Magic Quadrant for Pan-European Network Service Providers

This Magic Quadrant assesses suppliers that can deliver fixed corporate networking services on a Pan-European basis. Services to be provided include:

• WAN services, predominantly managed, including Multiprotocol Label Switching (MPLS), IPsec VPNs and Ethernet services
• Voice services, including switched and dedicated voice, Session Initiation Protocol (SIP) trunks and Internet Protocol (IP) telephony
• Dedicated Internet services, including managed VPN offers

In addition to traditional voice services, it is highly desirable for providers to offer value-added networking services, including, but not limited to, application-fluent networking, managed LANs, hosted or managed IP telephony, unified communications and managed security services. Integrators, virtual operators and carriers are included, but only if they provide and manage offerings that include data networking and converged services.

Source: Gartner (April 2012)

Vendor Strengths and Cautions

AT&T

AT&T has a substantial European network, covering most countries, both large and small. However, it remains selective in addressing the European enterprise market, aggressively pursuing the very largest European multinationals, but less focused on midsize European multinationals. Its portfolio of optical, Ethernet and MPLS services is less dependent on partners than many of its peers. AT&T is less willing to embrace hybrid IP WANs and network-to-network interfaces (NNIs) than many of its leading competitors, making it less competitive for some configurations. Large multinationals should consider AT&T for their Pan-European networks.

Strengths

• AT&T has an extremely broad portfolio of managed services, including security, voice, LAN and WAN optimization.
• AT&T has an established track record with some of the largest multinational enterprises in Europe.
• AT&T's Business Direct portal has advanced capabilities and drives consistently high levels of utilization with AT&T customers, creating leverage for operations and support functions.

Cautions

• AT&T continued to make progress with postimplementation issues in 2011, but still generates more Gartner client inquiries around billing issues than its peers.
• AT&T puts most of its efforts into pursuing the very top end of the European multinational market, putting less emphasis on serving smaller European multinationals.
• AT&T can be less price competitive than its peers in European configurations requiring deep capillarity.

BT Global Services

Having been through a challenging period with an abrupt change in strategy and major reorganization, BT Global Services is now in a stronger position with a rationalized set of offerings and a greater emphasis on vertical industries. BT is well-advanced in its program to integrate its previously disparate portfolio of European national networks and services. With these challenges largely behind it, BT should now be able to focus more on network services innovation. BT is able to respond to a broad range of Pan-European networking opportunities, but is strongest when bidding on larger (€5 million or more per year) managed services deals, especially in its selected verticals of global banking and financial services, consumer packaged goods, global commerce and government and health.

Strengths

• BT has an extensive Pan-European MPLS network, and additional networks in the U.K., Italy, Spain, Germany, Ireland and the Netherlands. Current investments are directed at the core network, extending in-country reach of the global network and capacity upgrades.
• BT has an extensive portfolio of managed and professional services, which has now been renamed and reorganized to improve clarity and better align service components. BT has made significant progress in catching up with leading competitors in Ethernet services. In Europe, its Ethernet Connect service is now available in 18 countries.
• BT service quality, which had dipped during previous reorganizations, has been restored to a high level.
• BT has made headway in marketing, illustrated through its account and key-account-based programs, which help BT more proactively engage to apply the portfolio to its clients' business requirements.

Cautions

• While BT has been innovative in many areas, it has been less innovative in enterprise networking services, lagging some other providers in certain areas, including utility managed LAN services or losing previous leadership in areas such as application performance management (APM).
• BT's new customer portal is a significant step forward from its previous offering, but still has a long way to go to catch up with leading competitors.
• BT must resist the temptation to recommence aggressively bidding on "your mess for less" outsourcing deals, or it may recreate much of the fragmentation and complexity it has been working to eliminate.

