Aerie looking to reap benefits.
Fortune 500 businesses just might be ready to own their own fiber pairs by 2004, when Aerie Networks completes its 194-city route and starts selling pieces of its 432-fiber network.
Aerie executives are counting on it. In three years, they say, optical equipment will be cheaper, bandwidth will be in greater demand and the conundrum of last-mile costs exceeding revenue will be fixed. The recent market bloodbath that clobbered optical stocks and illuminated the flaws in the plans of last-mile service providers likely will be a distant memory by then. In fact, this springs bad news might be good news for the 20-month-old Denver company.
"A lot of the start-up metro guys are really hurting now," says John Griebling, vice president of global network services. "It isnt going to take as much of an incentive to get them to partner with us. Its probably more of a plus than a minus."
Aerie envisions that service providers and the largest enterprises will want the simplicity and control that comes with owning their own fiber network. Thats why it is installing 432 fibers in the ground, when its competitors are only putting in a handful.
Because each customer would need its own set of switches, regenerators, amplifiers and channel dividers to light the fiber, its a model that will only work for service providers, carriers and the globes largest businesses.
"Anybody who spends $30 million a year or more on long-haul capacity could save a lot of money with us," Griebling says. Today, $30 million buys one or two wavelengths on a national footprint, capable of carrying traffic at 20 gigabits per second. A fiber purchased from Aerie could be divided into 64, 128 or 256 channels, increasing their carrying capacity 32-fold to 128-fold.
But the key value is that they dont have to start off that big, Griebling says. They can run all the traffic they need over one or two channels and wont have to invest in expensive Dense Wavelength Division Multiplexing equipment. They would pay monthly maintenance and service charges to Aerie that would be a fraction of what they would pay to lease lines from someone else. It will help small service providers compete with legacy carriers.
"The most important criteria is the first wavelength cost," Griebling says. Aerie is working with Nortel Networks and other vendors, asking for a new product that is compact and inexpensive, and values reliability over raw capacity.
In December, it started installing Corning Leaf fiber in its routes from Houston to Kansas City, Mo., and Washington to New York. Its the most ambitious broadband network to date a 20,000-mile nationwide backbone with 8.9 million fiber miles.
"The simplicity of our product will make it much more reliable and predictable," Griebling says. "Every new improvement we can take advantage of it."
Analysts say Aeries approach has the potential to completely change the economics of networking for the better. Still, they worry about Aeries ability to solve the access problem and note that three years is a long time in Internet years.
For now, the information managers of large enterprises are intrigued by Aeries potential, but content to wait and see if its big idea bears fruit.