The format and criteria for Gartner's 2007 Magic Quadrant for global network service providers (NSPs) have changed from the 2005 edition to reflect changes in Gartner's Magic Quadrant methodology. As a result, direct comparison of the placement of NSPs between this and previous versions is not applicable. As the market evolves, what "best in class" looks like changes to accommodate new technologies and approaches, such as:

• Application-fluent networking services
• New sourcing approaches, such as the bundling of more managed services with global WANs
• New ways to construct networks, such as the virtual network operator (VNO) approach used to construct global offers (for example, by Vanco) or to increase coverage (for example, Cable & Wireless)

Although this research describes the market landscape for global NSPs, organizations with global networking needs can also employ a regional NSP strategy. This can be an attractive option where interregional traffic can be minimized or at least focused on a few global data centers. In fact, enterprises are increasingly choosing a regional strategy for their global networks because they are easier to integrate and manage and because they can be drastically less expensive than using one primary global provider.

Enterprises should ensure that their evaluations of global NSPs do not overly focus on ownership of network assets. No provider, however global, will own every piece of a global network solution. The capability to successfully integrate network elements from different sources and deliver a good overall end-to-end service are critical items for enterprises. This will become increasingly important as the demand for more global wireless services grows.

Enterprises are increasingly bundling more areas of networking into fewer contracts. It is common for global networking deals to include WAN transport, managed routers, voice — voice over IP (VoIP) and traditional voice — and remote access. Other services, such as security, managed LANs, application-fluent networking, IP telephony as a service and mobility solutions, are appearing with growing frequency. The demand for including global wireless services is also growing, but the supply isn't there because the cellular market is only beginning to mature sufficiently to consider multinational deals.

The assessment of NSPs in this Magic Quadrant increases the importance placed on NSPs' capabilities to provide value-added services beyond basic telecommunications. These bundles can simplify the operational challenge for enterprises, but seldom lead to lower pricing. They also make the challenges of vendor selection and management greater because there are many global system integrators (SIs) that can reasonably claim to do the same thing.

The global NSP market remains very competitive but with no real public price lists. A competitive bid is the best way to determine market pricing, with benchmarking as the next-best approach. Providers have been dramatically changing their approaches to qualifying their responses to RFPs, however, and enterprises should not assume that sending an RFP to a long list of vendors will result in the most bid responses and the best pricing. Gartner finds that a more focused list of between four and six providers (more in the case of a modular RFP) will result in more and better responses from NSPs.

Although many of the leaders in providing global network services may have changed their names, they are the same from five years ago. AT&T, BT Global Services (BT), Orange Business Services and Verizon Business are still the leaders in the market. The problem is that increasing customer demands for greater flexibility and for decreases in international prices to match domestic decreases have led many enterprises to look at alternatives to a single global provider.

At the same time, global providers also have been looking at alternatives. In this case, however, they have been looking at how they can run better businesses. We contend that without the domestic revenue that comes with many global contracts, the international operations of the global carriers would not be profitable. This has led some of the providers (for example, BT, Cable & Wireless and Orange Business Services) to shift operation support to lower-cost locations and others to rely more on global SIs for support.

The gap between supply and demand has created an opportunity for other providers. For example, Vanco has expanded out of its Western European base to compete globally. Regional providers, such as NTT Communications and SingTel in the Asia/Pacific region and Telefonica and TelMex in Latin America, have also started offering better and more-affordable services in their regions. So, the biggest challenge for global providers is how to stay competitive in a changing market. Some of the global providers will likely back out of trying to be global, other than through loose partnerships (for example, Sprint). Others will pursue a hybrid VNO model by owning their own domestic or regional networks and extending globally with a few partners for individual customers (for example, KPN, NTT, Sprint and TeliaSonera). However, many providers still want their own assets in key new markets, such as India and China, which they see as key future growth engines for their businesses.

The global NSP market is about to go through some radical changes. As a result, enterprises should view this market and Magic Quadrant more tactically.

