The pan-European network service provider market continues to contain a broad spectrum of providers, each with its own geographic and service coverage. Service differentiation in 2007 came from tying the data center to the network and delivering optimized environments with hosted communications, application acceleration and application service-level agreements (SLAs). Such offerings can be quite different in terms of how providers specify, deploy and support them, so organizations should look in detail at the extent to which these match their needs, and at the geographic limitations for different providers in terms of sales and support.

The format and criteria for the 2007 Magic Quadrant have changed to reflect the development of distinct Magic Quadrants covering network service provision (for global and regional Magic Quadrants, such as this one) and managed and professional network services (global and North American Magic Quadrants). Although managed and professional network services have a clear role to play in the network service provider market, the underlying provision of network services is the common link for this Magic Quadrant. Thus, IT services companies that deliver network services only as part of a wider IT outsourcing portfolio are excluded from comparison here. As a result, comparison between this Magic Quadrant and the 2006 version is not applicable.

The pan-European network service market continues to show modest growth, as user organizations leverage their international presence to achieve more economies of scale across a widening range of network services. The providers in this Magic Quadrant have tended to broaden and deepen their service offerings to compete by investing in infrastructure, technologies, sales, service and support.

Although the range of providers in the pan-European network service market is as large as ever, there have been relatively fewer outsourcing mega-deals than in previous years, but a burgeoning market for smaller network deals. As a result, network-focused providers have started to concentrate on the creation of replicable building blocks for service delivery, which can be driven profitably toward smaller deal sizes. For this reason, full outsourcers, such as IT service providers that focus only on the managed service layer or above, have been excluded from this year's Magic Quadrant. Providers that are included cover the full spectrum of network-focused providers, from infrastructure-centric operators, through to virtual network operators (VNOs), with those in between that mix their own infrastructure with interconnects to other carriers.

In addition to deploying more Multiprotocol Label Switching (MPLS) nodes, enhancing access options and extending the reach of their Ethernet service offerings, most providers have expanded their carrier relationships to extend network reach through network-to-network interfaces (NNIs). MPLS interconnects (NNIs) are being used by an increasing number of providers to improve network reach through partnerships with other providers in different markets. Although MPLS and IP virtual private networks (VPNs) remain the most common network solutions sought by organizations, a range of Ethernet services, including virtual private LAN services are rapidly being deployed by providers as an alternative, and growth in this market has been faster than expected. Ethernet interconnects are also becoming more common, particularly for metropolitan Ethernet services.

Providers have extended their reach from the network into the data center and toward the desktop. The relationship between the network and the data center is a common theme in the new wave of services being delivered, with hosted communications applications, such as hosted IP PBX, hosted contact center or IP Centrex, being heavily promoted. Network-based application performance improvements, such as application acceleration or WAN optimization services, have been developed and promoted. The most-advanced network application service offerings include end-to-end, service-level guarantees. In some cases, these SLAs provide guarantees of business outcomes.

With all the carriers in the 2007 Magic Quadrant having achieved a measure of financial stability and performance, the focus is on extending the vision for the network as the enabler for the data center to the desktop and as a platform for unified communications, and on executing on the vision outlined in the past. Vendors that have done their best in this Magic Quadrant have tended to overachieve on what they set out to do in 2006. In addition, they have clearly defined routes for achieving their 2008 goals.

This market is for the supply of enterprise data and voice services, spanning multiple European countries. These services may be delivered as unmanaged connectivity, managed services or outsourced networks. To qualify for inclusion, suppliers must be able to take prime contracting responsibility for the provision and ongoing operational support of network-only projects in Europe. The organizations delivering these services are primarily telecommunications operators and VNOs.

To be considered for inclusion in this Magic Quadrant, providers must meet all the following criteria:

• Offer voice, data, managed network services and value-added services to enterprise customers across multiple geographies in Europe.
• Be willing to bid for stand-alone European network-only contracts with a total annual run rate of as little as €500 000.
• Have sales and support and deliver services to customers based in the U.K., France, Germany and Italy, plus at least one of the following regions: Benelux, Southern Europe, the Nordic countries, or Central and Eastern Europe.
• Generate at least €100 million in enterprise network services revenue contracted in Europe (not merely revenue for delivery in Europe under contract from non-European sources).
• Not simply resell network services from other providers in Europe.

KPN

Atos Origin, CSC, EDS, HP and IBM do not meet our revised inclusion criteria.

Our emphasis regarding ability to execute continues to be on service quality, the match that the provider brings to its target customer base and how well this covers the wider requirements of organizations requiring Pan-European network services. In addition to having a good track record of meeting customer requirements pre- and post-sales, providers that scored best here not only had a broader service portfolio, but were able to deliver it in a more uniform manner to a wider range of customers.

