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benchmark-it.co.uk benchmark-it performance This new 249-page report profiles and compares 21 key alternative providers of trans-border telecoms services in Western Europe. The report includes the following: • Profiles of 21 carriers • Verdict • Summary (strategy and recent activities) • Geographic reach • Portfolio • Management (revenues and reputation) Who should buy the report? • Operators selling telecoms services in Western Europe • Companies investing in or supplying the above • Companies buying services from the service providers covered Key benefits: • Source of key information on 21 carriers • Independent market analysis and comparisons • Gives customers time to concentrate on analysing implications and to formulate action plans Updated since last report: • 19 updated player profiles, two all-new player profiles • Analysis of player positioning and differentiation strategies • Market analysis and updated conclusions from previous report Key conclusions: • There are clear signs of confidence retuning to the telecoms sector • The combination of customers spending on upgrading their IT and the emergence of IP VPNs as their communications platform of choice for the coming years offers an excellent opportunity to win business • Service provider success will be predicated by management’s (and the organization’s) ability to execute their chosen strategy Pricing is £995 for a corporate licence (intranet licence). benchmark-it performance benchmark-it.co.uk Summary & Sample  benchmark-it.co.uk. All rights reserved. For reproduction rights contact info@benchmark-it.co.uk. Opinions reflect judgement at the time and are subject to change.

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Alternative Trans-Border Telecoms Service Providers In Western Europe

December 2003

Author: Rob Pritchard

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TABLE OF CONTENTS Executive Summary Page 3 Market Analysis Page 5 Check-list From The Last Report Page 7 Benchmarked Suppliers Page 9 Supplier Profiles: AT&T BT Global Services Cable & Wireless COLT Equant ETT Global Crossing Infonet Interoute KPN EuroRings LambdaNet Level 3 MCI NTT SAVVIS Sprint Telstra T-Systems Vanco Versatel Viatel

Page 13 Page 26 Page 45 Page 58 Page 73 Page 89 Page 96 Page 108 Page 128 Page 138 Page 150 Page 157 Page 169 Page 184 Page 189 Page 199 Page 209 Page 214 Page 227 Page 233 Page 242

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Executive Summary As 2003 has proceeded, there have been clear indications of confidence returning in the telecoms sector not only has investor confidence shown signs of life, but service providers have started investing again in future growth, rather than focusing purely on cost-cutting. The grounds for this return of confidence in telecoms comes as part of a broader return of economic growth, despite continued global political uncertainty. IT budgets appear to be growing again after years of stagnation and holding back partly because customer hardware and software has been getting beyond its useful working life and needs replacing. The knock-on effect of this tends also to be an increase in international networking requirements. The combination of a return to growth (steady growth and not the boom years that preceded the recent bust) comes at a time when most corporate customers have shifted to or are shifting to IP VPNs as the core of their networks, presenting service providers with a great opportunity to win new business or grow their revenues from existing customers. Although there is no evidence that IP VPNs offer better margins than the services they replace (indeed the evidence to date points to the opposite), they offer the potential to converge customers’ voice, data, IP and even video communications and thus the opportunity to win a greater share of each customer’s spend or to enable them to spend more by adopting new services on the IP VPN platform. Despite the return of optimism and the opportunity offered by IP VPNs, it is our opinion that the market remains almost flat in terms of absolute value and, if it is growing it is at a rate in the low percentage points. This means that service providers, many of whom are still saddled with significant debts, face a challenge in delivering growth. Options include: • Grow overall share of existing addressable market; • Grow share of existing customer base spend; • Expand addressable market: o New geographies; o New sectors; o New products; o New (adjacent) capabilities (e.g. systems integration, applications management). Different service providers are trying one or more of the above strategies, as is illustrated in the report. It is too early to tell which will prove to be a winning strategy and success will, as ever, be predicated primarily by the management’s (and the whole organization’s) ability to execute its strategy successfully a challenge that is all too often underestimated and forgotten in the hurly-burly of day-to-day operations. benchmark-it performance benchmark-it.co.uk Summary & Sample  benchmark-it.co.uk. All rights reserved. For reproduction rights contact info@benchmark-it.co.uk. Opinions reflect judgement at the time and are subject to change.

