AT&T and IBM forge US$450-million e-business hosting deal

IBM Corp. has entered into a US$450 million agreement with AT&T Corp. to develop electronic-business services using several hundred square feet of AT&T’s Internet hosting facilities, the companies announced Tuesday in a joint statement.

IBM will start operations from AT&T Internet Data Centers by year’s end in Chicago, Phoenix and New York, said Nancy Kaplan, an IBM spokeswoman. IBM is pitching Web-hosting services to large companies setting up businesses on the Web, dot-com companies, electronic-marketplaces and ASPs (application service providers) primarily – but not exclusively – in the selected metropolitan areas, she said, adding that IBM will expand into six other cities by 2001.

The deal allows IBM to capitalize on an immediate business opportunity, Kaplan said. “Sometimes we build an IBM facility, but this is a cost-effective answer for our customers’ needs right now,” she said.

AT&T’s Internet Data Centers provide managed Internet access to AT&T’s OC-192/OC-48 IP network. AT&T will offer service-level agreements to IBM, guaranteeing IP (Internet protocol) network and Internet Data Center service availability. IBM will further extend service-level agreements to its own customers based on these guarantees.

Also, AT&T and IBM said they would bundle and market Web hosting services and products. AT&T will incorporate IBM’s Netfinity 4000R Web servers into its streaming media services for small businesses.

IBM, in Armonk, N.Y., can be reached at AT&T, in Basking Ridge, N.J., can be reached at