WTO Pact Creates

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WTO Pact Creates Integrator Opportunity

By Nick Wakeman

Staff Writer

Cheaper international calls might be the most obvious benefit of a trade agreement opening telecommunications markets in 70 countries, but systems integrators will be dialing for dollars, too.

That's because the World Trade Organization pact, signed Feb. 15, is certain to increase markets for a range of services linked by telecommunications networks, such as online commerce, voice mail and debit card systems.

The agreement, which exports regulatory principles that changed the face of the U.S. telecommunications industry, takes effect Jan. 1, 1998.

"This agreement is pretty far-reaching .... The basis of technology is linkages that telecommunications makes possible," said George Newstrom, corporate vice president for Electronic Data Systems Corp., Herndon, Va.

Although it's too early to make industry revenue projections, the trade pact should open up a market bonanza for systems integrators, said Matthew Weathers, senior analyst on communications for G2 Research Inc., Mountain View, Calif.

Indeed, business-to-business electronic commerce is projected to account for $66 billion in revenues by 2000, according to a report by Forrester Research, Cambridge, Mass., published before the pact was finalized.

The pact represents great opportunities for integrators, creating "a pretty big sandbox in which to play,'' said Marc Pearl, general counsel and vice president of government affairs for the Information Technology Association of America. He attended the most recent round of WTO negotiations in Geneva.

In the short term, there is little doubt that telecommunications companies stand to gain the most in what is estimated to be a $500 billion global telecom market.

"The ones that are going to benefit most directly are the telecommunications companies, but rising tides lift all boats," said Patrick Ward, a spokesman for Digital Equipment Corp., Maynard, Mass.

The agreement should speed the pace of alliances between telecommunications companies and integrators, Newstrom said. "I don't know if the basic agreement will be the catalyst for [more alliances]," he said, because integrators and telecommunications companies needed to be more aligned anyway to provide better services to their customers.

"This is a major step forward for users of information technology throughout the world," said Fred McNeese, spokesman for IBM, Armonk, N.Y.

Traditional integrators can
expect more competition from telecommunications firms as these companies take more interest in the systems integration market. Specifically, MCI bought SHL Systemhouse, a Canadian integrator, in September 1995. When AT&T broke up that same month, it kept its systems integration arm, AT&T Solutions.

MCI has estimated the market for consulting, design and management of network computing systems at $40 billion, growing at 20 percent a year.

Some powerful telecommunications alliances have already been formed that should be able to exploit the trade pact. For example, British Telecommunications plc and MCI, Washington, which plan to merge into the company Concert, have teamed with Microsoft to offer intranet services. Digital Equipment Corp. will lend its hand to this alliance.

On the other side, IBM and its Lotus subsidiary have formed a partnership with AT&T, Basking Ridge, N.J., to integrate Lotus Notes with AT&T's Internet service.

Telcos have been forming worldwide alliances at the level of Concert. Global One includes Sprint, Deutsche Telekom and France Telecom. Unisource includes AT&T, PTT Telecom Netherlands, Sweden's Telia, Swiss Telecom PTT and Spain's Telefsnica.

"Mergers and acquisitions [among telcos] will drive the need for systems integrators," said Weathers.

"The need for reduced costs will drive a need for outsourcing, as well as upgrades of current systems," he said.

Shannon Henry and Dennis McCafferty contributed to this report.


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