France Invades U.S. Internet Market

Internet traffic between the United States and Europe isescalating, and France Telecom wants to be sure it's in on the action. The company outlined plans Tuesday to build a huge U.S. network backbone connected to its new pan-European backbone, so it can provide intercontinental data and voice services to carriers by 2001.

France telecom says it'll lay a $200 million, 15,000-mile, 1.6- Tbps backbone between 28 U.S. cities. Existing submarine cables will join that network to France Telecom's 250-city European backbone. The U.S. backbone is expected to carry IP, intranet-VPN, asynchronous-transfer-mode, and frame relay traffic.

A foreign player here could spell trouble for domestic carriers such as WorldCom and Qwest, and opportunity for customers. "If [France Telecom] executes, it's certainly big for the United States," says LuAnn Newman, a consultant with TeleChoice. It would be "another choice when now we're down to just a couple of big players." And France Telecom has staying power, she says.

Although France Telecom is the first of its brethren to spell out a strategy for competing in the United States, several European carriers have expressed interest since the Federal Communications Commission began relaxing its rules for foreign competition. Says Newman, "Now that a foreign company can operate in the United States, the big guys are coming over."