The Pan European network service provider (NSP) market remains crowded and fiercely competitive. The economic downturn has not led to a "flight to safety," as seen in previous downturns, but to a "flight to value," with enterprises seeking out good deals even if they come from less-well-known providers. This has ensured continued downward pressure on pricing for enterprises pursuing competitive procurement strategies, and the opportunity to gain more-favorable commercial terms.

The scope of enterprise networking in Europe has become wider, with many more enterprises requiring connectivity to Central European and Eastern European markets, thus challenging many providers that had thought their European networks were complete once they'd covered the major Western European markets. Despite the increased use of partnerships and network-to-network interconnections to improve coverage, ownership of intercountry and national infrastructures remains a key differentiator for providers, allowing for improved pricing, better operational continuity and stronger service-level agreements (SLAs). However, enterprises should ensure that their evaluations of Pan-European NSPs do not overly focus on ownership of network assets, but on the outcomes that this enables, keeping in mind that no provider will own every segment of the network.

NSP portfolios continue to evolve, with Ethernet joining Multiprotocol Label Switching (MPLS) and Internet virtual private networks (VPNs) in the transport services portfolio of most providers. The array of managed services on offer continues to expand, with hosting services evolving to infrastructure utility services, and hosted Internet Protocol (IP) telephony evolving to hosted unified communications and being joined by managed video communications, such as telepresence — all delivered to the enterprise over a managed network.

While fixed mobile convergence offerings are emerging, the mobile market in Europe remains distinct, and Gartner covers it in separate Magic Quadrant research.

The number of providers serving the Pan-European NSP market remains high, ensuring a fiercely competitive market. The economic downturn has led to many enterprises considering smaller, but potentially more cost-effective, providers, rather than simply their established suppliers. The absence of effective public price lists, however, still means that only enterprises using competitive sourcing approaches will reap the full benefits of this environment.

In Europe, most leased-line access below 2 Mbps is so close in price to full 2 Mbps that enterprises might as well take full 2 Mbps. For access above 2 Mbps, Ethernet access has supplanted higher-speed leased lines. "Asymmetric digital subscriber line" (ADSL) is popular for locations where lower service levels are sufficient. Some providers are offering third-generation cellular as an access technology to enable the rapid deployment of new locations, as well as providing a network-independent backup solution. This is a welcome enhancement, especially because installation lead times for wireline services are a major cause of dissatisfaction for enterprises.

Native Ethernet services have become mainstream in Europe, at least in the largest cities. While there are cases where a Layer 2 service is needed (such as certain virtualization deployments or where the enterprise wishes to retain full control over its IP addressing), in most cases, Ethernet and MPLS (with Ethernet access) services are substitutable and price will be the determinant, with some providers pricing Ethernet much lower than MPLS, while others price the two services at close to parity.

The European market has the highest adoption rate of any region of managed network services, with very few enterprises buying "wires only" connectivity services on an international basis. Partly as a result of this, European companies have also led the evolution of network outsourcing deals away from classical "your mess for less" deals built around the transfer of assets, existing contracts or people, toward deals built around standard off-the-shelf managed services, in an effort to reduce costs and increase scalability.

With managed services so popular in Europe, they have become a major focus of differentiation, with a huge array of services on offer. These range from application acceleration and performance management, LAN and wireless LAN, extending out to the network edge, while hosted services from unified communications to infrastructure utility services live in the provider's cloud. Other service areas, such as video and security, will have multiple delivery options. For example, converged voice can include combinations of managed, on-site IP PBX, IP Centrex and SIP trunking.

It is extremely unlikely that a provider will be able to deliver every part of a Pan-European network; therefore, enterprises should focus on the critical capability to integrate network elements from different sources into an end-to-end solution. Portals giving online visibility and control over many aspects of the solution are an increasingly important tool to deliver this end-to-end experience.

Although fixed-mobile convergence offerings are emerging, and some fixed operators are offering "managed mobility" services, the mobile services market in Europe continues to be a distinct market, which Gartner covers in separate Magic Quadrant research.

The NSP market is for the supply of enterprise data and voice services, spanning multiple European countries. These services may be delivered as unmanaged connectivity, managed services or outsourced networks. To qualify for inclusion, suppliers must be able to take prime contracting responsibility for the provisioning and ongoing operational support of network-only projects in Europe. The organizations delivering these services are primarily telecommunications operators and virtual network operators (VNOs).

