from $100,000 to $3 million.

By allowing telecom carriers and ISPs to comparison-shop this way, Global Internetworking has capitalized on an appealing idea, but one that faces a lot of challenges, said Seth Libby, an analyst with the Yankee Group, a market research firm in Boston.

"It’s one-stop shopping. That type of efficiency is needed in the industry," because there is a glut of available networks, Libby said.

Valley Network Partnership, a Waynesboro, Va.-based telecommunications firm, would agree. It has used Global’s online software for about two months, and it made about four network purchases using the company’s price-comparison software, said General Manager Gene Sandridge.

"We can get pricing within a few minutes, versus a couple of days of waiting for a price" if he had to call the various network suppliers himself, Sandridge said.

But firms like Global Internetworking and rival Universal Access Global Holdings Inc., are in a tough market, analyst Libby said, because carriers simply aren’t spending much and "right now the market is not paying attention to this type of service."

Global’s biggest competitors are the larger carriers. Verizon Communications Inc., AT&T Corp. and other big carriers have their own databases of companies that serve areas where they don’t own a network. They can do the buying themselves.

"They can strike a good deal anyway, because prices for bandwidth have fallen already," Libby said. "If I’m AT&T, I can get a better deal than anyone because I buy volume."

The industry isn’t likely to turn more business over to a reseller unless it offers something cheaper, faster or of better quality than telecommunications firms or Internet service providers can find for themselves, he said.

Universal Access’s business was "pounded" by multiple bankruptcies among its customers, and revenue has declined, said Randall R. Lay, chief financial officer for the Chicago firm. Revenue fell 17 percent, to $101 million, and it had to lay off 45 percent of its staff last year.

"This is certainly not the go-go years. We’re feeling reasonably good about the fact that the storm is passing," Lay said. International carriers are starting to spend more for network capacity, he said. "But it’s too early to call it a recovery, that’s for sure."

Tough times in the telecom industry have also made it difficult to keep track of which firms are still in business.

In the past five years, 82 publicly traded telecommunications firms have declared bankruptcy, according to research firm BankruptcyData.com. In some cases, companies come out of bankruptcy and continue operating under a different name; in other cases, businesses simply shut down.

Measuring the financial viability of suppliers is a concern for many potential customers, analyst Libby said. Resellers such as Global Internetworking don’t control networks, so they have to have a plan in place if a carrier’s network fails or is acquired, or if the carrier files for bankruptcy, he said.

The firm puts its customers and its providers through strict financial scrutiny before contracting with them, said Todd J. Vecchio, Global’s vice president of sales. Employees update the database daily with information on the status of vendors and their networks, so that any network changes can be rerouted, he said.

"It’s a fact of life in the business, of course: All carriers have had problems," said Keenan, Global’s chief executive. But the company hasn’t yet had a network outage, he said.

In spite of the industry’s problems, there are still plenty of opportunities to do more network sales business — to the government for homeland security purposes and to supply the overall increase in demand for Internet capacity, Keenan argues.

"This whole Internet thing is a catalyst that won’t decrease," he said.

http://www.washingtonpost.com/wp-dyn/articles/A47653-2003May12.html?referrer=email

News Catrgory Sponspor:


Dorsey & Whitney - An International business law firm, applying a business perspective to clients' needs in Missoula, Montana and beyond.

Leave a Comment

You must be logged in to post a comment.