Cable&Wireless Worldwide

In the last 12 months, Cable&Wireless Worldwide has faced a difficult time with two changes of CEO, and a series of profit warnings and potential takeover bids. Possibly as a result of this, it has lost its previous momentum as an innovator in both technical and commercial approaches to enterprise networking services and has also seen an increase in service quality issues. Financial services and technology companies are key industry sectors for Cable&Wireless. This provider increasingly focuses on delivering a broad basket of managed services around its core networking offerings to its clients such as video, multimedia and application performance management (APM). Enterprises whose European needs include significant coverage in the U.K. should consider Cable&Wireless. On 23 April 2012, Vodafone Group agreed to acquire Cable&Wireless Worldwide.

Strengths

• Cable&Wireless has continued to roll out additional nodes on its "MSP" platform, delivering both MPLS and Ethernet services, allowing it to offer high-speed services in all the major European markets, now extending also to Sweden.
• Cable&Wireless has made progress in internationalizing its managed services portfolio, which was previously very U.K.-centric.
• Cable&Wireless' network covers the largest markets in Europe and is especially strong in the U.K.

Cautions

• Gartner clients report issues with Cable&Wireless' service quality (e.g., issues resolving network outages).
• Cable&Wireless has lost its former position as an innovator in both technical and commercial aspects of network services.
• Cable&Wireless has limited sales coverage and mind share in European markets outside of the U.K.

Colt

Colt has been continuing its evolution from a fibre-centric supplier of point services to a solutions provider utilizing its own and partners' assets. To this end, it has added further NNIs to its network, grown its own fibre footprint and enhanced its portfolio of sector-specific solutions (currently targeted to the financial services and media sectors). Colt has also been enhancing its managed services portfolio in areas such as managed WAN optimization and security, but still has gaps in areas such as managed LAN services. Colt should be considered by enterprises looking for connectivity or managed services, especially at high speeds (100 Mbps and above), and where the requirements are weighted to the major Western European countries.

Strengths

• Colt's extensive fibre network, including metropolitan area networks in the major Western European markets, enables it to offer services, especially Ethernet services, at very attractive price points.
• Gartner clients report a high degree of satisfaction with Colt's customer service and network reliability.
• Colt has strong vertical market offerings for the financial services and media (especially broadcast media) sectors.

Cautions

• Colt is not particularly innovative in terms of products or commercial approaches to the enterprise network market.
• Colt lacks mind share outside the financial vertical, where it is reasonably well-known. As a result, it is not being considered for opportunities it might have been able to fulfill.
• Although Colt's strategy is solution-focused, we still see instances of sales teams taking a more product-centric approach to enterprise requests.

Easynet Global Services

Easynet Global Services is an innovator in many areas of enterprise networking, both technical and commercial, with measures such as its SLAs and "total satisfaction guarantee" strategy. Easynet is building on this foundation, for example, with plans to instrument all MPLS connections to basic application-level visibility. Strong innovation in several areas, coupled with robust execution, price competitiveness and new customer wins outside home markets, moves Easynet from the Visionaries quadrant into the Leaders quadrant. Easynet has been extending its reach through increased use of NNI agreements. It plans to extend its copper-based access services, currently only delivered in the U.K., to other major European markets. Although no longer part of the Sky media empire, Easynet has a number of offers targeted to the broadcast media sector. Enterprises looking for European network services, with a strong weighting toward the larger Western European markets, should consider Easynet.

Strengths

• Easynet has aligned its WAN services portfolio by SLA level (each service level being delivered by a combination of different primary and/or secondary links) and is delivering full hybrid IP WANs, allowing it to successfully match its offer to enterprise needs.
• Easynet offers a unique approach to SIP trunks, essentially giving clients access to major SIP exchanges and allowing them the choice of any long-distance SIP minutes provider.
• Easynet has been enhancing its managed service portfolio, which now includes items such as managed LAN and WAN optimization.