To be considered for inclusion in this Magic Quadrant, providers must meet all the following criteria:

• Offer voice, data, managed network services and value-added services to enterprise customers across multiple geographies in Europe
• Be willing to bid for stand-alone, European-network-only contracts with a total annual run rate of as little as €500,000
• Offer sales and support, and deliver services to, customers based in the U.K., France, Germany and Italy, plus at least one of the following regions: Benelux, Southern Europe, the Nordic countries, or Central and Eastern Europe
• Generate at least €100 million in enterprise network service revenue contracted in Europe (not merely revenue for delivery in Europe under contract from non-European sources)
• Not simply resell network services from another Pan-European provider

None

None

Our emphasis regarding ability to execute continues to be on service quality, the match that the provider brings to its target customer base and how well this covers the wider requirements of organizations that need Pan-European network services. In addition to having a good track record of meeting customer requirements (presales and postsales), providers that scored best here not only had a broader service portfolio, but also were able to deliver it in a more-uniform manner to a wider range of customers (see Table 1).

A continuing focus on the sales strategy for addressing customer needs geographically and functionally weighed heavily in the score for completeness of vision. Organizations with a wider portfolio of network-centric services and a stronger road map for service development scored better than those that had more-constrained plans to develop their offerings. In a fast-developing market, providers need to be innovative in terms of their product offerings just to keep up (see Table 2).

Leaders have a full portfolio of voice and data services, including relatively new offerings in areas such as unified communications and Ethernet services. These services will be delivered with good quality across a wide area of coverage at competitive prices by account teams that are typically closer to the customer. Leaders have a strong vision of the market and their role in it, and they will typically be able to address a wider range of customers (in terms of size, geography and service requirements) with their service offerings than others in this Magic Quadrant.

Challengers offer a good portfolio of voice and data services, with strong operational capabilities. However, their long-term plans may be vague, undifferentiated or focused around themselves, rather than on the market's needs. They likely will have more-limited new-service capabilities than leaders.

Visionaries have a strong understanding of the direction of the market and their position in it. They typically have a strong road map regarding new network service offerings. However, their delivery capabilities will be more limited, or their ability to execute on their vision may be constrained by financial or operational limitations.

Niche players do not address the full range of market needs covered in this Magic Quadrant. This may be a deliberately focused strategy, or they may lack the necessary investment or broad vision to serve the needs across the whole market. However, niche players may excel in a specific subsegment, such as a vertical industry, a product or service area, a specific sourcing model, a geography, or a particular customer demographic.

After various changes in European strategy over the years, AT&T is now targeting European deals. However, it is quite selective about the clients it will pursue, principally addressing larger enterprises to which it will offer a variety of sourcing options, from connectivity services to managed services to full outsourcing. AT&T has been making progress in overcoming its reputation as being expensive and inflexible, but it still has a way to go before being considered best in class in these respects.

• AT&T offers high-quality Pan-European network services and a comprehensive portfolio of managed services, including offerings in areas such as telepresence and infrastructure utility services.
• The vendor has extended its European network to cover most markets, large or small.
• Strong financial performance continues to be a differentiator for AT&T, as customers evaluate the strength of strategic vendors.
• The vendor has adopted a more-competitive access sourcing strategy and, as a result, has become more competitive in terms of price, SLAs and lead times.

• AT&T lacks the deep in-country infrastructure in the major European markets that some of its competitors have, affecting its pricing and service delivery for networks needing substantial density of sites in these markets.
• Sometimes the vendor's highly selective approach to deciding which opportunities it will pursue leads to it not bidding on opportunities for which it seems to be a good fit.
• AT&T tends to be inflexible when enterprises want things outside its admittedly broad standard product offerings and contracting approaches, such as custom SLAs.

BT Global Services' prior strategy of aggressive growth, through the acquisition of companies and outsourcing deals, left it with a heterogeneous infrastructure and poor profitability. The vendor has perpetuated this situation by running its national operations in Europe as separate businesses, rather than as parts of its global network. Some of the steps BT has taken to resolve this challenge, such as staff reductions and an unwillingness to renegotiate deals or bid on opportunities requiring significant investment while necessary, have significantly affected this vendor's position in the market. BT Global Services is strongest when addressing larger managed services opportunities, where its extensive footprint can be brought to bear.

