After a stunningly brutal fiscal season, telecom giants AT&T Corp., Sprint Corp., and WorldCom Inc. are revving up enhanced services for the enterprise, realizing that their futures likely hang on selling deeper into corporate accounts.

AT&T has trumpeted its enhanced INCS (Integrated Network Connection Service), lining up customers such as retail giant Best Buy Co. Inc. for the offering that promises to pass voice and data over integrated lines.

Meanwhile, WorldCom has scrambled to show that larger customers such as the Arby’s Inc. restaurant chain, which hired the carrier in October, are interested in the hosting prowess it gained through its purchase of Digex Inc.

Not to be outdone, Sprint last week declared that it would be the first to convert its digital circuit-switched network to a packet-based network to ease data transmission.

However, even as the carriers scramble for capabilities and partnerships geared at enterprise evolution, they are leaning on steady revenue streams from their traditional networks. In so doing, carriers are trying to disavow users of the notion that hard times will impair their ability to serve major corporations.

“Each carrier has its own unique set of dire circumstances,” noted Bob Rosenberg, an analyst at Insight Research Corp. in Parsippany, N.J. “They no longer have a cash cow to milk,” he said, speaking of plummeting long-distance revenue.

In fact, a study last week indicated that VOIP (voice over IP) would continue to gut long-distance revenue that has long propped up the carriers. Washington-based TeleGeography Inc. said VOIP will almost double to make up six per cent of traffic.

To enterprise users, news of the potential demise or dismantling of industry stalwarts is not so much causing panic as pause.

“There is a lot of uncertainty and curiosity about what will transpire over the next year,” said Mason Rotelli, CIO of Communications Supply Corp. in Carols Stream, Ill.

For Basking Ridge, N.J.-based AT&T, the road has been particularly rough. The company cut its work force, unwound its international partnership with British Telecommunications PLC, and announced it will exit the broadband wireless space.

WorldCom, too, has had less-than-stellar financials and staff reductions. Kansas City, Mo.-based Sprint has had layoffs and announced recently that it will shed its ION (Integrated-On-Demand) service, launched about two years ago as a single platform for voice, video, and data.

“It makes you question the future of semi-managed offerings,” Rotelli suggested of the ION dismantling.

Yet managed offerings and IP migration strategies are exactly the direction in which the carriers are headed. For example, AT&T and WorldCom recently came out with VPN enhancements that parlay frame-relay assets into IP apps.

For its part, WorldCom is fast acting on its intent to become a network-based applications provider. The Clinton, Miss.-based carrier now counts IBM as one of its “strongest, nontraditional competitors,” said Brian Brewer, WorldCom senior vice-president and chief marketing officer.

And yet carriers are still clinging to traditional ATM and frame-relay accounts, as enterprise users are loathe to swap out vendors or equipment once services are in place.

The measured paths many enterprises are taking dovetails with AT&T’s emphasis on “relentless incrementalism,” said Dale McHenry, vice president of data connectivity.

“Our mission is not to convert our customer base to brave new technologies. It is the relentless evolution of networks one step at a time,” McHenry added.

The “industrial-strength connectivity” that AT&T has honed through enterprise accounts is now a “building block” to be offered on either a stand-alone or integrated basis, added Robin Young, AT&T’s senior vice president of managed services.

Such multitasking, most agreed, is key to the telecoms’ survival. But it involves shedding the traditional telecom mentality.

“We are all very conditioned to selling transport. We’ve got to move up the food chain with an integrated approach that is much more complex,” said Len Lauer, president of Sprint’s global markets group.