CLECs Exploit Innovation in Race Against RBOCs

FRAMINGHAM (03/24/2000) - When competitive local exchange carriers compete, they don't always do it the old-fashioned way. These upstart carriers that challenge the regional Bell operating companies look to the latest technologies to build networks. Cost is the main reason. The new equipment also supports services that traditional carriers just can't offer, or lets the CLECs offer services at prices RBOCs can't beat.

Rather than spend the millions it takes to buy a traditional local telephone switch, for instance, CLECs buy switches that handle data and voice at a tenth of the cost. And rather than settle on equipment that will lock them into the same technology for years to come, they adopt gear that is flexible enough to complement the next generation of switches when they come along.

It's all about supplying "the best equipment changes pretty rapidly," says Mick Seamans, chief technology officer of Cmetric, a startup CLEC in San Francisco.

One of the company's key investments is a lab in which the latest technology is put through its paces to determine whether it is ready for deployment in a commercial network.

CLECs face the same challenges RBOCs do - building links between customer sites and network services, typically local and long-distance voice; Internet access; virtual private network services; and data links between customer sites. Two or three different carriers might offer those services, but a common theme among CLECs is to offer one-stop shopping and put all of these services on a single link into the customer's building.

CLEC 2nd Century Communications Inc., for example, installs a traditional T-1 line to its customer sites, but then connects this T-1 to its untraditional network, delivering voice, data and Internet access. 2nd Century uses a Vina Technologies integrated access device (IAD) at customer sites to convert customer voice and Internet traffic into ATM cells and drop them onto the T-1.

Siemens MainStreet 36170 ATM switches in 2nd Century's network sort out the cells and send voice to local or long-distance carriers and send Internet packets to an ISP.

The ATM switches eliminate Class 5 voice switches, making the local switching investment about a tenth of what it would otherwise cost, says Vince Rocca, chief technology officer and co-founder of 2nd Century. The service, called Enhanced Subscriber Loop, will employ less expensive digital subscriber line technology after the technology matures, Rocca says.

Customers can sign up for the carrier to manage the service right down to an Ethernet hub in each office. Future services include unified messaging, computer-telephony integration and desktop management.

ITL Metro, a CLEC in Oregon, is building its local network on gear from BroadSoft, which makes software that runs on off-the-shelf gear such as Cisco routers and Sun servers to support local voice and data services. The software includes provisioning of Centrex and other voice call features by customers via a Web interface. The interface lets sales staff set up new services, and because the whole process is automated, there are fewer human errors to delay provisioning, says Joel Eisenberg, CEO of ITL.

ITL relies on other carriers, such as Covad Communications Co., to link customers to ITL's network, says Eisenberg. ITL charges $300 to $500 per month for combined local and long-distance phone and Internet access.

The price of BroadSoft's alternative switching platform made ITL's service feasible. "Otherwise it wouldn't have been worthwhile," Eisenberg says.

Other CLECs are customizing the latest carrier switches to enable new services.

International Long Distance, despite its name, is also a local carrier that has worked with multiprotocol switch vendor Salix to build new services. Customers can buy services that allow them to send traffic at rates of 100 or 1,000 times the base speed of the circuit they order. ILD ties into customer buildings via fiber or high-bandwidth copper links, and gives customers an IP port into the ILD network.

ILD also offers local IP-based phone services, including Centrex features. The Salix ETX 5000 switch can tie into data network backbones or connect with traditional phone networks, reducing the investment ILD makes in switches.

"The Salix switches also let us take CLEC services and put them in an IP environment," says Reggie Ibison, vice president of engineering of ILD.

Cmetric, the San Francisco CLEC with its extensive test lab, is pushing the envelope on delivering IP services. Its local fiber networks offer customers 100M bit/sec Ethernet ports for LAN speed metro connections. Customers can buy bandwidth at 1M bit/sec increments on those ports, and buy multiple ports.

Pricing for the service is based on bandwidth and the distance between customer sites. Exact prices are not set, but they will be roughly half the cost of traditional bandwidth prices, says Cmetrics' Seamans. If a customer paid $3,000 per month for a DS-3, Cmetric would charge about $1,500 for a 45M bit/sec service, he says.

Cmetric puts Gigabit Ethernet switches at customer sites and connects them to a fiber that runs back to a Cmetric point of presence. Gigabit Ethernet runs directly on the fiber to a Layer 3 switch at Cmetric's POP, where it is switched among customer sites on a virtual private network or to the Internet.

Cmetric uses multiple hardware vendors but declined to identify them.

While CLECs embrace new technologies to offer new services, customers should beware, says Jilani Zeribi, an analyst with Current Analysis in Sterling, Va.

The technologies have not been tested long-term in carrier networks, and many of the CLECs themselves, while well-funded with borrowed money, have yet to show they can stand on their own for the long term, Zeribi says. Reliance on cutting-edge technology may be cause for customer concern down the road.

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