Cautions

• Easynet's network footprint is focused on the major Western European markets. It relies on NNI partnerships to reach Central and Eastern Europe.
• Easynet's professional services capabilities are not as extensive as those of the leading providers on this Magic Quadrant, limiting its ability to address larger, more complex enterprise requirements.
• Easynet's sales coverage and brand recognition are lower than those of the largest providers on this Magic Quadrant.

Interoute

Interoute has been continuing to grow its extensive European fibre network, as well as adding NNI partnerships to extend its service reach. Interoute is gradually broadening its portfolio of managed services to include capabilities such as managed LANs and developments, which together with strong vision and positive customer feedback move it from the Visionaries quadrant into the Leaders quadrant. Enterprises seeking managed or unmanaged WAN services, especially at higher speeds (such as 100 Mbps and above) should consider Interoute.

Strengths

• Interoute's Unified Connectivity offer is a class-leading multiservice networking proposition, flexibly combining Ethernet, MPLS, Internet access and SIP trunks over a wide variety of access options.
• Interoute's WAN services offerings are very price competitive, especially when it can deliver services from its own network (versus using NNIs).
• Interoute has a strong SIP trunk offer.

Cautions

• Interoute's managed and professional services portfolio is still more limited in terms of practice areas and vertical focus than those of the other leading providers on this Magic Quadrant, impeding its ability to address more-complex opportunities.
• Interoute's emphasis on delivering services from its own network makes it less suitable for clients who require a high fan out of low-speed sites away from Interoute's infrastructure.
• Compared with other leading vendors in this Magic Quadrant, Interoute's sales coverage and brand recognition are limited.

KPN

KPN's primary European networking focus is on midsize (typically 10s of sites) Pan-European enterprises, with requirements focused in the 22 largest European countries served by KPN's network. Its secondary focus is on supporting the larger enterprise customers served by its IT services company, Getronics, which it uses to deliver on-site service, such as managed LANs. However, KPN is in the process of divesting its Getronics business outside the Netherlands. The Getronics Workspace Alliance should enable KPN to continue to support clients' needs for on-site services outside the Netherlands. The Getronics Workspace Alliance will sell KPN's networking services, but is unlikely to be as committed to doing so as when it was part of KPN, or working as closely with KPN on network service portfolio development. KPN has integrated its Infonet Netherlands business into its International Business Services unit, giving it access to significant parts of BT Global Services' portfolio. Midsize multinationals and others requiring connectivity that is weighted toward locations in Western Europe should consider KPN.

Strengths

• KPN has an extensive fibre network connecting the major Western European markets, making it especially cost-effective in that region. Coverage is extended to additional markets through partnerships, principally with BT Global Services and also with others, such as Telefonica.
• In addition to a managed WAN services portfolio, KPN offers managed LAN services from its Getronics unit in the Netherlands and from the Getronics Workspace Alliance outside the Netherlands.
• KPN has vertical offerings aimed at the media and automotive sectors.

Cautions

• KPN's networking solutions are based in the combination of services from a number of organizations inside and outside KPN, making it difficult to offer consistent end-to-end solutions.
• KPN's network footprint and sales force continues to be focused on the larger European markets and have not been extended this year, making it less cost-effective for solutions that go beyond its core geographies.
• While reasonably complete, the KPN network services portfolio lags behind the leading providers in this Magic Quadrant in areas such as WAN optimization and hybrid IP networks.

Level 3 Communications

Level 3 Communications acquired Global Crossing in 2011. Integration between the two companies and their networks has started with the customer-facing aspects, such as sales and support; however, there is a long way to go in this process. Level 3 brought additional capacity and coverage in Europe to Global Crossing's footprint, which was already very strong in the U.K. Compared with the leading providers in this Magic Quadrant, Level 3 has a more basic portfolio of managed services, but has strengths in capabilities such as low-latency networking for the financial services sector, and the content delivery network (CDN) for the media sector. Level 3 is developing managed security service offerings to replace the services from partners that Level 3 and Global Crossing currently employ.

