IP Data & Services: Sprint Ahead of the Crowd

What a difference a year makes. Last year, WorldCom was a clear VAR favorite for business-class IP services. This year, in the wake of its infamous financial wheeling and dealing, WorldCom is operating in Chapter 11 bankruptcy, while Sprint has emerged as the hands-down winner for the IP and data services category in the 2002 VARBusiness Annual Report Card (ARC) survey.

Report Card Score

Sprint scored victories in three out of four subcategories: product innovation, support and partnership,and was a close second to industry giant AT&T in loyalty, giving it an overall average of 71. AT&T's overall score of 66 put it in third place, just behind Qwest, which scored 67. WorldCom's overall 2002 score was a last-place 63.

With 42.5 percent of the IP and data transport market, AT&T is still the dominant player, but Sprint should soon move past WorldCom into second place, says Jim Clayton, a San Antonio-based analyst with market research firm Frost & Sullivan. WorldCom had 23.9 percent of the market share compared with Sprint's 22 percent, in Frost & Sullivan's most recent research, but the uncertainty surrounding WorldCom's financial condition will drive customers toward the competition, Clayton says.

Stability and reliability of the carrier are the most important criteria to end-user business customers in selecting an IP carrier, Clayton says. That means WorldCom will probably lose market share, despite company insistence that it may be down, but not out.

WorldCom spokesperson Jamison Gosselin insists the company "is on track to emerge from Chapter 11 as a healthy, viable entity by mid-2003. With determination and focus, WorldCom plans to recapture first place in 2003," he says.

Whether or not WorldCom's ambitions are wishful thinking, Sprint and AT&T may also pick up market position from Qwest, which has had to restate earnings and is under SEC investigation. In 2001, Qwest had 3.3 percent of the IP market, Clayton says.

Meanwhile, Sprint is delighted at its high ratings from VARs. "The ratings speak to the stability of Sprint and its partner program," says Darlene Daude, Sprint's manager of indirect channel marketing. "We have had a partner program for over 10 years and are continuing to enhance it...Happy customers make happy partners."

Sprint scored first or second on every criterion rated in the ARC survey, including wins on key criteria such as overall revenue/profit potential and quality of tech support. The communications company has the best solution provider program and is the easiest with which to do business, surveyed VARs say.

Those wins are no accident, according to Daude. "We continue to execute on our commitment to make it easy to do business with Sprint," she says. "A couple of years ago, we formed an integrated services organization (ISO). The ISO comprises a centralized location of presales and postsales support representatives who provide everything from engineering the network to order-tracking all the way out to customer care."

With 42.5 percent of the market, however, AT&T still dominates the industry, not only edging out Sprint on VAR loyalty, but also scoring first on product quality/reliability and on richness of features.

When VARs evaluate services of IP and data services vendors, they should keep in mind that the most important criterion to most customers is an offering of "integrated services that provide interworking of technologies that allow the enterprise to easily migrate to next-generation technologies at its own pace," Clayton says.

One of those "next-generation" technologies remains data transport over IP for most businesses, according to Clayton. Only 3 percent to 5 percent of data-transport revenue is generated from transporting data via IP-based solutions, he says, a figure that will only gradually increase to 13 to 14 percent by 2008.

"Everyone today is in a survival mode," Clayton says, meaning businesses are much slower to adopt new technologies than they were a dozen years ago, when frame-relay and ATM technologies hit the market. "Many companies are looking at IP-based services," he says. "But I don't see widespread adoption for another two to three years."