Looking for Money in the Metro
Certainly not Looking Glass Networks, which today announced that it has turned up new networks in nine metropolitan areas with the intent of selling services to other service providers and large enterprise customers.
Founded in April 2000, the company has raised $450 million in financing to build facilities in Atlanta, Chicago, Dallas, Houston, Los Angeles, New York/Northern New Jersey, San Francisco, Seattle and Washington D.C./Northern Virginia.
Looking Glass executives say there is still major demand for bandwidth in the metro areas from players, such as the long-distance companies, that dont want to use local incumbents to reach their customers.
"People were expecting to use the Bell company infrastructure at a reasonable price they didnt think they needed to build more infrastructure, especially companies like AT&T, which bought Teleport and WorldCom with MFS," says Looking Glass CEO Lynn Riefer, a former senior vice president of network planning at MCI WorldCom and network-development executive at Level 3 Communications. "But the Telecom Act didnt end up working too well. The Bell companies have not opened up their infrastructure, especially for broadband capacity. There is such significant growth that AT&T couldnt keep up with its own internal needs much less helping others."
The Looking Glass business plan is to offer cost-efficient and highly flexible services based on a fiber-optic network that is available at the most popular places within a metro area, including carrier hotels, incumbent central offices and major data-hosting centers. Its own switching gear is located in less-expensive real estate, but connected to the fiber ring. Using a state-of-the-art operations and support system, the company can provide bandwidth virtually on demand where it is most needed, Riefer says.
"Seventy to eighty percent of all local data traffic goes through these aggregation points," says Sunit Patel, CFO of Looking Glass and former treasurer at MCI WorldCom. "Its still very expensive to get into these spaces. We had to fight tooth and nail to get into these spaces."
With other competitive local exchange carriers struggling to generate the revenue needed to make debt payments, Riefer and Patel still maintain that current trends work in their favor. First, says Riefer, companies that wanted local connections are no longer as interested in expending the capital to construct their own facilities and are looking for available capacity.
In addition, "especially following Sept. 11, customers are looking for diversity in routing and in networks," he adds. "They dont want to buy from two service providers if both of those service providers are using fiber from MFN [Metropolitan Fiber Network], because that isnt true diversity."
Patel says Looking Glass is fully funded for its first phase, thanks to $200 million in equity from Madison Dearborn Partners and Battery Ventures and a $275 million bank-and-vendor credit facility from Cisco Systems, whose Cisco Cerent 15454 system is being widely deployed in the Looking Glass network to support a diversity of services.