Dutch telecomm operator KPN said it plans to "leapfrog" into the IP market in partnership with US carrier Qwest, owner of European Internet provider EUnet.
KPN will link its pan-European fibre optic backbone with Qwest's fibre optic network in north America, in a joint venture expected to generate revenues of around $400 million next year, and grow by 40 per cent annually thereafter.
The KPN-Qwest partnership, due to launch in January, will provide international broadband IP services to ISPs, content providers and other communications providers in Europe and north America.
Qwest will gain an international partner that it badly needs to compete internationally with rival US carriers such as AT&T, Sprint and MCI Worldcom, according to analysts.
"The bar has been significantly raised in Europe. Qwest could not play without a big European position," said Jo Sawyer, an analyst at Forrester Research in Amsterdam.
EUnet, acquired by Qwest in April, is a major business Internet access provider in Europe with nearly 84,000 customers, and will also play an important role in the partnership the companies said.
But EUnet did not provide Qwest with the European strength it had hoped for, said Sawyer. "Qwest got a lot of more than it bargained for with EUnet. They were very decentralised, and their network needed a lot of infrastructure upgrades," he said.
Overall the KPN-Qwest deal is a good fit, said Sawyer. EUnet's hub is in Amsterdam, where KPN is based, and KPN has been trying to fill the hole left by the departure of AT&T from Unisource, a joint venture which includes KPN, he said.
AT&T is leaving Unisource to partner with BT. Sprint is part of Global One, a partnership with France Telecom and Deutsche Telekom. Worldcom is expected to open its European network next week, and Cable & Wireless announced plans this week to build a pan-European network connected to its Internet backbone in the US.
Qwest has nearly completed an 18,499 mile fibre optic network in north America. This will connect to KPN's 2,000 mile European network called Euro Rings which serves major cities in the UK, Germany, France and Benelux. The venture will extend the network by a further 6,800 miles.
The creation of Euro Rings has enabled KPN to partner with Qwest "and make a leapfrog move into the IP market," said Wim Dik, chief executive of KPN.
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