• BT Global Services has a European wide MPLS network, with deep capillarity in several countries (the U.K., Italy, Spain, Germany, Ireland and the Netherlands).
• The vendor has a strong portfolio of managed service options, from application-aware networking through security and hosting to LANs, including managed telepresence and video.
• BT Global Services has strong convergence offerings, including IP telephony, unified communications and contact center services.
• The vendor has strong offerings for vertical industries, such as finance, healthcare, automotive, and oil and gas.

• BT Global Services has had several changes of CEO, and has undertaken substantial restructuring in the past 12 months, creating concerns regarding its future strategies.
• Gartner has seen an increase in customer dissatisfaction with the vendor, especially in large outsourced deals, with reports of support resources being cut back and service delivery issues.
• BT Global Services is behind other providers in rolling out Pan-European Ethernet services.

Cable & Wireless' much-publicized intention to separate into two companies, one serving the enterprise market and the other comprising incumbent telecom operators in a number of smaller markets, is welcome because it will increase focus on the enterprise business. However, the vendor's merger with the U.K. operator, while giving it a strong No. 2 position in the U.K. enterprise market, has led Cable & Wireless to become more U.K.-centric, with some of its more-innovative offerings (such as fixed mobile convergence) only available in the U.K. Cable & Wireless is at its best when the enterprise needs network services in the major European markets, rather than deep capillarity in a particular market (apart from the U.K.).

• Cable & Wireless has MPLS and Ethernet coverage of Western Europe, plus a large number of network-to-network interfaces (NNIs) to improve country depth and provide reach into Eastern Europe.
• The vendor has a reasonably broad portfolio of managed services.
• It is innovative and flexible, both in terms of the solutions it offers and the commercial arrangements is it prepared to enter into.

• Cable & Wireless is very focused on U.K.-headquartered companies, and is less visible and active in other markets.
• The vendor's managed service portfolio, although covering the most important areas, is not as extensive as leaders in this market, especially for on-site services.
• Outside the U.K., Cable & Wireless lacks the scale to implement very large outsourcing projects and other extremely large and complex deals.

Colt possesses an extensive fiber network, both long distance and metropolitan, in the major Western European markets, as well as substantial data center capacity. Its strategy is based around leveraging these assets, leading it to focus on high-capacity basic connectivity and hosted services, which it delivers with good quality and low prices. Colt has been especially aggressive in rolling out Pan-European Ethernet services. These services have fit well with its traditional customer base, centered around the financial services sector; however, the vendor's limited capabilities in serving the rest of Europe and in delivering on-site managed services have limited its penetration of other sectors.

• Colt has an extensive fiber infrastructure between and within the major Western European cities, enabling it to offer strong service levels and aggressive pricing for those locations.
• The vendor is a leader in bringing Ethernet services to market.
• Colt's strong hosting and data center portfolio continues to expand toward a full infrastructure utility offering.
• Vertical offerings for the financial services sector, such as proximity hosting, are leveraging the vendor's long-standing relationship with this sector.

• Although it is planning to extend its network, Colt currently has very limited capabilities to serve Central Europe and Eastern Europe, relying on partners to serve these regions.
• The vendor is less strong at delivering value-added services with a significant on-site component, such as managed LANs and PBXs.
• Colt has limited ability to deliver end-to-end SLAs spanning multiple products.

Easynet has been focusing on addressing the Pan-European networking needs of midsize enterprises, but has been progressively increasing the size of its largest deals. It has focused on customer needs rather than its own network footprint, and has been early to market with a number of innovative offerings. However, Easynet must be careful to ensure that it does not overreach itself as it grows its network coverage and its portfolio simultaneously.

• Easynet's geographic footprint covers the majority of Europe, including deep in-country coverage with its own DSL assets in some markets, such as the U.K. and the Netherlands, combined with partnerships to extend its reach into smaller markets.
• The vendor has a reasonably broad and growing set of managed services, including IP telephony, hosting and unified communications services, with special strength in telepresence.
• Easynet has innovative offerings in areas such as "Ethernet first mile" and video distribution.
• Gartner clients report that Easynet is responsive and flexible in responding to their needs, including offering innovative commercial approaches.