benchmark-it.co.uk Benchmarked Suppliers This section places the companies analysed in this report in comparison with each other from the points of view of relative positioning, stability, strategic focus and revenue performance. A summary of these benchmarks is shown below: Supplier Coverage Stability Focus Growth AT&T Global Stable Good Steady BT Global Global Stable Good Steady Services Cable & Wireless Niche global Stabilising Strong UK, Negative due to otherwise ok disposals COLT Western Stable Very good Above average European Equant Global Stable Good Flat ETT VNO Stable Good Good Global Crossing Global Stabilising Good Flat Infonet Global Stable Good Above average Interoute European Stable Good N/A KPN EuroRings European Stable Good N/A LambdaNet Multi-country Stable Good Good Level 3 U.S. plus Stable Ok Steady some Europe MCI Global Stable Good Steady NTT Asia Pacific Stable Ok N/A plus U.S. and Europe SAVVIS Global Stable Ok and Steady improving Sprint Global Stable Ok N/A Telstra Asia Pacific Stable Ok N/A plus U.S. and Europe T-Systems Global Stable Good Steady Vanco VNO Stable Good Strong Versatel Niche Stable Good Strong European Viatel Niche Stable Good N/A European Coverage refers to the primary focus of the breadth and depth of networks offered; Stability refers to the financial, managerial and strategic consistency of the company; Focus refers to the extent to which the company is focused on supplying services to the corporate segment (in Western Europe); Growth refers to the company’s recent ability to grow revenues (in Western Europe). The table on the previous page was derived from analysis of data included in the report which is summarised in picture format later (note that positions are indicative of relative positions): benchmark-it performance benchmark-it.co.uk Summary & Sample  benchmark-it.co.uk. All rights reserved. For reproduction rights contact info@benchmark-it.co.uk. Opinions reflect judgement at the time and are subject to change.

benchmark-it.co.uk Players in this report can be characterised in the following way:

Player Positioning

Global Coverer

Niche Player

Full Geographic Provider

Continental Provider

Local Presence

Ideally, suppliers would occupy the top right-hand of the chart, meaning they would be able to offer comprehensive global coverage combined with in-country depth across multiple countries, thus maximising their addressable market. As yet, no such global super-carrier exists, although a number of suppliers are edging towards the position.

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Player Positioning

Equant Infonet AT&T BT MCI NTT Cable & WirelessGlobal SAVVIS C ing T-Systems ross

ri KPN TelstraSpntRigInteroute Euro n s COLT Viate l Level 3 Versatel

Local Presence

N.B. relative positions are indicative and like-for-like comparisons are not always possible.

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Growth vs Revenues

Versatel Vanco

ETT LambdaNet Infonet SAVVIS Level 3

COLTMCI Global T-Systems AT&T BT CrossingEquant Cable & Wireless

0-500m 501m-1bn 1bn+ Revenues (€)

N.B. chart is indicative of relative positions in Western Europe and based on company results or (where these were unavailable) benchmark-it estimates.

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MCI Verdict: With MCI’s emergence from Chapter 11 bankruptcy protection looking imminent, the company will be looking to grow its international presence and revenue, particularly as its domestic business is under so much pressure. It will also look to leverage its historic position as a leader in IP-based services to capture a greater share of the MNC and corporate segment markets across Europe and is likely to expand its international MPLS network to do so. Summary MCI is the second-largest long-distance service provider in the USA and one of the largest international players in the telecoms market. “MCI’s focus is clear to use our global network and expertise to deliver innovative products that provide simplicity and unsurpassed value to our customers. With more than 20 million business and residential customers, MCI is a leader in serving global businesses, government offices and U.S. residential customers. MCI delivers a comprehensive portfolio of local-to-global business data, Internet and voice services to a ‘Who’s Who’ list of the Fortune 1000. MCI is an established leader in IP network technology and VPN (Virtual Private Networking), delivering VPNs based on private data networks as well as our global Internet backbone, which spans six continents. MCI today owns and operates some of the world’s most complex and sophisticated custom networks, delivering value for a wide variety of customers. MCI International’s vision runs thus: “To be recognised as the innovative, customer-focused global communications provider, utilizing the world’s most technologically advanced, ubiquitous network, delivering premier products and services and value to our customers. MCI aims to: • Be the market leader for inter- and intra-regional telecommunications services, creating value with existing assets: o Grow retail market share each year; o Maintain leadership position in wholesale; o Emphasize data and Internet services.

