Concert Communications Services
Encyclopedia
Concert Communications Services was a $1 billion joint venture, originally launched June 1994 by BT Group
and MCI Communications
. Portugal Telecom
became a partner in 1997.
Concert was the first multi-service global end-to-end telecommunications provider , which broke the global national telecom monopoly
on both international and in-country services. Its aim was to provide single deliverer end-to-end connectivity to multinational corporations. Its speed of global service coverage and availability was gained by leasing bandwidth from national telecoms companies, unlike competitors like FLAG
or Global Crossing
who physically laid cables in oceans, roads and pavements.
After the breakdown of the BT/MCI relationship, it became a joint venture between BT and AT&T
in 1999. After BT and AT&T's relationship broke down in 2001, Concerts assets were split between the two parties and merged into their regional operations in 2002.
culture, and create a strategy to develop to create a global-level competitive group . This needed two deliverables in the business plan:
Concert was developed to address the second deliverable - the conductor of global business. It was recognised in the strategy for Concert, that the organisation (i.e. - BT and Concert combined) could not own the world - nor would it want to, as some markets may be key to certain customers, but not to the overall strategy. Secondly, the regulation of global communications was broken down into both national, regional and global based regulators - to address them all would be highly complex, but most importantly slow rollout speed of the service. Resultantly, Concert had to be seen to be an independent organisation of its founder BT.
It was decided to locate Concerts global HQ in North America, the largest global telecommunications market. Reston, Virginia
was chosen as it was both easily accessible from Europe, and sat in the then developing telecommunications and technology corridor of northern Virginia. Concert started building its Global network in 1993 ; unlike its competitors FLAG and COLT who physically built their network using their own assets, Concert grew rapidly by purchasing capacity from other TelCo's.
and Deutsche Telekom
about the same idea ), launched Concert Communications Services, a $1 billion joint venture between the two companies . MCI had been in trouble for a while and needed cash - while BT needed a partner for CONCERT and access to the North American market: BT resultantly bought 20% of MCI to secure the deal, and inject the needed cash .
Concerts aim was to build a network which would provide easy global connectivity to multinational corporations . A series of Concert products were announced, which were based on Concert's global delivery platform, to fulfill its stated mission to develop a portfolio of enhanced telecommunication services targeted at multinational corporations. These services were available to purchase from both the owners, plus a series of partners who signed into the Concert global platform around the world . Concert's portfolio of services included :
According to Concert, by August 1995 Concert products encompassed approximately $700 million contracts with 2,000 customers in 40 countries and 800 cities .
The problem with the Concert arrangement was that, to over come regulation, the three companies (BT, Concert and MCI) were separate . Each had its own board, sales force, operations team and billing engine for instance . This made delivering truly global deals virtually impossible - the only Customer Managed Service that progressed to delivery was with Dow Chemical.
Portugal Telecom
(PT) also joined the alliance in 1997, but it didn't buy any share on Concert: it would only be the distributor of Concert services in Portugal. BT and MCI bought, respectively, 1% and 0.5% of PT.
The merger proposition gained approval from the European Commission
, the US Department of Justice and the US Federal Communications Commission
and looked set to proceed. However, after BT reduced its offer for MCI allowing it to talk to other suitors , on 1 October 1997 Worldcom made a rival bid for MCI which was followed by a counter bid from GTE
. MCI accepted the Worldcom bid and BT pulled out of its deal with a severance fee of $465 million . BT made even more money when it sold its stake in MCI to Worldcom in 1998 for £4,159 million on which it made an exceptional pre-tax profit of £1,133 million. As part of the deal, BT bought from MCI its 24.9 per cent interest in Concert Communications , making Concert a wholly owned part of BT.
An AT&T/BT option had been mooted in the past, but stopped on regulatory grounds due to their individual virtual monopolies in their home markets. By 1996, this had receded to the point where a deal was possible. However, the former monoloplies clashed in management and culture - and the alliance never really worked from the start. Also, during the proposed MCI merger position, BT/MCI had placed a series of nominated customers inside Concert to overcome regulatory issues, leaving Concert with a sales force. On merger with AT&T, it was reversion to delivery of a series of Global products , and two competing owners - which robbed Concert of revenues and left its management disillusioned .
At its height, the Concert managed network directly reached more than 800 cities in 52 countries, and interlinked to about 240 other networks to extend access to 1,300 cities in 130 countries . Although Concert continued signing customers , its rate of revenue growth slowed, so that in 1999 David Dorman
was made CEO with a brief to revive it .
In late 2000 the BT and AT&T boards fell-out - partly due to each partner's excess debt and the resultant board room clear-out(s); partly due to Concerts $800M annual losses . AT&T recognised that Concert was a threat to its ambitions if left intact, and so negotiated a deal where Concert was split in two in 2001: North America and Eastern Asia went to AT&T, the rest of the world and $400M to BT .