A continuing focus on the sales strategy for addressing customer needs geographically and functionally weighed heavily in the score for completeness of vision. Organizations with a wider portfolio of network-centric services and a stronger road map for service development scored better than those that had more-constrained plans to develop their offerings. In a fast-developing market, providers need to be innovative in terms of their product offerings just to keep up.

Leaders have a full portfolio of voice and data services, including relatively new offerings in areas such as application-aware networking, WAN optimization and hosted communications applications. These services will be delivered with good quality across a wide area of coverage at competitive prices by account teams that are typically closer to the customer. Leaders have a strong vision of the market and their role in it, and they will typically be able to address a wider range of customers (in terms of size, geography and service requirements) with their service offerings than others in this Magic Quadrant.

Challengers offer a good portfolio of voice and data services, with strong operational capabilities. However, their long-term plans may be vague, undifferentiated or focused around themselves rather than the market's needs. They are likely to have more-limited new service capabilities than leaders.

Visionaries have a strong understanding of the direction of the market and their position in it. They typically have a strong road map regarding new network service offerings. However, their delivery capabilities will be more limited, or their ability to execute on their vision may be constrained by financial or operational limitations.

Niche players do not address the full range of market needs covered in this Magic Quadrant. This may be a deliberately focused strategy, or they may lack the necessary investment or broad vision to serve the needs across the whole market. However, they may excel in a specific subsegment, such as a vertical industry, a product or service area, a specific sourcing model, a geography or a particular customer demographic.

• AT&T is extending its reach with a core IP network refresh and expanded use of what it calls its "rent model," which is essentially a VNO approach to access services in international markets.
• It has a class-leading customer service portal that provides excellent management information.
• AT&T is extending its capabilities through acquisitions. It acquired application management capabilities from its purchase of USinternetworking, and enhanced its LAN and PBX management services by acquiring these capabilities from IBM.
• It has a long-established IP voice service in conjunction with its Ethernet VPN MPLS offering, which provides a set of tangible (if unique to AT&T) metrics for measuring voice quality.

• AT&T generally only bids on larger European deals, or those that involve connectivity beyond Europe.
• It tends to be inflexible when enterprises want things outside of its, admittedly broad, standard product offerings.
• AT&T's hosted applications and networking services are being integrated, but they do not yet offer the same level of end-to-end coordination as more-mature offerings in this space.
• Its pricing is expensive where deep in-country coverage is needed.

• BT Global Services has a Europe-wide MPLS network, with deep capillarity in several countries (U.K., Italy, Spain, Germany, Ireland and the Netherlands) and relatively uniform service levels across the network. A new willingness to form NNI partnerships has extended BT's reach in, for example, Russia.
• It has a strong portfolio of managed service options, including managed security services and application optimization.
• BT has a strong vertical focus in sectors such as finance, health, automotive, oil and gas, which include network and network-related IT services.
• It has an established track record in full network outsourcing for large and small clients.
• BT has developed a good strategy regarding converged IP voice and data for customers looking to go with a single network solution.

• BT is expensive for simple or unmanaged requirements.
• It does not have a strong Ethernet offering and prefers to focus on its MPLS solutions.
• BT recognizes the need to deliver reusable components in service offerings, but these services are still relatively immature in BT.
• A conservative approach to integrating BT's many acquisitions has led to delays in achieving a homogeneous offering.

• Cable & Wireless has extended its western European backbone with new central European nodes and good use of NNIs, with aligned SLAs to extend its reach across Europe.
• It is investing a lot in improving its customer experience pre- and post-sales.
• Cable & Wireless is price-competitive, particularly regarding international IP voice, where it leverages its strong wholesale position.
• It is prepared to offer flexible and innovative commercial arrangements, including business impact SLAs, engaging as a second supplier for major customers and managing third-party networks on behalf of the customer.

• Cable & Wireless's portfolio, although extensive, is not as broad or as deep as leaders in this market, particularly in terms of WAN optimization and application acceleration capabilities outside the U.K.
• Its technical solutions for supporting improved customer experience lag those of the leaders in this market. It has limited functionality and client coverage for its self-service portal.
• Cable & Wireless has limited in-house resources to support customer premise-based solutions outside the U.K.

• Colt is aggressive in bringing Ethernet services to market.
• Its hosted service portfolio continues to expand. Intelligent use of a shared service architecture, along with more-flexible pricing models, is enabling it to deliver services such as hosted voice or e-mail delivered over the network on a utility basis.
• New capabilities in the financial services sector, such as proximity hosting, are leveraging Colt's long-standing relationship with this industry and its investments in Ethernet.
• Colt's hosted IP telephony services with bundled calling provide a predictable and reasonably competitive pricing model for voice.