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benchmark-it.co.uk SAMPLE PAGES Geographic Reach: Western Europe: The table below shows the European cities that have Sprint PoPs. Planned PoPs are shown in red : Austria Belgium Denmark Finland France

Germany

Ireland Italy Netherlands Norway Portugal Spain Sweden

Dornbirn, Graz, Innsbruck, Linz, Salzburg, Vienna Antwerp, Brugge, Brussels, Charleroi, Ghant, Hasselt, Kortrijk, Leuven, Liege, Mechelen, Mona, Namur, Ostend, Wavre Aarhus, Billund, Copenhagen, Odense, Vejle Helsinki, Turku Annecy, Avignon, Bayonne, Bordeaux, Clermont-Ferrand, Cognac, Dijon, Evry, Grenoble, Le Havre, Lille, Lognes, Lyon, Marseille, Metz, Monte Carlo, Montpellier, Mulhouse, Nancy, Nantes, Nice, Paris, Pau, Quimper, Reims, Rennes, Rouen, Sophia Antipolis, Strasbourg, Toulon, Toulouse, Tours Aachen, Augsburg, Baden-baden, Bayreuth, Berlin , Bielefeld, Bochum, Bonn, Braunschweig, Bremen, Bremerhaven, Chemnitz, Cologne, Darmstadt, Dortmund, Dresden, Duisburg, Dusseldorf, Erfurt, Essen, Flensburg, Frankfurt, Freiburg, Friedrichshafen, Fulda, Gera, Goettingen, Greifswald, Hagen, Halle, Hamburg, Hamm, Hanau, Hanover, Heidelberg Heilbronn, Hildesheim, Ingolstadt, Jena, Kaisterslauten, Karlsruhe, Kassel, Kiel, Koblenz, Leipzig, Ludwigsburg, Luebeck, Magdeburg, Mianz, Mannheim, Minden, Moechengladbach, Muenster, Munich, Neubradenburg, Neuss, Neu-Ulm, Nuremberg, Oldenburg, Osnabrueck, Paderborn, Potsdam, Regensburg, Reutlingen, Rostock, Saarbruecken, Schwerin, Siegen, Stuttgart, Trier, Villingen, Wetzlar, Wiesbaden, Wuerzburg, Wuppertal Cork, Dublin, Shannon Ancona, Bari, Bergamo, Bologna, Bolzano, Brescia, Catania, Florence, Genoa, Gorizia, Milan, Naples, Olbia, Padova, Palermo, Parma, Perugia, Pisa, Pomezia, Rimini, Rome, Trieste, Turin, Udine, Varese, Venice, Verona, Vicenza Amsterdam, Arnhem, Breda, Eindhoven, Enschede, Groningen, Leiden, Maastricht, Rotterdam, The Hague, Utrecht Bergen, Oslo, Stavanger Faro, Funchal, Lisbon, Porto Alicante, Barcelona , Bilbao, Gran Canaria, Ibiza, Madrid , Malaga, Palma Mallorca, San Sebastian, Seville, Tenerife, Valancia, Valladolid, Vigo, Zaragoza Gothenberg, Malmo, Ronneby, Stockholm, Sundsvall

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Network: Infonet calls its global network “The World Network it is an ATM-based backbone network which offers access in more than 180 countries. It covers more than one million route kms (including 720,000km of fibre) with the backbone moving from 155Mbps to 622Mbps and 2.5Gbps. Infonet offers an SLA that guarantees network availability at more than 99.996% on average. • 58 Marconi ATM devices; • 154 Nortel Passport platforms; • 70 Lucent RAS hubs; • 69 Nortel X.25 nodes; • 365 ATM ports; • 12,341 intranet ports; • 6,843 public and private Dial IP ports; • 556 X.25 ports; • 1,393 Dial X.25 ports; • 82 Marconi TNX/ANX; • 469+ IP hub routers. Infonet has adopted the strategy of replacing short-term leases by buying long-term IRUs to reduce its network costs. The company is also looking to exploit excess capacity in metropolitan loops to cut its own access costs to date Infonet has acquired capacity on city rings in Amsterdam, Dusseldorf, Frankfurt, Paris and London in Europe. Infonet has closed its two Web hosting centres as the company no longer offers Web hosting. Infonet has stated that it will continue to “take steps to increase the coverage of our network and to deploy new technologies to reduce local access costs.

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