June 6, 2006 10:25 AM PDT

Mergers are giving AT&T's networks a boost

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CHICAGO--As AT&T digests one merger and prepares for another, the company is pushing forward with network upgrades to deliver a slew of services to large business customers and consumers, a company executive said Tuesday.

During a keynote address at the GlobalComm trade show here, John Stankey, AT&T's chief technology officer, outlined the company's strategy and plans to upgrade its long-distance fiber network.

Last year's merger between AT&T, the old long-distance phone company, and SBC Communications, one of the four Baby Bell local phone companies, created the largest phone company in the United States. The company will be even larger after the proposed merger with local phone company BellSouth.

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Stankey said the added traffic and scale from these mergers is enough to justify spending more money to upgrade AT&T's worldwide long-haul network, which before the merger was the largest global Internet Protocol-based network in the world.

AT&T is spending billions of dollars on faster IP routers and optical networking gear, quadrupling speeds on some links to 40 gigabits per second (Gbps) from 10Gbps, he said. These links, to be deployed this summer, will connect 31 of AT&T's highest-traffic cities. In the end, the network will be able to transmit 94,000Gbps, he added.

Stankey said a faster network is necessary to push new services to businesses and consumers.

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"No matter how advanced the service you offer, it's only as good as the network that stands behind it," he said. "About 5.6 petabytes of data travel over AT&T's network. That sounds like a lot and it is. But the day will come when that is not enough."

But Stankey also said simply building a faster network is not enough, and developing services for both business customers and consumers is critical to the company's success.

"We realize that transport is a commodity business," he said.

As part of this strategy, AT&T is pushing managed services of all flavors to its business customers. From managing security to network capacity to the myriad mobile devices that have crept into corporate life, Stankey said AT&T offers solutions to help businesses work more efficiently and reduce costs.

"Managing complexity is AT&T's sweet spot," he said. "And it makes service providers such as us even more relevant."

The network upgrades that allow AT&T to offer more robust services to businesses will also provide the foundation for carrying enormous amounts of traffic that will be generated from AT&T's new IP-based TV service.

AT&T, which has been adding fiber to regional networks to better deliver bandwidth-intensive video services, is preparing to launch its IPTV service in several cities this year. The company has been conducting a controlled release of the service in San Antonio, Texas, where Stankey said results have been good.

Now the company plans to expand the offering to 15 to 20 cities before the end of the year. Some observers have questioned whether or not AT&T's strategy of using existing copper infrastructure to deliver IPTV to customers in the last mile will be sufficient, especially with high-definition TV coming on the scene.

But Stankey said these worries are unfounded since the service in San Antonio has demonstrated speeds of up to 20Mbps to 25Mbps, which he said was "more than ample bandwidth to deliver four TV streams including one high-definition channel and high-speed Internet access."

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