GTE Is Regrouping To Concentrate Efforts In Electronic Commerce

GTE Corp. is embarking on a reorganization that it says will sharpen its focus on the financial services industry and its role in electronic commerce.

Effective Jan. 1, the telecommunications company will move its digital certification unit, GTE Cybertrust Solutions Inc., into a newly formed division, GTE Internetworking.

The move will bring GTE's Internet services-including BBN Corp., the Internet technology pioneer acquired in May for $616 million-under a single umbrella.

"We have substantially focused on the financial services community," said Peter Hussey, vice president and general manager of GTE Cybertrust. "We work with most of the large banks-and the Federal Reserve System-doing architecture and design work, professional services, and consulting."

GTE Internetworking also will provide technical assistance with network security, firewalls, and digital certificate programs.

In banking and brokerage, digital certificates are used mainly to authenticate customers seeking account access, though a single certificate may have multiple applications.

First Union Corp. uses GTE Cybertrust certificate technology in its home banking system. Mellon Bank Corp. uses the certificates for on-line securities purchases.

Wells Fargo & Co. is in a partnership with GTE that should result in one of the first commercial rollouts of certificates based on the MasterCard- Visa Secure Electronic Transaction protocol.

GTE is involved in SET pilots with banks in Taiwan, Israel, and Singapore, and with American Express Co.

In addition, it is working with the Financial Services Technology Consortium on an electronic check pilot and is involved in writing standards and processes to handle electronic checks.

Thomas Carty, vice president of business development and marketing for GTE Cybertrust, said the Internetworking unit is eager to form new relationships with companies providing software and services to the financial community.

"We'll do all the (digital security) work," he said. "We'll create, issue, distribute, manage validity periods, and if the certificate is compromised, we'll put the person on the recovery list."

GTE Cybertrust handles all elements of the certification process except the decisions left to the on-line service provider: Who should get the certificates and if they should be revoked.

The Cybertrust division, based in Needham, Mass., has about 120 employees and accounts for $5 million of GTE's $21 billion of annual revenue. Cybertrust expects its revenue to at least double in 1998.

The combination of Cybertrust with BBN and Genuity Inc., a Web hosting service, in GTE Internetworking will result in a 2,800-employee group with headquarters in Irving, Tex., and an operations center in Cambridge, Mass.

"On the product side, we're beginning to compete more and more with Entrust (Technologies Inc.)," said Mr. Carty. He added that Verisign Inc. and International Business Machines Corp. also are competitors.

He expects the electronic commerce market to revolve around three types of payments: business to business, business to consumer, and consumer to consumer.

Though the market for certificates is still small, Mr. Carty sees some growth in 1998 and a more rapid expansion in 1999.

"Financial institutions will be the first to adopt," he said. "Retail banks and brokerages will use the technology bank-to-bank and for buyer-to- supplier networks."

He does not discount the possibility that large banks could become their own certification authorities and offer such services to community banks, thereby cutting companies like GTE out of the loop.

Second-tier banks, however, are likely to outsource, and GTE, Verisign, and Entrust will be in position to provide the service and support bank- branded certificates if desired.

Since its formal launch Sept. 2, GTE Internetworking has received a $1.5 billion investment from GTE Corp., part of it the result of a GTE alliance with Cisco Systems Inc. It has also been aligning the business units and adding new services.

"We are in a rapid growth phase," said Mr. Hussey.

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