Strengths

• Level 3's network coverage in Europe is quite good overall, and extremely strong in the U.K.
• Level 3's price for services, especially high-speed services, is very attractive in markets where it has good network coverage.
• Level 3's wholesale voice capabilities should enable it to offer cost-effective enterprise voice solutions, although appropriate service packages are still under development.

Cautions

• Level 3's network lacks strength in the smaller economies of Europe, relative to the Leaders in this Magic Quadrant, although further network expansion is planned.
• Level 3's managed services portfolio is more basic than that of leading providers on this Magic Quadrant in areas such as managed LAN.
• Level 3's enterprise voice portfolio is lagging some of the Leaders, although its wholesale SIP trunk offer will be repurposed for the enterprise market.

Orange Business Services

Despite having the broadest geographic reach of any European provider, Orange Business Services, like its competitors, is making increasing use of NNIs to extend geographic reach to improve its ability to deliver cost-effective, deep, in-country coverage, especially in larger markets. It uses fixed network assets from other parts of the France Telecom/Orange group in Poland and Russia, for example, to support its business services. Unlike some of its peers, Orange Business Services is not making significant use of its mobile footprint to provide additional infrastructure for its fixed services. Orange has significantly expanded its Ethernet service coverage to address a previously weak area of its portfolio. Orange is strongest for managed services deals of all sizes, especially where connectivity to smaller countries is required.

Strengths

• Orange's network has the broadest European reach of any provider, with good coverage in most markets, with particular strength in France, Poland and Russia.
• Orange has a very broad portfolio of managed and network services, including WAN optimization, application performance management and managed LAN.
• The quality of Orange's customer service and support is high.
• Orange has a mature approach to identifying customer needs for different services and for renegotiating with its existing clients — for example, proactively proposing benchmarking existing deals in place of customers issuing RFPs.

Cautions

• Although if often has strong offers, Orange still struggles to capture mind share for new services, due to its low-profile marketing approach.
• Orange has positioned managed LAN as part of its unified communications portfolio, not its networking portfolio. This limits its visibility in this high growth area, although a recent reorganization should improve this situation.
• Gartner clients report that Orange can be slow to respond to requests for changes, especially the provisioning of new locations.
• Although it has national networks in some markets, Orange's network lacks in-country depth, such as domestic fibre or metropolitan networks, in some of the major markets, such as Germany and the U.K. Thus, Orange is forced to use NNI connections for deep or extensive in-country needs in these markets.

Reliance Globalcom

Reliance Globalcom positions itself as a provider of integrated network solutions, combining its assets, principally located outside Europe, with third-party services. Reliance has a longer track record of integrating third-party services and using NNIs than any other provider on this Magic Quadrant, and can combine more services and providers than any other provider on this Magic Quadrant. However, as its competitors also make increasing use of NNIs in addition to expanding their infrastructures, this model is becoming less differentiated. As a provider based in India, Reliance has access to cost-effective labor, without needing to offshore or outsource work and has, accordingly, centralized many functions in India. However, this may have contributed to service quality issues that some Gartner clients have reported. Reliance Globalcom is best suited for managed services, especially when sites are highly dispersed, such as in the retail and engineering sectors.

Strengths

• Reliance has broad geographic coverage through its integrator approach.
• Reliance has a comprehensive portfolio of managed services, including WAN optimization, APM and managed LAN, although it relies on third parties for areas such as security services.
• Reliance should be able to extend services developed for its Indian domestic business to its clients with European requirements.

Cautions

• Reported quality is improving, but is still lower than leading providers in this market.
• Reliance is not innovating technically or commercially in the network services market, possibly due to its reliance on third-party services to construct its offerings.
• Reliance Globalcom's voice portfolio is centered on unified communications with no discrete SIP trunk offer.
• Reliance Globalcom's portal is not as advanced as those of leading providers in this market. Although a new portal is promised, extending information from partner networks to the portal will be challenging.