• The vendor can be less attractive in price performance terms for networks that are substantially located in the markets served by Easynet's partner networks.
• Although growing, Easynet is still a relatively small provider, and will be challenged to handle very large deals, such as outsourcing projects.
• The vendor's service portfolio does not include many customer premises-based solutions, such as managed LAN services.

Shifting its business from low-margin wholesale and voice to more-attractive enterprise data and converged networking, Global Crossing has focused on being the primary provider to midsize multinationals or a secondary provider to the largest Pan-European multinationals. While executing well on the basics in the major Western European, Global Crossing is still challenged by the need to simultaneously expand its coverage into Eastern European and smaller markets and to enhance its managed service portfolio.

• Global Crossing continues to compete aggressively on price for core transport services.
• The vendor has strong network coverage in the Western European markets, especially the U.K., including fiber between the cities and metropolitan area networks.
• Global Crossing continues to have particular strengths in secure network services that meet government and military standards.

• Although it is expanding its footprint, Global Crossing's network does not currently cover most of the Eastern European markets, where it uses partners.
• The vendor is seeking to increase its ability to deliver hosting and hosted services, but it currently has a limited portfolio and infrastructure.
• Despite having a growing portfolio of enterprise managed services, Global Crossing still trails the market leaders, especially in the area of on-site value-added services, such as managed LANs.
• The UCommand portal has added some additional provisioning capabilities, but still trails the market as rivals continue to innovate.

Interoute's extensive fiber network enables it to offer price-competitive, high-capacity services across Europe and, unusually, compared with other Pan-European fiber networks, the vendor is strong in Central Europe also. Interoute has also entered into partnerships with a number of smaller European national operators to provide them with Pan-European capability.

• Interoute has an extensive fiber network, intercity and metropolitan, in Western Europe and Central Europe, delivering MPLS, Ethernet and Internet services at very attractive price points.
• The vendor has a portfolio of managed services, especially those that are cloud-based, such as hosted unified communications, as well as site-to-site and public IP voice.
• Interoute uses a library of standard service components to create custom solutions, including vertical industry solutions for sectors such as media and publishing.

• In some European markets (e.g., the U.K. and the Nordic region), Interoute lacks its own national coverage, affecting pricing and service levels for enterprises with substantial requirements in these markets.
• The vendor is focused on network-based solutions and has limited capability in the area of customer premises-based services, such as managed LAN, on-site IP PBX or telepresence.
• Interoute's emphasis on its core fiber network makes it less suitable where low-cost, capillarity services, such as DSL, are a major part of the network.

Although KPN possesses a Pan-European fiber network, unlike some other fiber-owning operators, this has not dominated its service portfolio or customer profile, which is rather centered on midsize Pan-European companies. KPN is also in the process of merging its Infonet Netherlands business, into its International Business Services unit, which should result in enhanced capabilities, from access to the portfolio of BT Global Services. However will take time to achieve a full integration of the corresponding networks, portfolios and sales organizations. Through its ownership of IT services provider Getronics, KPN is able to bring a variety of additional managed services to its clients. However, KPN is still keeping Getronics as a separate entity, and there is limited alignment between the offerings from the two entities. While KPN's service portfolio is reasonably broad, it has tended to trail the market in the introduction of most services.

• KPN has a clear focus on its targeted customer segment — that is, enterprises just below the Fortune 500 and smaller, with sales resources focused in the Netherlands, Belgium, Germany, the U.K. and France.
• The vendor has a fiber network connecting 22 European countries, and extends its geographic reach beyond and within these countries through partnering, including its membership of the BT Global Services alliance program.
• The portfolio spans a variety of areas, from WAN transport services, including Ethernet, to managed network services, including telepresence, and through its ownership of Getronics, additional managed services including unified communications, LAN and desktop management.

• KPN has not been expanding its own network coverage into smaller European markets and also lacks deep in-country network capillarity in countries it does cover, relying instead on partners. This limits its ability to offer a consistent level of prices and services for broader network requirements.
• The vendor has not extended its offerings into important new areas, such as hosted unified communications and infrastructure utility services.
• KPN has chosen not to fully integrate Getronics into its enterprise networking division, resulting in disparate offerings and coverage between the two portfolios.

