CHICAGO--AT&T is upgrading its IP-MPLS core network to OC-768 or 40 Gb/s links beginning this summer, CTO and Senior Vice President John Stankey said here today.

The initial OC-768 links will connect New York, Chicago, Atlanta and D.C., and will be in service by the first quarter of 2007, Stankey said in a Globalcomm keynote address. The upgrades are part of a four-fold strategy to manage complexity in the converged networks world for both its business and consumer customers, he said.

“That is AT&T’s sweet spot,” Stankey said. The upgrades will “dramatically improve our ability to carry converged network services” and enable AT&T to “quickly and efficiently grow our network as demand increases,” he said. This is all made possible by the merger of AT&T and SBC to “create the critical mass we needed,” Stankey added. “This will only get better as we integrate the networks of Cingular and BellSouth, following our pending mergers later this year.”

Ultimately, 31 cities will be connected via OC-768 links as part of the planned network upgrade that will consume some of the $8 billion to $8.5 billion in capex AT&T will spend this year.

“Getting the network infrastructure right” is a major key to the overall convergence strategy, Stankey said. Other major components include managing convergence, which includes delivering hosted services such as VoIP and managed services such as security, over a common infrastructure. AT&T must also create value for the customer and develop strong partnerships with other service providers, content providers, equipment vendors, systems integrators and applications developers, he said.

“AT&T is uniquely positioned to deliver many benefits of convergence to all of our customers,” Stankey said.

He forecast better times for the industry ahead, citing the $861 million in venture capital for service provider and the $1.2 billion for software development this year. “This is the healthiest it’s been since the mid-‘90s Internet boom,” he said.

Customers today have more options and more capabilities but also more frustration when services of all kinds--voice, data, and video--don’t work everywhere, due to increased customer expectations, Stankey said.

AT&T’s network now carriers 5.6 petabytes of traffic daily, he added, which is equivalent to transmitting the entire contents of the Library of Congress every 3.5 minutes.