KPN-Qwest starts search for UK ally

Acquisition sought for IP network, reports Andrew Craig in Venice.

Transatlantic IP network alliance KPN-Qwest is planning to buy an ISP in the UK, but must first decide whether to float off part of the company.

The Dutch-American alliance, announced in November, is building a pan-European IP-based network by connecting Qwest's north American network, its Eunet internet backbone business in Europe and KPN's European network.

But the alliance does not cover all the continent, notably the UK and southern Italy where Eunet does not have a presence. It recently added Germany to its coverage when it bought the country's number two ISP, Xlink, last month.

Jack McMaster, Qwest's executive vice president, said: 'We plan to go in and out of the UK via London, but we're somewhat limited because Eunet does not have a UK presence. We believe the UK footprint requires some reinforcing.'

The acquisition target could be an ISP or a hybrid ISP and local provider, he added, but conceded that the company was not actively talking to any candidates.

But any acquisition activity will have to wait until the boards of KPN and Qwest, which each own 50 per cent of the joint venture, decide whether to float part of the company. Most of its rivals, such as Global Crossing, Viatel and Level 3, are publicly quoted.

'It has been observed that KPN-Qwest would be an attractive company if it were to float equity,' said McMaster. 'My expectation is that's the path we'll follow.'

In addition to the UK and southern Italy, KPN-Qwest is eyeing eastern Europe. 'There is a strong belief that eastern Europe is going up the technology curve. However, in Italy and the UK it is a case of finding the right match, while in eastern Europe it is a case of timing the deployment of capital,' he said.

Hewlett Packard is planning a suite of products that will enable internet-connected devices to automatically conduct transactions and access pay-per-usage software online, invisibly to the user.

The products will be scalable, enabling tasks ranging from updating healthcare information on smart cards or mobile phones, to accessing enterprise software applications using PCs.

Details of the products were revealed at the IDC Telecoms Forum last week, where HP disclosed further details of its internet-focused business.

Full details of this and other products are expected within the next two months.

CARRIER-CLASS ROUTERS ON A PROMISE

KPN-Qwest will provide voice over IP and ATM for European businesses, subject to hardware equipment vendors delivering carrier-class routers on schedule.

Cisco, Sun, Lucent and others have promised IP-grade routers with carrier-class quality for voice by the end of the year. KPN-Qwest wants to use these products so it does not have to deploy circuit-switched equipment on its network in order to offer voice services.

Jack McMaster, executive vice president at Qwest, told PC Dealer at the IDC European Telecoms Forum: 'The choice is to put in a circuit-switched layer to go after voice traffic, or to bet that in the next couple of quarters there is going to be carrier-quality routing.' KPN-Qwest hopes to offer packetised voice over ATM for corporates and voice over IP for smaller carriers in Europe.

'I'm hoping the Ciscos of the world are going to be able to take IP-oriented routers out of the labs fast enough for us not to have to deploy circuit switched,' said McMaster. Whether the equipment will be ready by the end of the year will become clear in the second quarter, he added.

'If it turns out that it's not going to be ready, I would make a moderate investment in circuit-switched architecture,' he said. 'If there are going to be voice-driven applications that cannot take one iota off your vision, then we'll do it.'