Diversity looks good to the enterprise

Duke Energy Corp. prides itself on offering solid-state service to customers. Too bad the company’s voice provider can’t say the same, according to Duke’s IT director in Canada.

“A few weeks ago we had an outage that caused us to lose our 519 (area code) inbound and outbound for almost 10 hours,” said Gord Lamb, Duke’s director, Canada IT infrastructure in Chatham, Ont. “That’s pretty significant for our business.”

Duke uses Telus Corp. for voice connectivity in Alberta, B.C. and Ontario. The energy firm has done so for three “frustrating” years, Lamb said.

Yes, Telus fixed the 519 problem, but the experience “brought to our attention… their lack of redundancy from both the switch level and the circuit level,” Lamb said, explaining that the situation somewhat diminished Telus in Duke’s view.

Duke is mulling its options as the Telus contract winds down. The energy firm is considering mixing service providers, of perhaps scoring connections from local carriers, rather than hitching itself to one national operator.

Telus is still in the running for Duke’s business. “They’ve come a long, long way, no doubt about it,” Lamb said, explaining how the carrier has largely improved its service.

But the next time the energy company goes shopping for connectivity, Duke plans to employ a communications strategy that just “makes sense” for the firm, be it a combination of carrier services, or perhaps offerings from a single provider. However, considering the frustration Duke experienced with Telus, Lamb said that last option seems less likely.

Duke isn’t alone in second guessing the all-in-one service provider option, says Greg Carr, president of Teldata Control Inc., a communications consulting firm in East Rutherford, N.J. He notes a trend away from consolidation during these troubled times for the telecom industry.

In the mid-’90s companies went looking for bargains. The hunt led them to carriers peddling low-priced packages. Service providers such as Telus and Clinton, Miss.-based WorldCom offered competitive and comprehensive connectivity; local and long-distance as well as various data services became the proverbial eggs in one basket.

But times have changed. WorldCom is no longer the stalwart of stability it once appeared. Other supposedly rock-solid carriers now simply on the rocks prove that the malaise lingering over the telecom sector affects not only upstart competitors, but also the big guys.

“The whole sector is taking a hit,” Carr said. “Whether these firms are going to be around is a question.…People are saying, ‘We can’t have all our eggs in one basket anymore.'”

As a result, companies are more conscious than ever of who gets their business, and how much they get, Carr said. Whereas an enterprise might have given 90 per cent to one service provider and 10 per cent to another back in telecom’s heyday, it’s more likely to split costs 75/25 today.

According to some industry insiders and observers, the hunt for solid single-carrier service is not only frustrating, but also a bad idea. If the carrier’s network goes offline the customer has no backup for service.

Others, however, suggest consolidation might be the only option for corporate Canada, thanks to our relatively small population of carriers and the equally small pool of choices they comprise.

So is Carr’s observation a U.S.-only thing, or a cross-industry and pan-North American trend? The answer depends on whom you ask.

According to Samantha Kane, a founding partner with Kane-MacKay & Associates Ltd., a telecom consulting firm in Belleville, Ont., consolidation makes no sense. For one thing, companies wooed by promises of cost savings might end up paying more than they have to for service.

“It used to be that you wanted to go to a single environment because you felt that you could get more bang for your buck,” Kane said. “But that’s not the way it works.”

Let’s say an enterprise wants to use Telus for connectivity across the country. Duke Energy’s Lamb said Telus leases infrastructure from Bell Canada in Ontario. That carrier-to-carrier leasing agreement could add cost to the enterprise’s contract with Telus – an expense that could be avoided if the enterprise dealt with Bell directly in Ontario, Kane suggested.

She said Carr is “bang on” with his observation, whether in Canada or the U.S.

Besides the dearth of solid cross-country coverage, “the reality is, people rarely stay with one carrier anymore, for contingency reasons and disaster recovery.”

Others disagree. Mark Cheers, for one, said ECWebworks Inc., the Burlington, Ont.-based application service provider where he works, is happy with its single data carrier – WorldCom, no less.

“We have a primary circuit and a secondary circuit, and between them we were down two hours out of the year,” Cheers said.

Although he agreed it’s prudent to diversify, it’s not always necessary. “It’s something we have considered, but because of the service we’ve had, not seriously.”

Don Corbett figures Canadian companies have little choice but to consolidate to a certain extent. Corbett is the acting vice-president of Contour Telecom Services Inc., a telecom consultancy in Toronto.

Canadian firms have less choice than do their U.S. brethren, he said.

“The States have much more of a ‘bird’s nest’ of suppliers – Regional Bell Operating Companies (RBOCs)… But in Canada, let’s look at the truth: How much do the ILECs (incumbent local exchange carriers) have? Ninety-five per cent of the market belongs to Telus and Bell.”

Like it or not, Canadian companies have little choice but to make deals with one or another incumbent such as Aliant in the east, Bell in the middle and Telus out west, he said.

Corbett also said the incumbents are doing their darnedest to make consolidation the right choice for enterprises.

“At this juncture, to keep companies from choosing different carriers, you’ve got Bell West lighting up Alberta, and you’ve got Telus coming into Aliant territory in the east.” And as the carriers stretch into new markets, they are better positioned to provide all-in-one service for national firms, he said.

But that’s not the way Lamb sees things. As far as he’s concerned, “there doesn’t appear to be a single provider that can deliver Canada-wide service yet.”

Telus dropped the ball with Duke, particularly in areas beyond the carrier’s classic operating space, he said.

“It has been a struggle in Ontario.”