MetroHoldings telecom

MetroHoldings telecom

By EDWARD HARROFF

London`s newest metropolitan telecommunications network has recently gone live. MetroHoldings Ltd., a joint venture between Deutsche Telekom, Energis, and France Telecom, has completed construction of three fiber rings covering Broadgate, Canary Wharf, and Aldgate. Businesses in and around the city of London can now gain direct access to the network, which will offer services for national and international voice and data communications.

The announcement confirms the rapid progress that this fast-track, alternative carrier has made since its formation in April (see Lightwave, July 1998, page 1). Energis Communications, Deutsche Telekom (Europe`s largest telecommunications group, with revenues of DM 67 billion/$43.8 billion), and France Telecom (the world`s fourth-largest carrier, with revenues of FFr 156.7 billion/$30.3 billion) share a common vision of how to invest in high-capacity Synchronous Digital Hierarchy (SDH)-based city networks to improve their services to UK-based global business accounts. This city network in London is the first part of a five-year build plan that will cost 𧴜 million ($166 million) for core network infrastructure (not including customer tails).

The live rings are based on the latest SDH broadband fiber-optic transmission technology. The same technology is used in Energis`s existing national network (at 2.5 Gbit/sec) and Deutsche Telekom`s 32 city networks in Germany and is offered by France Telecom to its customers all over France through dedicated rings. MetroHoldings` approach also benefits all shareholders because it allows for the rapid and cost-effective construction of the network.

"Thanks to the completion of these rings, done at a reduced cost to all three partners, we will now be able to offer our clients, at a competitive price, the best available technology they have come to expect from us," says Francois Comet, vice president, alternate networks at France Telecom.

The next phase of the London network will see three further rings constructed to cover all remaining major business districts in the capital. Following completion of the London network, MetroHoldings intends to focus on other major UK cities, including Birmingham and Manchester. According to John Beaumont, director of strategy and business development at Energis and acting managing director of MetroHoldings, when the London city network was nearing completion in November, planners were already examining other potential UK metropolitan sites, such as Leeds.

MetroHoldings selected GPT as the main SDH supplier to equip the London rings. One of the important network design criteria is tight integration into Energis`s national core network.

Return on investment

"MAN [metropolitan area network] investments are also a very interesting venture with such a quick return-on-investment pattern [less than two years]," says James Dodd, senior telecommunications analyst at Dresdner Bank/Kleinwort and Benson. He points outs that "MetroHoldings` time-to-market capabilities are impressive, as the new SDH network build starts from Energis`s existing network based on the right-of-ways with The National Grid and London Underground. There are very few MANs existing in the UK, about four serious London competitors--BT, Mercury, COLT Telecom, and WorldCom. Other competitors are FibreNet, London CATV operators, and Manchester Electric Utility`s fiber ring."

The importance of MetroHoldings achieving its aggressive construction plans in London is highlighted by Dataquest analyst Steve Wallage`s observation that Energis is estimated to be currently sharing about half its revenues with British Telecom and other public telephone operators due to interconnection charge-backs (e.g., last-mile customer tails).

Commenting on behalf of Energis (which owns 50% of MetroHoldings), Mike Grabiner, chief executive, says, "The construction of a new metropolitan network for London demonstrates what can be achieved through international teamwork when working to clearly defined objectives. The success has cemented the already close relationship that exists between all parties in the MetroHoldings joint venture."

Building on corresponding agreement

As for Energis`s choices for international partners, the MetroHoldings deal builds on a correspondent carrier agreement into France and Germany. Energis is already adding London-based international customers such as Lehman Brothers to its customer reference list.

As for the possibility of additional investors into MetroHoldings, Energis`s John Beaumont mentions that future international projects might involve Global One, an international joint venture among Deutsche Telecom, Sprint, and France Telecom that provides global voice and data services for businesses, consumers, and carriers. Global One has the option to join as a MetroHoldings shareholder at a later date. q

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