SITA

SITA was formed to provide networking services to the air transportation market. From this base, it has selectively expanded its scope to include some government entities, shipping companies and rail companies. Companies in these sectors should consider SITA as an option. SITA has a close relationship with Orange Business Services and uses many of its network services, including its MPLS network, which complements SITA's portfolio in areas such as Internet VPNs, voice and mobility, supported by a shared airport hub infrastructure. Enterprises in, or closely aligned with, the air transportation sector should consider SITA.

Strengths

• Through the combination of its airport hubs and the network of Orange Business Services, SITA has very broad coverage in Europe.
• The integration between its products and solution organizations has enabled SITA to expand its offerings in areas such as managed LANs and offer innovative solutions tailored for the air transportation industry.
• SITA is innovating commercially by bundling connectivity with business applications, such as passenger solutions and pricing on a per-passenger basis.

Cautions

• SITA remains narrowly focused on the air transportation sector and a number of closely related segments, and has not pushed strongly into additional vertical sectors.
• SITA's Ethernet coverage and pricing is not as competitive as other providers in this Magic Quadrant.
• Although it has created some local partnerships, SITA´s ownership structure and strong commitment to Orange Business Services limits its ability to respond flexibly in areas such as partnerships with other industry players.

T-Systems

T-Systems continues to be considered foremost as an IT services company. In the past 12 months, T-Systems did not extend its reasonably broad network footprint, preferring to develop its NNI capabilities. However, it has continued to develop its managed services portfolio, especially in areas such as networking for cloud services and utility-priced managed LAN services, where it has some class-leading capabilities. Automotive, utilities, media and healthcare are the vertical segments on which T-Systems is focusing. T-Systems is strongest for enterprises seeking managed services, especially when an enterprise has substantial requirements in Germany.

Strengths

• Gartner clients report a high level of satisfaction with the quality of T-Systems' services.
• T-Systems has a strong portfolio of managed and professional services.
• T-Systems has a mature and flexible approach to engaging with clients in areas such as contracting and solutions design.

Cautions

• T-Systems' voice portfolio is weaker than those of leading providers in this market — e.g., with more limited SIP trunk rollout and slower than the other Leaders in this Magic Quadrant to interconnect its telepresence offering with other providers.
• T-Systems' market recognition as a network, as opposed to IT, service provider is lower than its competitors, resulting in not being considered for as many opportunities.
• Outside Germany, T-Systems continues to suffer from low marketing visibility for its network portfolio, vis-a-vis its IT services portfolio. Its strategic objectives with regard to networking-only deals is sometimes unclear to clients. Consequently, T-Systems is not considered as frequently as other leading peers for network-only deals.

Telefonica

Telefonica has expanded the coverage of its European network by continuing to add new nodes, as well as NNIs to third parties and various Telefonica national networks in Europe. However, local fixed networking offerings and sales approaches at the various Telefonica operating companies vary considerably, with only a defined list of 250 large enterprises directly served by the Telefonica Multinational Solutions group. Large enterprises whose networks require broad coverage in Europe should consider Telefonica.

Strengths

• Telefonica's network covers most of Europe, with deep coverage in Spain, Germany, the U.K. and the Czech Republic.
• Telefonica has been raising brand awareness by strongly marketing its global capabilities and growing the number of accounts served by its multinational solutions unit.
• Telefonica has a class-leading SIP trunk capability.

Cautions

• Only the top few hundred of Telefonica's global multinational corporation (MNC) clients are handled directly by Telefonica's Multinational Solutions unit. Smaller MNC clients are currently handled by country-level businesses, which have differing approaches to fixed networking, including different partners and service portfolios.
• Telefonica's managed services portfolio is weaker than leading providers in this market in areas such as managed WAN optimization and managed LAN.

