Gartner Says Enterprises Must Quickly Address Challenges and Opportunities Created by Network Service Provider Turmoil.

Business Editors/High Tech Writers

STAMFORD, Conn.--(BUSINESS WIRE)--Sept. 24, 2002

As bankruptcy and large mergers continue in the network service provider (NSP) market, Gartner, Inc. (NYSE: IT and ITB) advises enterprises to adopt a multi-NSP strategy to ensure business continuity and to view the troubled market as an opportunity to renegotiate contracts.

Gartner expects the global NSP market to continue to suffer until at least 2004. "It is likely that more consolidation will occur, more NSPs will file for bankruptcy and healthier NSPs will grow by acquiring distressed assets at bargain prices," said Jay Pultz, vice president and research director for Gartner. "Enterprises should act quickly on the opportunity that current market conditions offer."

Among other actions, Gartner advises enterprises to lock in rates with NSPs immediately because prices are beginning to increase. Enterprises that have not renegotiated pricing for 12 to 18 months should do so now, because today's rates are likely lower than what enterprises are paying under current contracts. Enterprises should lower minimum annual commitments to protect themselves and to reintroduce NSP diversity. Moreover, enterprises should take this opportunity to negotiate more flexible "out" clauses to protect the enterprise if the NSP can no longer provide adequate services.

To ensure business continuity during a time when NSPs are quickly exiting the market, Gartner analysts said enterprises should not align with just one provider. "The days are gone when enterprises could look to a single NSP for all of their voice and data network services," Pultz said. "Enterprises should not panic, but instead they should carefully assess what actions they need to take to reduce risks -- carefully balancing lost efficiencies and increased costs against risk."

Enterprises without multiple NSP strategies and back-up plans in place prior to a NSP bankruptcy filing face significantly higher risk and have fewer options for action than those that have already prepared contingency plans.

More analysis on the NSP market is available in the Gartner Spotlight report "WorldCom's Problems and the NSP Crisis." This Spotlight features 11 reports on the outlook for WorldCom and the NSP market and provides analysis on the implications for enterprises, vendors and all NSPs. This Spotlight can be found on the Gartner Web site at www.gartner.com/pages/story.php.id.2315.s.8.jsp

Further discussion of the NSP industry will be discussed at Gartner Symposium/ITxpo, October 6-11, in Orlando, Florida. Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. For more information, please visit www.gartner.com/symposium .Members of the media can register by contacting Maria DiMasi at 212-699-2734, or by e-mail at [e-mail].

Gartner, Inc. is a research and advisory firm that helps more than 10,500 clients understand technology and drive business growth. Gartner's businesses are Gartner Research, Gartner Consulting, Gartner Measurement and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has 4,000 associates, including 1,200 research analysts and consultants, in more than 90 locations worldwide. Fiscal 2001 revenue totaled $963 million. For more information, visit www.gartner.com