Gartner's Magic Quadrant for global NSPs assesses suppliers of fixed corporate networking solutions that span multiple regions of the world. Services to be provided include:

• WAN services, predominantly managed, including Multiprotocol Label Switching (MPLS) and IPsec virtual private networks (VPNs)
• Converged voice services
• Remote access services

It is highly desirable for providers to also offer value-added networking services, including, but not limited to, application-fluent networking, traditional voice services, managed LANs, hosted or managed IP telephony, and unified communications and security services. SIs and carriers are included, but only if they provide and manage offerings that include data, voice and converged services.

To be considered for inclusion in this Magic Quadrant, providers must meet certain criteria:

• They must offer data and managed network services. They should offer other services, such as voice, to customers across multiple geographies (as defined below).
• They must be able to deliver services and/or have points of presence, if applicable, in the top 25 markets (countries) in the world.
• They must actively sell enterprise networking to organizations in North America, Western Europe and Asia/Pacific, and not just sell services in other regions for delivery in those markets.
• They must generate at least $200 million in direct global enterprise network service revenue (excluding domestic business and wholesale).
• Providers simply reselling the service from a single global provider are not included.

• Vanco
• Verizon Business (formerly MCI)
• Orange Business Services (formerly Equant)

• MCI (now Verizon Business)
• Equant (now Orange Business Services)
• Sprint no longer tries to sell services from regions other than the U.S.

Our emphasis is on service quality, pricing and track record. These elements are particularly important for global networks because the issues of infrastructure, language and cultural problems become more complicated and prolonged.

We look for a thorough understanding of what clients want in a global provider, which is different from the requirements of a domestic provider. NSPs should have a clear and evolving geographic strategy to meet the changing needs of customers. The portfolio should be broad enough to satisfy the evolving requirements of most enterprises.

Leaders have a full portfolio of voice and data products, coupled with above-average service and support, wide global coverage and competitive pricing. They have a strong vision that includes adopting more information and communication technology (ICT) capabilities, which they articulate clearly and openly.

Challengers exhibit strong operational and exceptional capabilities in the areas of service and support, pricing and coverage. However, long-term plans are sometimes vague. They may not understand the requirements of enterprises or the market, but what they offer tends to be of high quality.

Visionaries will have a clear understanding of the market and where it is going. However, they often lack the financial and people resources to execute on these directions.

Niche players are often strong in a specific element of execution (such as service and support) or a part of the product portfolio, or they offer low pricing. However, they usually lack vision and resources.

• AT&T offers high-quality network services.
• It has a broad networking portfolio and integrated contracts.
• It has extensive network coverage (especially good in the U.S.) and is continuing to invest in enhancing its international capabilities.
• It is one of only a few providers offering global voice services (public switched telephone network).

• AT&T can be inflexible with its offers. Customers have to negotiate aggressively to get what they want.
• Because of a series of "no bids" and AT&T's own comments, we believe it is limiting its focus to customer networks with a strong U.S. element.
• It has multiple overlapping MPLS offers that are confusing to customers.
• Although it was a very early proponent, it has become very conservative (slow) in rolling out outsourcing, ICT or VNO services.
• AT&T still tends to be more expensive than most other providers, especially from the U.S.
• Although AT&T continues to invest internationally, we believe its priority is the integration of domestic wireless services with its wireline offerings.

• BT has a broad portfolio of networking and professional services. Most are offered globally.
• It has flexible sourcing options and will offer anything from basic transport to fully outsourced services.
• It has extensive network coverage and national-level networks in several markets.
• BT continues to acquire new capabilities and coverage in regional markets (for example, recent acquisitions in Latin America and India).
• It is a leader in network outsourcing and ICT.
• It will have better Latin American coverage with its purchase of Comsat International.

• BT offers too many custom offerings, leading to longer sales and implementation times.
• Its prices are higher than average.
• Its U.S. visibility and capabilities are limited outside of the financial vertical industry and security services via BT Counterpane.
• It has significant integration challenges with its constant stream of new acquisitions, and past examples of its lack of or slow integration of companies such as Infonet does not bode well.