Verizon

Verizon has significant network capacity, down to the metro fibre level in Europe's major economies. Extending its network NNI partnerships also provides good coverage with multiple access options through multiple providers in virtually all of the European markets. Verizon appears to be aligning itself strongly with Vodafone, which should deliver significant enhancements to its fixed and mobile capabilities globally. So far, the impact in Europe has been to delay the availability of cellular WAN backup options, pending a broader agreement between Verizon and Vodafone. Verizon is in the middle of a major program to transform its customer support capabilities, which will continue throughout 2012. This program includes the centralization of support functions, such as order management. This seems to be one of the causes contributing to a recent dip in Verizon's service quality. In the U.S., Verizon is reorganizing around vertical industries, something several of its competitors are also doing. This is not yet being extended to Europe, where Verizon is moving toward a country-centric model. European enterprises of all sizes should consider Verizon for their managed and unmanaged network service requirements.

Strengths

• Verizon continues to expand its already extensive network footprint in Europe (e.g., France, with further sites added specifically in Paris). It is also developing or deepening more NNI relationships, such as those with TDC and Swisscom, to provide cost-effective, in-country access in smaller economies. Its European Ethernet portfolio and coverage is good, extending throughout Europe, through multiple access providers in most markets.
• Based on Gartner's sourcing work with enterprise clients, Verizon's service pricing continues to be significantly better than its leading peers, including European-only deals.
• Verizon has a comprehensive portfolio of managed services, including WAN options, security, LAN and voice services to which Verizon adds its professional services capabilities — e.g., for security, when required.
• Verizon's customer portal is class leading, with a wide range of functions and information available, presented in an easy-to-use manner. Recent functionality includes quick functions and enhancements to invoice reporting.

Cautions

• Gartner has received a significant increase in complaints about Verizon's service quality, especially its ability to deliver new locations in a timely manner.
• Verizon is less mature than its leading competitors in terms of the contractual approaches it will offer — for example, being reluctant to accept benchmarking clauses.
• As Verizon is now delivering far more of its WAN services via NNIs, enterprises need to ensure that the customer experience and SLAs of these services are sufficient to meet their needs.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added

Level 3 Communications — acquired Global Crossing

Dropped

Global Crossing — acquired by Level 3 communications

NTT Communications — no longer met all the inclusion criteria

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 (such as security, unified communications or data center services) to enterprise customers across multiple geographies in Europe.
• Offer sales, support and delivery 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.
• Actively bid for stand-alone, European-network-only contracts, with a total annual run rate of as little as €500,000.
• Generate at least €100 million in Pan-European enterprise network service revenue contracted in Europe (not merely revenue for delivery in Europe under contract from non-European sources).
• Cannot simply resell network services from another Pan-European provider.

Evaluation Criteria

Ability to Execute

Our emphasis is on a vendor's service quality, pricing and track record. These elements are particularly important for Pan-European networks, because the issues of infrastructure, language and cultural problems become more complicated and prolonged than if applicable to only one country (see Table 1).

Source: Gartner (April 2012)

Completeness of Vision

We look for a thorough understanding of what clients want in a Pan-European provider (see Table 2), which is different from the requirements of a national provider, because it inevitably includes third-party elements, and frequently includes a wider set of managed services. Network service providers (NSPs) should have a clear and evolving geographic strategy to meet the changing needs of customers. The portfolio should be broad enough to satisfy the evolving requirements of most enterprises, not just a specific vertical industry or customer size. While not prescriptive, visionary providers should have a clearly articulated strategy and market traction in evolving areas like SIP trunks, application performance management and virtual private LAN service (VPLS).

Source: Gartner (April 2012)

Quadrant Descriptions

Leaders

Leaders have a full portfolio of voice and data products, coupled with above-average service and support, wide European coverage and competitive pricing. They have a strong vision that includes adopting more information and communication technology (ICT) capabilities, which is a strategy they articulate clearly and openly.

