DOD raises concerns over possible AT&T, British Telecom deal

A proposed $10 billion global venture between AT&T Corp. and British
Telecommunications PLC has raised security concerns about a major Defense Information
Systems Network contract held by AT&T, Defense Department officials said.

The Defense Information Systems Agency is studying whether the deal would compromise
AT&T’s $5 billion DISN Transmission Services for the Continental United States
contract. AT&T is providing backbone and access area transmission services at
bandwidth rates of T1 and higher to DOD facilities in the United States under the
nine-year contract.

DISA is concerned that a foreign company such as British Telecom would have access to
DISN, a secure network designed to provide DOD with transport and routing of voice,
circuit-switched data, packet-switched data, video and point-to-point bandwidth services
for WANs, LANs and MANs.

DOD routinely investigates foreign companies that plan to merge or do business with
U.S. companies that hold military contracts.

DISA’s general counsel is also reviewing AT&T’s DISN Video Service-Global
contract, which provides multivendor and dedicated video services to warfighting commands
and units worldwide, and the DISN Hawaii Information Transfer System contract, which
provides WAN and LAN services to DOD posts, camps, bases and stations.

“We are unaware of any DOD concerns and feel it would be inappropriate for us to
respond,” said Greg McCormick, spokesman for AT&T government markets.

AT&T and British Telecom last week announced plans to combine their international
assets and operations into a new, as yet unnamed company. Even though the deal is not a
merger between the two telecommunications giants, the Justice Department and Federal
Communications Commission still must approve the alliance.


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