BT's remaining Concert assets were merged into its BT Ignite, later BT Global Solutions group .
BT Group
BT Group plc is a global telecommunications services company headquartered in London, United Kingdom. It is one of the largest telecommunications services companies in the world and has operations in more than 170 countries. Through its BT Global Services division it is a major supplier of...
and MCI Communications
MCI Communications
MCI Communications Corp. was an American telecommunications company that was instrumental in legal and regulatory changes that led to the breakup of the AT&T monopoly of American telephony and ushered in the competitive long-distance telephone industry. It was headquartered in Washington,...
. Portugal Telecom
Portugal Telecom
Portugal Telecom is the largest telecommunications service provider in Portugal. Although it operates mainly in Portugal and Brazil, it has also a significant presence in Guinea-Bissau, Cape Verde, Mozambique, Timor-Leste, Angola, Kenya, the People's Republic of China, and São Tomé and...
became a partner in 1997.
Concert was the first multi-service global end-to-end telecommunications provider , which broke the global national telecom monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
on both international and in-country services. Its aim was to provide single deliverer end-to-end connectivity to multinational corporations. Its speed of global service coverage and availability was gained by leasing bandwidth from national telecoms companies, unlike competitors like FLAG
Fiber-Optic Link Around the Globe
Fiber-Optic Link Around the Globe is a 28,000-kilometer-long submarine communications cable containing optical fiber that connects the United Kingdom, Japan, and many places in between. The cable is operated by India's Flag Telecom, a fully owned subsidiary of Reliance Communications. The system...
or Global Crossing
Global Crossing
Global Crossing Limited was a telecommunications company that provides computer networking services worldwide. It maintained a large backbone and offered transit and peering links, VPN, leased lines, audio and video conferencing, long distance telephone, managed services, dialup, colocation and...
who physically laid cables in oceans, roads and pavements.
After the breakdown of the BT/MCI relationship, it became a joint venture between BT and AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...
in 1999. After BT and AT&T's relationship broke down in 2001, Concerts assets were split between the two parties and merged into their regional operations in 2002.
Business need for Concert
In 1992, Sir Iain Vallence's SCOOP project in BT (later called Project Sovereign ), objective was to rid the organisation of its Civil ServiceCivil service
The term civil service has two distinct meanings:* A branch of governmental service in which individuals are employed on the basis of professional merit as proven by competitive examinations....
culture, and create a strategy to develop to create a global-level competitive group . This needed two deliverables in the business plan:
- UK based "the customer is King" approach, with a structure focused on specific market sectors
- global carrier level services, which removed the problem of B-end delivery by owning the whole route. At the time, international telecommunications services were based on agreements between national telecommunication providers wholly "owning" their countries territory
Concert was developed to address the second deliverable - the conductor of global business. It was recognised in the strategy for Concert, that the organisation (i.e. - BT and Concert combined) could not own the world - nor would it want to, as some markets may be key to certain customers, but not to the overall strategy. Secondly, the regulation of global communications was broken down into both national, regional and global based regulators - to address them all would be highly complex, but most importantly slow rollout speed of the service. Resultantly, Concert had to be seen to be an independent organisation of its founder BT.
It was decided to locate Concerts global HQ in North America, the largest global telecommunications market. Reston, Virginia
Reston, Virginia
Reston is a census-designated place in Fairfax County, Virginia, United States, within the Washington, D.C. metropolitan area. The population was 58,404, at the 2010 Census and 56,407 at the 2000 census...
was chosen as it was both easily accessible from Europe, and sat in the then developing telecommunications and technology corridor of northern Virginia. Concert started building its Global network in 1993 ; unlike its competitors FLAG and COLT who physically built their network using their own assets, Concert grew rapidly by purchasing capacity from other TelCo's.
Concert with MCI
In June 1994 BT and MCI (who had been talking to European rivals France TelecomFrance Télécom
France Telecom S.A. is the main telecommunications company in France, the third-largest in Europe and one of the largest in the world. It currently employs about 180,000 people and has 192.7 million customers worldwide . In 2010 the group had revenue of €45.5 billion...
and Deutsche Telekom
Deutsche Telekom
Deutsche Telekom AG is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Europe....
about the same idea ), launched Concert Communications Services, a $1 billion joint venture between the two companies . MCI had been in trouble for a while and needed cash - while BT needed a partner for CONCERT and access to the North American market: BT resultantly bought 20% of MCI to secure the deal, and inject the needed cash .