Challengers

Challengers exhibit good capabilities in the areas of service and support, pricing and coverage. However, long-term plans are sometimes vague. They may not understand the requirements of enterprises or the market, but what they offer tends to be good quality.

Visionaries

Visionaries have a clear understanding of the market and where it is going. However, they often lack the financial and people resources to execute on these directions.

Niche Players

Niche Players are often strong in a specific element of execution (such as service and support) or part of the product portfolio, or they offer low pricing. However, they usually lack comprehensive vision and resources.

While the Pan-European NSP market remains intensely competitive, changing NSPs is a major upheaval. As a result, enterprises are often tempted to remain with their providers, without challenging them significantly. Enterprise network requirements, unit prices, available technologies and the provider landscape are all evolving rapidly, so clients must employ competitive procurement strategies to get the best value for their networks. Much of the innovation in technologies and commercial approaches in the Pan-European NSP market is coming from smaller more agile providers, which means it's more important than ever to take a broad look at the market.

Clients have a wealth of technology options with which to build a Pan-European network. Technologies include MPLS, Ethernet, Internet VPNs and hybrid combinations of these, delivered over wired and wireless access options, with or without WAN optimization. In most cases, there will be more than one technical approach that could satisfy an enterprise's networking needs. Therefore, enterprises should focus their procurement efforts on specifying the outcomes they require, especially in terms of service levels, and only focus on the specific means proposed, to ensure that a provider's solution (normally a combination of multiple products or services) is a credible way to achieve these outcomes.

The intense competition in the Pan-European network services market is having a number of effects on the market, not all of them positive. The pressure for providers to deliver year-over-year unit price decreases has led many to centralize and/or offshore key support functions. This loss of local capabilities has impacted service delivery from some providers in areas such as new site installations and fault management, especially in less mature European markets where personal relationships can be key to getting things done. As a result, while the measures taken and their consequences vary greatly among providers, there has been a drop in the average quality of Pan-European network services for the first time in more than five years.

Most NSPs offer a broad range of other service offerings, ranging from telepresence and video to IP telephony, unified communications and cloud services. As these portfolio items mature, Gartner is addressing many of these services through specific Magic Quadrants and other research. While recognizing that it can be valuable to have additional services available from an NSP, we have focused this edition of the Magic Quadrant firmly on network services, including WAN services, such as MPLS, Ethernet and Internet VPNs, managed WAN optimization, voice (both traditional time division multiplexing [TDM] voice and SIP trunks), managed LANs and wireless LANs (WLANs). Gartner sees managed WAN optimization and associated APM services and managed LAN/WLAN as areas of growing interest to multinational enterprises and often incorporated in WAN RFPs.

The pressure on providers to reduce costs has led to an explosion in European providers' use of NNIs to connect their backbones to national or subregional providers. For example, most providers will have NNIs with one or more of the three main Nordic regional providers (TeliaSonera, Telenor and TDC), with only a few providers adding significant numbers of new nodes to their networks. Providers use NNIs to provide cost-effective service in markets that are extensions to their primary geographies, without having to build out extensive networks ahead of actual demand. The use of NNIs can reduce competitive differentiation, as there will typically only be a few suitable local providers in a given market. As a result, many Pan-European providers end up using the same local providers. In these cases, differentiation between NSPs becomes a question of the degree of integration the NNI delivers. In addition to interconnecting their networks, they can elect to interconnect (or e-bond) various other systems, including ordering, trouble ticketing, provisioning, billing and so on, and presenting some of this third-party information to their clients via their enterprise self-service portals.

There are also different approaches to the provision of managed network services when using NNIs. Some Pan-European providers will place their on-site equipment, such as a router, at the site connected to their NNI partner's network, while others will let the NNI provider deliver this functionality. Compared with direct connections to the provider's European backbone, combinations of these approaches to NNIs will lead to differences in SLAs and visibility, which enterprises must weigh against the competitive prices that NNIs can offer.