Despite having a number of European clients, NTT Communications has very little recognition in the European NSP marketplace. In addition to its own network, the vendor provides managed services for many enterprises on top of other providers' networks, and gains excellent feedback for the quality of these and the other services it provides. Historical innovation in areas such as Ethernet services and IPv6 have gone largely unrecognized in the market, and NTT Communications' extensive hosting capability has not been leveraged to compete with other providers' infrastructure utility services. This is due to a combination of a conservative corporate culture and a complex structure of multiple operating companies, which is gradually being simplified.

• NTT Communications has been gradually improving its network coverage in the major European markets, and uses partnerships in the remaining countries.
• The vendor offers a wide range of value-added services, including hosting, LAN management and application acceleration.
• NTT Communications enjoys very high levels of customer satisfaction, thanks to factors such as proactive SLA management .

• The vendor's European network coverage and in-country sales and support continue to be significantly less extensive than those of other vendors in this Magic Quadrant.
• While some simplification has taken place, NTT Communications still has a complex organizational structure, resulting in, for example, its strong hosting offerings not being well-integrated with its networking offerings.
• The vendor has a limited voice offering, which is tied to the delivery of the data network.

Orange Business Services is able to exploit its broad service portfolio and even broader geographic reach to serve enterprises that need the broadest coverage of the European landscape. However, the vendor's focus on managed services, rather than on basic connectivity, has left it weaker at delivering high-capacity requirements in the major economies. It has also failed to associate itself as strongly as its competitors with major market trends, such as video/telepresence and cloud services, despite its having capabilities in these areas.

• Orange Business Services has the broadest geographic network reach of any provider in this Magic Quadrant, with special strength in France, Poland and Russia.
• The vendor has regained its position as the benchmark for execution, particularly regarding customer service.
• In addition to having a very broad portfolio of managed network services, Orange Business Services is growing its information and communication technology (ICT) business, with offerings such as VPN Gallery positioning it to enter the cloud service delivery space.
• The vendor has many innovative offerings, developed in the French market, such as vertical offerings in healthcare and utilities, which it is starting to bring to its international customers.

• Orange Business Services lacks its own deep national infrastructure in the major markets, apart from France, Poland and Russia, and has been less willing than the other providers to use NNIs for reach extension, limiting its ability to deliver cost-effective high-capacity transport services.
• The vendor has a reputation for being expensive, although this is often due to it bidding overengineered solutions (e.g., MPLS, where Internet VPNs would be sufficient).
• Orange Business Services struggles to gain mind share in new service areas, such as telepresence, Ethernet services, cloud computing and unified communications, despite being close behind the leaders in delivery in most of these areas.

Formed from the combination of VNO Vanco and previous Reliance acquisitions of FLAG (undersea cables) and Yipes (U.S. Ethernet services), Reliance Globalcom is still struggling to find an identity as a hybrid VNO. Just as importantly, it is still struggling to overcome the dip in service quality that occurred during Vanco's near bankruptcy. However, Reliance Globalcom's ability to deliver low-cost sourcing of network access, especially DSL, enables it to cost-effectively provide networks for enterprises requiring deep in-country presence in multiple countries.

• Reliance Globalcom brings significant financial strength to the former Vanco organization.
• The vendor offers a portfolio of managed services, including hosting, security, videoconferencing and telephony.
• Reliance Globalcom uses an extensive portfolio of national providers, making it cost-effective for networks requiring deep in-country coverage.

• Reliance Globalcom is still struggling to restore customer experience to the very high levels achieved by its Vanco acquisition.
• The vendor has not yet revised its commercial practices, such as the active negotiation process for price revision, to reflect its new position as an infrastructure-owning operator, rather than a pure VNO.
• Its offerings in areas beyond the converged WAN, remote access and hosting, such as fixed and mobile voice, LANs, and PBX, are still immature.

SITA was formed to provide networking services to the air transportation sector. It has been gradually expending its scope, and now serves a number of adjacent markets, including international government agencies, shipping and ports. SITA primarily uses network services from Orange Business Services, with which it has a very close working relationship. It complements these with its own offerings in areas such as Internet VPNs, voice and mobility, supported by shared airport hub infrastructure.

• SITA has comprehensive European coverage for its network services.
• The vendor has a broad range of managed network service offerings.
• It offers tailored vertical solutions for the air transportation industry and adjacent markets.