• Cable & Wireless is one of the leading users of MPLS interconnection with national operators for domestic coverage.
• It is very flexible with its contract terms and conditions.
• It is very competitively priced.
• It has substantial international cable assets on major routes.

• Cable & Wireless is subscale in enterprise network sales and services and doesn't have enough global partners.
• It offers too many custom solutions, leading to longer sales and implementation times.
• It lacks advanced managed services outside the U.K. (LANs, PBXs and application-fluent networking).
• Despite a fairly stable corporate strategy during the past 18 months, Cable & Wireless' past contradictory marketing and its record of pulling out of markets and radically shifting strategies have many companies not willing to trust it. Although this lack of trust is unwarranted, the latent mistrust points out the lack of success in Cable & Wireless' marketing.
• It lacks any significant customer visibility outside of the U.K.

• Global Crossing is very aggressive with its pricing.
• It has a strong focus in Latin America with its purchase of Impsat.
• It is flexible with its contracting terms.
• It offers public voice services in the U.S. and the U.K.
• It is leveraging the security capabilities it gained from serving the U.K. government to service other markets.

• Global Crossing's financial position is not as robust as its major competitors. It has limited reserves, which are at risk if it does not meet its aggressive financial targets.
• Outside the U.K., its portfolio is limited to basic WAN and router services, and it lacks value-added services, such as LAN management, IP telephony and mobility.
• Global Crossing's Asia/Pacific services are inconsistent because they are based on multiple opportunistic partnerships with regional providers. This is not likely to change until it sees a suitable opportunity for acquisition.

• Orange Business Services has the broadest network coverage of any provider.
• It has the broadest portfolio of network and ICT services.
• It takes a product factory approach to enable proven repeatable solutions.
• It offers flexible sourcing options from basic transport through managed services to full network outsourcing.

• Its pricing is higher than average, especially for the connectivity elements of a solution.
• Many customers report that Orange Business Services is not particularly easy to do business with.
• Ongoing language problems at the customer service center in Rio will continue to damage trust if they are not resolved, especially as they follow significant problems (now resolved) with the migration of another customer service center to Cairo.
• It tries to bundle too much into its offers in the U.S. and Asia/Pacific, where most customers want more-basic offerings.

• T-Systems offers one of the fullest ranges of professional and IT services.
• It has renewed its bid responsiveness due to the creation of a dedicated international networking sales force.
• It has a strong Western European and vertical market emphasis.

• It can appear expensive because of its tendency to bundle additional services into deals.
• T-Systems' network presence is smaller than its infrastructure-owning competitors and, although it has extended its reach via partnerships with Orange Business Services and Vanco, this still presents issues (for example, serving sites in any markets where its network coverage is lighter than those of its partners).
• It has small sales operations outside of Western Europe.
• T-Systems' stated strategy to seek a partner for the IT part of its business is leading to uncertainty regarding its strategy for international networking.

• Vanco offers high-quality managed WANs and remote access services, especially in Western Europe.
• Its customers report a high level of service satisfaction and responsiveness.
• Its pricing is typically competitive.
• It has experienced strong growth and is profitable as an international provider.

• Vanco's value-added offerings (LAN, PBX, voice and mobile) are growing but immature.
• It has limited ICT and professional service capabilities.
• It tends to push customers to purchase on-site equipment upfront, rather than spreading the costs over the contract term.
• It is relatively unknown outside of Western Europe.

• Verizon Business' non-U.S.-based contracts tend to be competitively priced.
• It has a strong and growing international portfolio (expanding such services as VoIP, call center, LAN and convergence to the rest of the world).
• It has strong global network coverage (national networks in key countries and expansion into some developing markets).

• Its customer experience outside the U.S. is inconsistent.
• It is very product-siloed rather than solution-focused (for example, no linkage between remote application management [totality] and application-aware VPNs. This may change with a new organizational structure, but it is too soon to tell.
• Despite a recent reorganization to create more integrated service offerings, we believe that Verizon Business has been more distracted on the U.S. side of its global business because of bigger U.S. investments and priorities in wireless and consumer broadband.