• Colt has limited capabilities to deliver value-added services with a significant on-site component, such as managed LANs and PBXs.
• It has a small but growing range of solutions that harness and coordinate products from across its portfolio; however, most service offerings remain siloed, with limited alignment in areas such as SLAs.
• Although Colt's long-standing preference to bid only on projects it can mostly serve from its own network footprint is receding, it is still less competitive when connectivity is required in countries beyond its predominantly western European coverage area.

• Easynet's network covers the major European markets, including some with deep in-country coverage, down to its own DSL. This is combined with partnerships to extend reach into smaller markets.
• It is leveraging its strong hosting offering to build managed hosted services.
• Easynet has made extensive use of tools and automation to improve the customer experience that it offers.
• An increasing use of channel sales is enabling it to extend its customer reach.

• Although it has some large corporate customers, Easynet does not have the scale to support the largest multinational company needs or those headquartered outside its core network countries.
• It does not typically offer customer premise-based solutions, such as managed LAN or IP PBX.
• Because Easynet is not a full VNO outside its own network, enterprises with requirements that are mostly based in its partner geographies are likely to find better pricing and service management elsewhere.
• Easynet has been slow to develop and deploy its IP voice capability. Until recently, it relied on wholesale partnerships.

• A focused approach to core IP network services has enabled Global Crossing to build a platform for the delivery of hosted unified communications.
• It continues to have particular strengths in secure network services that meet government and military standards.
• Global Crossing has a primary focus on government and midsize corporate customers, although it will also position itself as a second supplier to larger multinational companies.

• Global Crossing's own network does not cover most of the central and eastern European markets. Its financial position, although stable, 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., Global Crossing has limited on-site, value-added service capabilities.

• Interoute has an extensive fiber network, both inter-city and metropolitan, in western and eastern Europe.
• It offers some innovative applications that leverage the network to provide, for example, data center failover, public voice over IP and unified communications federation.
• It makes good use of components to build custom-made solutions.
• Interoute has tailored vertical industry offerings in sectors such as media and publishing.
• Its pricing is typically competitive.

• Interoute is less well-positioned to deliver networks requiring deep in-country coverage.
• It is not well-placed to support customer premise-based services, such as managed LAN or IP PBX.

• KPN can deliver network outsourcing and managed network services, and has proved capable of taking contracts ranging from a single site to sites valued at hundreds of millions of euros.
• The acquisition of Getronics should significantly enhance KPN's managed services and information and communication technology (ICT) capability, especially in the Netherlands, the U.K. and Belgium.
• KPN has extended its capabilities in countries such as Poland and Turkey, following its strategy to invest in operators in emerging countries.
• It moved to a fully integrated customer portal covering its full-service range as far back as 2002, meaning its management information capability is more mature than most in this Magic Quadrant, and covers its full range of voice and data services.

• KPN is not investing heavily in deep capillarity in-country, relying instead on partners to provide this, which will create challenges in delivering a homogeneous service experience.
• Many of KPN's innovative vertical industry offerings, such as healthcare and energy management, are only applicable in limited geographies, particularly the Netherlands.
• It has limited ability to deliver on-site managed services outside the Benelux region, although this situation should be significantly improved by the integration of Getronics.

• NTT Communications offers a wide range of value-added services, including LAN management and application acceleration.
• It has core network offerings: MPLS and Ethernet in the major western European markets and NNI relationships for other countries.
• Growing capabilities in content delivery networks provide NTT with an advantage in this generally global marketplace, ahead of many of the providers in this Magic Quadrant.

• NTT's European network coverage and in-country sales and support continue to be significantly less extensive than those of others in this Magic Quadrant.
• Its strong hosting offerings are not integrated with its networking offerings.
• Although application flow monitoring has been added to the portfolio, NTT does not deliver end-to-end application SLAs.
• It has a rather limited voice offering, which is tied to the delivery of the data network.

• Orange Business Services has regained its position as the benchmark for execution, particularly regarding customer service.
• A new structure, with a separate European head, is renewing Orange's focus on its core markets across western Europe.
• In addition to having one of the broadest network footprints and a full portfolio of network services, Orange is growing its ICT business, launching additional capabilities around networked application management and Information Technology Infrastructure Library life cycle.
• Orange tends to use its own network and staff for core services and competencies, which results in more-predictable SLAs across the network. It has its own national networks in several markets, including in France, Russia and Poland, and it plans to leverage the networks of the Orange mobile and consumer ISP entities to improve its national coverage elsewhere in Europe, down to the unbundled local loop.
• A wide range of discrete and shared voice services, with an array of classic and seat-based pricing models, gives Orange added flexibility in delivering IP voice.

