Bridging the Gap - 2

Carriers seek better, more profitable ways to connect customers to the backbone

The Internet economy wont start humming again until a better way is found to connect businesses to the backbone — and to make money doing it.

While the silica settles, dozens of companies focusing on "last-mile" technologies are jockeying to be the ones whose names are called when the checks get handed out again.

The stakes are huge.

Tens of thousands of small and midsize companies want more bandwidth than they can afford — or can get — from stodgy regional Bells or cash-poor competitive carriers. But nothing much will happen until the access market gets a boost.

"Until the last mile is solved, were looking at a flat line at best," says Jon Price, chairman of the Last Mile Fall 2001 show that will be held in Las Vegas Oct. 9 to 11. "Once its solved, what happens to the economy will be just astronomical."

Innovations in technology and provisioning are rampant:

  • Alloptic is developing a symmetrical passive optical network (PON) device capable of delivering 1.25 gigabits per second over Ethernet, and that can connect small remote offices up to 40 miles away.
  • Quantum Bridge Communications is leveraging fiber owned by utilities and cable companies, using $100 passive optical couplers to link businesses and office buildings to the capacity. "Access is the key to the game, to resurrecting the economy and unlocking the value of the network," says Jeff Gwynne, Quantum Bridges senior vice president for marketing.
  • Symmetricom offers service providers a simple device that doubles the reach and capacity of residential DSL service, letting them deliver 3 megabits per second downstream as far as 30,000 feet from the central office. Its loop-extension technology could make a play for the market now dominated by cable and fixed wireless providers.
  • Avaya Labs and Marconi are two of the companies with new initiatives to bring fiber to the curb.
  • Emperative is testing a fully automated cable modem that customers can buy at a store and install themselves, letting the competitive ser-vice provider realize profits from the first month and build sustainable margins.
  • Large systems vendors such as Lucent Technologies and Nortel Networks are teaming with free space optics players to bring fiber capacity to downtown businesses.
  • Salira Optical Network Systems is in the proof-of-concept stage with a software and PON device that it says will lower the cost of installing high-speed Ethernet access from $1,100 to $450. A dozen offices would share 1.25 Gbps.
  • Ishoni Networks is putting three functions onto a single chip, so service providers can offer bandwidth switching, security and voice-over-broadband in a single box. The cost to the carrier could be less than $300; for that, the carrier could offer the box to the end user for free, making up for the cost in monthly fees. A box that saves the carrier some $800 can help get bandwidth to small offices and remote business users, says Martin Schenk, Ishonis acting vice president of marketing. "Everywhere we look, the consumer still wants broadband conductivity."
  • Gigabit Ethernet players such as Looking Glass Networks, Sigma Networks, Telseon and Yipes Communications are getting the undivided attention of venture capitalists, even as they still must prove that their plans to bypass the regional Bells incumbent wire lines are viable.

The last-mile companies say that all they need is for Congress and the Federal Communications Commission to free competitors to offer cheaper alternatives than the incumbent carriers are willing or able to offer enterprise customers.

"The rules are set up to protect the [regional Bells]," says Ed Keible, CEO of Endwave, which makes subsystems for high-capacity radio frequency wireless devices. "Congress needs to separate voice from data, because once theyre commingled, it all becomes voice," and the regional Bells stranglehold on the voice market will win. Without changes, the U.S. will slip behind other nations whose governments have more solid commitments to bringing broadband to homes and offices, he says.

Over the past five years, so much money and so many dreams went into the optical long-haul space that "we have more fiber core than the world will ever need," Keible says. Companies such as 360Networks and Level 3 Communications laid fiber across the nation, and now they face the problem of attracting new traffic when there is little money to run fiber to business parks. Optic fiber reaches less than 5 percent of all U.S. businesses today.

Startups and venture capitalists should have considered access demands first, says Keible. "How do you know how much fiber you need, if you dont know how much access you need?"