Concerts aim was to build a network which would provide easy global connectivity to multinational corporations . A series of Concert products were announced, which were based on Concert's global delivery platform, to fulfill its stated mission to develop a portfolio of enhanced telecommunication services targeted at multinational corporations. These services were available to purchase from both the owners, plus a series of partners who signed into the Concert global platform around the world . Concert's portfolio of services included :
- Global virtual network services - voice, switched data, and conferencing
- Global managed data services - low and high speed packet switching and frame relay as well as pre-provisioned, managed and flexible bandwidth services. These services included the integration of the former TymnetTymnetTymnet was an international data communications network headquartered in San Jose, California that used virtual call packet switched technology and X.25, SNA/SDLC, ASCII and BSC interfaces to connect host computers at thousands of large companies, educational institutions, and government agencies....
network - Global application services - messaging, electronic data interchange, e-mail, and videoconferencing
- Customer management services - network management outsourcing
According to Concert, by August 1995 Concert products encompassed approximately $700 million contracts with 2,000 customers in 40 countries and 800 cities .
The problem with the Concert arrangement was that, to over come regulation, the three companies (BT, Concert and MCI) were separate . Each had its own board, sales force, operations team and billing engine for instance . This made delivering truly global deals virtually impossible - the only Customer Managed Service that progressed to delivery was with Dow Chemical.
Concert plc
This alliance progressed further on 3 November 1996 when the two companies announcement that they had entered into a full merger agreement to create a global telecommunications company to be called Concert plc, which would be incorporated in the UK with headquarters in both London and Washington DC .Portugal Telecom
Portugal Telecom
Portugal Telecom is the largest telecommunications service provider in Portugal. Although it operates mainly in Portugal and Brazil, it has also a significant presence in Guinea-Bissau, Cape Verde, Mozambique, Timor-Leste, Angola, Kenya, the People's Republic of China, and São Tomé and...
(PT) also joined the alliance in 1997, but it didn't buy any share on Concert: it would only be the distributor of Concert services in Portugal. BT and MCI bought, respectively, 1% and 0.5% of PT.
The merger proposition gained approval from the European Commission
European Commission
The European Commission is the executive body of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding the Union's treaties and the general day-to-day running of the Union....
, the US Department of Justice and the US Federal Communications Commission
Federal Communications Commission
The Federal Communications Commission is an independent agency of the United States government, created, Congressional statute , and with the majority of its commissioners appointed by the current President. The FCC works towards six goals in the areas of broadband, competition, the spectrum, the...
and looked set to proceed. However, after BT reduced its offer for MCI allowing it to talk to other suitors , on 1 October 1997 Worldcom made a rival bid for MCI which was followed by a counter bid from GTE
GTE
GTE Corporation, formerly General Telephone & Electronics Corporation was the largest independent telephone company in the United States during the days of the Bell System....
. MCI accepted the Worldcom bid and BT pulled out of its deal with a severance fee of $465 million . BT made even more money when it sold its stake in MCI to Worldcom in 1998 for £4,159 million on which it made an exceptional pre-tax profit of £1,133 million. As part of the deal, BT bought from MCI its 24.9 per cent interest in Concert Communications , making Concert a wholly owned part of BT.
Concert with AT&T
As BT now owned Concert, and still wanted access to the North American market, it needed a new partner .An AT&T/BT option had been mooted in the past, but stopped on regulatory grounds due to their individual virtual monopolies in their home markets. By 1996, this had receded to the point where a deal was possible. However, the former monoloplies clashed in management and culture - and the alliance never really worked from the start. Also, during the proposed MCI merger position, BT/MCI had placed a series of nominated customers inside Concert to overcome regulatory issues, leaving Concert with a sales force. On merger with AT&T, it was reversion to delivery of a series of Global products , and two competing owners - which robbed Concert of revenues and left its management disillusioned .
At its height, the Concert managed network directly reached more than 800 cities in 52 countries, and interlinked to about 240 other networks to extend access to 1,300 cities in 130 countries . Although Concert continued signing customers , its rate of revenue growth slowed, so that in 1999 David Dorman
David Dorman
David W. Dorman is an American Telecommunications executive and is currently the non-executive chairman of Motorola....
was made CEO with a brief to revive it .
In late 2000 the BT and AT&T boards fell-out - partly due to each partner's excess debt and the resultant board room clear-out(s); partly due to Concerts $800M annual losses . AT&T recognised that Concert was a threat to its ambitions if left intact, and so negotiated a deal where Concert was split in two in 2001: North America and Eastern Asia went to AT&T, the rest of the world and $400M to BT .
BT's remaining Concert assets were merged into its BT Ignite, later BT Global Solutions group .
External links
- WebbConsult.com - Telecoms history in the 1990's
- Le Monde - Towards a worldwide communications oligopoly?
- Biz Journal article on break-up of Concert
- BT Global Services BT's solutions and products were moved to BT Global Services division