Williams Communications purchased assets of Herndon, Va.-based CoreExpress for an undisclosed amount yesterday, Nov. 1, a move that saved a struggling provider of guaranteed quality interconnections from bankruptcy, but which might not save CoreExpress customers from being disconnected.
The demise of CoreExpress business is well-documented, and its sale has been expected. The company, which sold virtual private networks with quality-of-service (QOS) guarantees via a product called Extranet, occupied a unique niche in the networking industry. While most carriers cant guarantee performance on other providers networks, CoreExpress did, through an innovative network architecture and customized applications of VPN tunneling, Border Gateway Protocol routing and Multiprotocol Label Switching technologies. As a result, almost 100 large enterprise customers - such as Magellan Health Services, ONI Systems and Paymentech - bought the service, which offered private network-style performance at Internet bandwidth prices.
However, Williams said it has no plans to continue supporting Extranet as a stand-alone service.
"I dont see a distinct technology difference in what they have provided in an Extranet product from what we have," said Mike McAndrews, Williams director of Internet services. "We announced earlier in the summer our intention to launch VPN products in the early part of 2002, and to me this acquisition is a big step to enabling that leap."
Williams plans to introduce end-to-end quality guarantees that CoreExpress was offering to buyers of its own VPN service. CoreExpress provisioned Extranet by striking agreements with a number of business ISPs that would support CoreExpress QOS parameters. Williams plans to adopt this architecture, saying that most of these ISPs are Williams bandwidth customers anyway, and CoreExpress backbone rides largely over Williams network through fiber leases and colocation agreements.
Not having to dispose of CoreExpress backbone is a big plus for Williams. A too large backbone is what killed CoreExpress in the first place. The company sought to develop a side business of selling raw bandwidth on top of the Extranet offering, but when no customers showed to fill fat pipes - which, Williams executives said, will provide "material" improvement of the capacity on the southern routes of Williams own network - CoreExpress ran into a situation that could have resulted only in a bankruptcy or in acquisition.
"We are at the process of winding down the company," Lawrence Strickling, a former chief of the Federal Communications Commissions Common Carrier Bureau and CoreExpress legal counsel, told Interactive Week in October.
While Williams is purchasing CoreExpress assets, it doesnt want the companys sales force. And the fate of CoreExpress customers is also unclear.
"On a question of customers, in terms of where we are in the transaction, it is still premature to talk about that," Williams McAndrews said.