Carrier swaps fiber to double routes
As a carriers` carrier, ixc Communications Inc. positions itself as a low-cost service provider. To expand from a regional to a national service supplier, the company had to develop fiber routes from New York to Los Angeles and to the major population centers along each coast. Yet the company did not have the capital to build a fiber-rich network on that scale and still maintain its low service rates.
Thus, ixc faced the problem of how to build the 7000 route-miles of fiber it needed to reach its expansion goals, but at a target investment that was less than 50% of normal construction costs. To solve the problem, the Austin, TX-based carrier decided to use fiber sales, swaps, and joint construction deals to effectively double the size of its network as every route-mile of construction was completed.
ixc began to plan its expansion strategy five years ago, according to Ken Hinther, executive vice president of network operations and engineering. Thus far, ixc has made deals with providers such as WorldCom, lci International Inc., and Vyvx Inc. Hinther says the company is working on one or two more partnerships that could result in 10,000 route-miles of fiber coming online by the end of this year. ixc has 3000 route-miles of fiber in deployment right now and has agreements in place that will bring the desired 7000 route-miles of fiber online by year-end, even with no additional partnerships. "Then, it will be a matter of growing the business that utilizes the network," comments Hinther.
Lay your fiber down
The first deal was a joint construction contract completed last year with WorldCom, Jackson, MS. Each side built 1000 miles of network in different regions and then swapped 24 fiber strands. The agreement specifies that each party has the right to expand the fiber count by paying the incremental costs of additional fibers. ixc did just that and purchased an additional 24 fiber strands. "The result was that ixc built 1000 miles but expanded its network by two," says Hinther. WorldCom`s build went from Missouri to Akron, OH, and then to Chicago. In return, ixc contributed fiber from a route that ran from Dallas to Phoenix.
Similar to the swap with WorldCom, ixc recently completed a fiber swap with Vyvx Inc., Tulsa, OK. Vyvx wanted to build a network along a 1600-mile route running from Houston to Washington, DC. ixc was planning a similar build.
Rather than compete with each other, both companies structured a joint build agreement. ixc`s contribution was fiber in the route already in the ground in exchange for fiber going into the Vyvx build. "For the cost of fiber in the existing route, we saved the cost of building an additional route, or on the order of $100 million dollars," says Hinther.
Meanwhile, ixc has acquired capital for other fiber builds by selling capacity on its planned infrastructure. For example, lci, McLean, VA, purchased 12 fiber strands earlier this year from ixc for approximately $100 million dollars. The sale involved a fiber route running from Chicago to the Dallas/Fort Worth area, via Indianapolis, St. Louis, and Kansas City. It then goes out to El Paso and eventually to Los Angeles.
The agreement specifies that ixc is responsible for facilities maintenance for an ongoing contractual fee. Hinther said that when required, ixc will also install the electronics. In some cases, ixc provides buyers with space to install their own electronics.
Route-miles of fiber can cost $80,000 to $100,000 per mile. Morgan Stanley analyst Peter Kennedy estimates that ixc`s fiber network construction is running about $60,000 to $65,000 per route-mile, or 18.7% to 35% cheaper. However, Hinther maintains that ixc`s goal was to reduce network build costs by 50% through partnering and that the company has exceeded those goals.
ixc is using all Corning LS fiber or AT&T TrueWave fiber. These are non-zero-dispersion-shifted fiber brands. Coupled with wavelength-division multiplexing technology, 44 fiber strands give ixc tremendous latitude to grow network bandwidth before exhausting capacity.
ixc is using Janus amplifiers (supplied by Nortel), operating in the 1500-nm window. But the company stacks OC-48 light signals through 16 windows to bring the total capacity up to 38.4 Gbits/sec. q
Paul Palumbo writes from Seaside, CA.