• Orange's pricing tends to be higher than average.
• It has become choosier about the business it goes after, and it has either "no bid" or "declined to bid" more often than in the past, particularly when it is competing only on price or if it cannot leverage any network differentiation at an international level.
• Orange has gained a reputation for being slow to deliver, simply because it overpromises, rather than because it is slower than other providers to deliver network connectivity.
• It lacks a strong legacy switched voice footprint, except in France, Poland and Spain.

• SITA goes where its air transportation customers go. Therefore, it has in-country operations in a diverse range of locations.
• Its core business is serving the air transport industry, which includes airlines, airports, airfreight, ground handlers, customs and immigration, and government and nongovernment organizations. Recently, SITA has expanded its coverage to deliver services to other transport-related industries, such as railways, ports and container terminals.
• SITA has innovative value-added service offerings for its target industries — up to and including transformational offerings.

• Despite the widening of SITA's target customer base, it remains narrowly focused on the air transport industry and closely related sectors. Thus, it will not offer services to many readers of this Magic Quadrant document.
• SITA's ownership structure and strong commitment to Orange Business Services limits its ability to respond flexibly in areas such as contractual terms, acquisitions associated with outsourcing deals or service provider partnerships.
• It tends to have above-average pricing for service components such as MPLS and voice, but it makes up for it, in part, by its network design approach.

• T-Systems has renewed its focus on the network business, including the creation of a dedicated networking sales force.
• Enhancements to T-Systems' own MPLS network and partnerships with Orange Business Services and Vanco have improved network coverage.
• T-Systems tends to have a broader view of corporate needs, thanks to its IT services business. As a result, it is well-placed to bring innovative, transformational ideas to its customers.
• It has a strategy of creating in-country service capabilities as it reaches relatively low levels of critical mass (typically, two to three customers). As a result, it has rapidly increased the range of countries it serves, with a direct T-Systems' support presence during the past few years.
• Limited legacy products mean that T-Systems can concentrate on IP voice offerings.

• Although growing, T-Systems' network presence is smaller than the leading infrastructure-owning competitors.
• It has lower marketing visibility for its network services than for its IT services outside Germany. As a result, T-Systems is not considered as widely for network-only deals.
• A heavy reliance on partner networks — but without the active management of a VNO to obtain best pricing — combined with a tendency to bundle additional professional services into deals can make T-Systems expensive, especially for network-only deals.
• T-Systems has stated in press releases and its earnings call on 9 August 2007 that it is "seeking a strategic partner for ICT." The potential impact of such a partnership on T-Systems' networking strategy creates uncertainty regarding its direction.

• Vanco's core focus remains the provision of high-quality managed WANs and remote access services, especially in western Europe.
• It is expanding the range of services it manages to cover: fixed and mobile voice, LANs and PBXs.
• Network management centers and customer support offices in a number of European countries provide a local interface between Vanco's customers and the network providers delivering the network, making Vanco more responsive than other providers using third parties.
• Vanco's pricing is typically competitive, especially in difficult-to-reach locations, where its relationships give it a pricing edge over other international providers.
• It has experienced strong growth and is profitable as an international provider.

• Vanco's value-added offerings (LAN, PBX, voice and mobile) are immature compared with its WAN capabilities.
• It has limited ICT and professional service capabilities.
• Vanco tends to push customers to purchase on-site equipment upfront, rather than spreading the costs over the contract term.

• Verizon Business has widely available DSL coverage across most of Europe and MPLS coverage with deep capillarity fiber in countries such as the U.K. and Germany. It has strong Internet VPN, Ethernet and voice offerings.
• It has a rapidly broadening product portfolio in managed service areas such as IP Centrex, hosted applications, security, and application-level networking and application management. These services tend to appear faster in Verizon's European portfolio than is the case with other non-European providers in this Magic Quadrant.
• Verizon bids on national and Europe-wide business. Its national account team focus is well-positioned to deal with in-country needs.
• It continues to have competitive pricing.

• Verizon is still very product-oriented, with less focus on solutions or vertical industry offerings than other leaders.
• Its customer experience in Europe, while improving, lags behind the best in the market, requiring the customer to be more proactive regarding, for example, SLA and fault management.
• Verizon has broken its "glass ceiling" on how far up the service stack it is willing to go, but its new strategy lacks some definition, particularly regarding how it will engage with IT services partners.