• Despite the widening of SITA's target customer base, it remains narrowly focused on the air transport industry and closely related sectors, and will not offer services to organizations in other industry sectors.
• According to Gartner clients, SITA's pricing can sometimes be higher than the market average, especially for the connectivity elements of a solution.
• The vendor's ownership structure and strong commitment to Orange Business Services limits its ability to respond flexibly in areas such as large outsourcing deals or partnerships with other industry players.

Outside Germany, T-Systems is still often regarded as more of an IT services company than a network operator. However, T-Systems has been making headway, not only in network outsourcing deals, but also in managed network service opportunities, such as MPLS. The vendor is strongest where enterprises have significant requirements for managed and professional services as part of their deal, and/or where coverage is weighted toward Germany and Central Europe, where its infrastructure is strongest.

• T-Systems continues to gain momentum in the Pan-European networking market, pursuing network opportunities regardless of whether they are part of broader IT services opportunities.
• The vendor's own network covers the major markets and is strongest in Germany and Central Europe. Partnerships, including one with Orange Business Services, are used to extend reach to smaller European countries.
• As a result of being an IT services provider, T-Systems tends to have a broader view of corporate needs; thus, it can bring innovative or even transformational ideas to its customers, such as utility pricing for managed services.

• Although growing, T-Systems' own network in Western Europe is significantly smaller than the leading facilities-based competitors.
• The vendor has lower marketing visibility for its network services than for its IT services outside Germany. As a result, T-Systems is not considered as frequently for network-only deals.
• T-Systems can appear expensive, especially for network-centric deals. This image is due to its tendency to include additional professional services in deals, and its reliance on a limited number of network partners for reach extension, rather than on VNO-style portfolio management, to obtain best pricing.

Telefonica's unit addressing multinational enterprises is relatively new and still comprises both its own resources and matrixed resources from Telefonica's various operating entities across Europe. As a result, many opportunities have to be addressed by pulling together custom solutions. Starting with large outsourcing deals, this unit has now evolved to address managed network services opportunities. There has been press speculation regarding the possible acquisition of Telecom Italia by Telefonica. Even if this was to take place, which does not seem likely, it would not impact global enterprises in the short to medium term, but in the longer term, it would allow access to both Telecom Italia's national network and its Sparkle international wholesale infrastructure.

• Telefonica's new corporate division continues to gain traction in the market, focusing on multinational enterprises.
• The vendor's network covers 31 European countries, with deep coverage in Spain, Germany, the U.K. and the Czech Republic.
• Telefonica offers an increasingly broad portfolio of managed services for enterprise customers.
• Its financial position is strong and includes investments in other operators, such as Telecom Italia.

• Telefonica's division focusing on multinational enterprises has yet to industrialize all of its offerings and, therefore, still has to rely on extensive use of custom solutions.
• The vendor's sales coverage is limited to the major European markets.
• Telefonica has limited brand awareness in the enterprise market outside Spain.

Verizon Business has strengthened its position in the Pan-European market, coming to grips with many of the issues that held it back, improving its coverage of Central European and Eastern European markets, adding a solutions layer to its extensive array of point products, and improving the customer experience, especially through enhanced portal capabilities. The vendor is also making headway in network outsourcing. Unlike many of the other NSPs in this Magic Quadrant, Verizon Business is able to address a very wide variety of opportunities, including networks ranging in size from small to the very largest, and sourcing models varying from high-capacity transport through managed services to fully outsourced networks.

• With its own national fiber networks in Europe's major economies, including metropolitan networks in the major cities, Verizon Business has been able to offer very attractive pricing, especially for high-capacity services such as Ethernet.
• The vendor is continuing to broaden its already extensive array of managed services with services in areas such as infrastructure utility, security, managed mobility and application assurance.
• Continued investment in its customer service portal has positioned Verizon Business to drive more run-and-maintain issues to a self-service model.
• The vendor has a simple, functionally based, organizational structure, leading to fewer issues of geographic conflict in products, sales and support.

• While the vendor has been improving its coverage of Central Eastern European markets, it still lags behind some of its competitors in this regard.
• Verizon Business is not as strong at partnering with industry players, ranging from other operators to IT services companies, compared with other leading NSPs.
• The vendor has been slow to respond to enterprise video initiatives, trailing larger rivals in consideration of telepresence opportunities.