Observers back BT alliance with AT&T

Analysts have welcomed the alliance between BT and AT&T announced on Sunday, saying it will provide international firms with a cost-effective one-stop shop for voice, data and Internet services.

John Matthews, consultant at Ovum, said: "Because they will be offering an end-to-end service, they will not need to buy in services, so there will be an element of cost savings. They will also have tremendous economies of scale."

However, Matthews added that the multinational companies will benefit from this the most. "It will mainly enable them to develop their market presence in Europe and Asia Pacific," he said. In particular, he said they will now be in a strong position against the European telco alliance, Global One, which is aimed at the same market.

But Steve Wallage, telecoms analyst at Dataquest, said there will be confusion in the short term. "There are a number of issues that need to be resolved, such as serving existing relationships with customers," he said.

Robin Bosworth, director at Schema, agreed: "The greatest issue is realigning or consolidating other interests, which will be a major challenge. There is also the regulation issue, which although the project is confined in scope, it will be treated the same as if it were a merger."

Dataquest's Wallage added: "The big danger is that it is a fairly loose alliance, so they won't be able to enforce standard agreements. AT&T has proven itself to be difficult to work with in the past, but then so has BT."