AT&T is viewing its new contract with the City of New York as a major milestone for the company and a potential model for business in cities where it is not already an incumbent provider.

The City of New York announced this week that it awarded a multi-year contract to AT&T, with the potential value of up to $100 million. Initial value is set at $25 million. The contract was awarded after a more than two-year RFP process which also awarded major business to Verizon, the incumbent service provider in the city. The Verizon contract has not yet been formally filed or announced, a city spokesman said.

Under the AT&T contract, considered the largest since the SBC-AT&T merger, New York city agencies can use AT&T’s local and long-distance voice and its data services as new options or to replace their existing services.

“This sounds pretty significant to me,” said Mark Winther, group vice president & general manager, Worldwide Telecommunications at IDC. “This is a contract that Verizon has held and dominated for some time. Plus it is in the heart of Verizon territory. I don’t know if AT&T wins points or bragging rights for that, but the sheer size of the contract makes it significant. This is a strategic account.”

Verizon will still hold the lion’s share of New York City’s business, Winther added.

For the AT&T team that devoted hours to landing the New York City contract, the win is a welcome victory, said Tom Handabaka, director, AT&T. The final bid was 800 pages long including 66 pages of pricing. AT&T is focused on helping the city work to make its government network highly survivable, in addition to enabling new services, such as e-government initiatives.

“We have long pursued the city of New York for a number of reasons,” he said. “The infrastructure we acquired when we purchased TCG gave us something that was missing. It gave us a greater local presence that they had developed and now we owned it. We’re thinking that we have this embedded infrastructure and it isn’t being used” by the city.

In the post-911 environment, the city is more aware of the need for redundancy and reliability, Handabaka said, and those are specific needs that AT&T was able to fill. In addition, the service provider is working to be a partner for the city as it launches new initiatives such as e-government.

“We made it clear to the city that this is a whole new environment and we want to be a partner in this -- we not looking to selling you minutes of use, not looking to get into as many agencies as we can,” he said. “I believe we were chosen because we can provide resiliency, redundancy, alternative access, alternative networks, disaster recovery – and then there are the various services, fiber, copper, microwave. In this case, we painted a pretty compelling reason why we need to be part of this.”

AT&T could well use what it does in New York City as a model for city business elsewhere, where it is not the incumbent provider.

“New York City makes a great reference client,” Winther said.

“This would be a great model for other NFL cities,” Handabaka said. “Like they say, if you can sell this concept here, you can sell it anywhere.”

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