Orange Business Services Inaugurates Much Improved IP Capabilities for European MNCs in LatAm

| Feb 5, 2009 | Business Telecom Services - Europe | Competitive Update

| Analyst: Bernt Ostergaard

Current Perspective: Positive/Neutral
Vendor Importance: Moderate
Market Impact: High

Event Summary

February 3, 2009 -- Orange Business Services increases the capacity of its IP network in Latin America by 250%. The expanded network capacity has been implemented in Argentina, Bolivia, Brazil, Chile, Costa Rica, Guatemala, Mexico and Venezuela. Additional upgrades are planned for Honduras and Panama in 2009. Orange is deploying new leading-edge network equipment to offer new services, such as Multicast, Telepresence and Network Boost, a network-based application performance management solution.

Analytical Summary

• Current Perspective: Slightly positive on Orange Business Services’ expansion of its IP infrastructure and services capabilities in Argentina, Bolivia, Brazil, Chile, Costa Rica, Guatemala, Mexico and Venezuela (with additional upgrades planned for Honduras and Panama later in 2009) for European MNCs because LatAm remains an underserved region among global carriers despite the region’s fast uptake of IP services. Although global carriers all have services in the region, new service roll outs are often delayed compared to launches of services in Europe.

• Vendor Importance: Moderate to Orange Business Services, which needed to improve its LatAm presence to support its range of IP services that are available to European Orange Business Services customers. The launch of pan-European MNC services by Telefonica with a strong LatAm presence also requires such a response from Orange Business Services.

• Market Impact: High on the managed services market for European MNCs looking for good LatAm coverage because they now get an additional possibility to negotiate for IP services with the same SLAs in Europe and LatAm. It provides an interesting alternative to Telefonica’s LatAm dominance. With a strong IP services offering in the world’s fastest growing IP market, Orange Business Services can pick up regional MNC business fast.

Recommended Competitor Actions

• Telefónica Latinoamérica can assert its unique regional proposition - The Telefónica Latinoamérica operation includes synergies for connectivity, integrated fixed/wireless and IT for supporting LatAm-headquartered customers and/or multinationals with sites in this region. However, there are still possibilities to improve the speed with which Telefónica Europe and Latam can commercialize such an offer to service MNC customers.

• AT&T should emphasize that they are customer-driven and that their LatAm presence adequately addresses their core MNC customer segment. However, it does classify most LatAm destinations in a different basket that receives somewhat lower SLA guarantees with a managed service than those it assigns to Western Europe, as well as some destinations in Eastern Europe and Asia. This deficiency should be addressed.

• Verizon Business should emphasize that it has aligned SLAs for managed WAN services to Argentina, Brazil, Chile, Colombia, Mexico, Panama, Peru, Puerto Rico, and Venezuela with those the carrier offers in 21 Western European and Asian telecom hub destinations. They include a four-hour time-to-repair guarantee, a 99.5%-100% availability guarantee depending on customer configuration, a 15-minute customer notification guarantee in the event of an outage, and up to 100% monthly credits for extended outages.

• BT Global Services should argue that its COMSAT-based IP network as well as its fully integrated fiber terrestrial network that covers Argentina, Brazil, Colombia, Mexico, Peru and Venezuela provides competitive regional LatAm coverage. With its Latin American offices in 17 countries and over 700 professionals with in-depth knowledge of Latin American markets and services directly in 15 LatAm countries, BT GS has an established track record in the delivery of complex projects and the management of network solutions for enterprise, public sector and carrier customers.

• Global Crossing can especially point to its lower cost and strong local presence in all major LatAm countries, and emphasise that mid-sized MNCs are its primary target market. Global Crossing should argue that incumbents and the larger global alternative operators often have a reputation for focusing on their largest customers and providing less quality of care to smaller customers.

CLIENTS ONLY

Competitive Positives and Concerns

Recommended Vendor Actions

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