Carrier1 International expands into the city networks market

Aug. 1, 2000

By Edward Harroff


Just when it looked like the pan-European telecommunications market could not get more crowded, another fast-growing new-entrant carrier signaled its intention to deploy transborder infrastructure on a massive scale. Carrier1 International, which has recently launched its initial public offering in both the United States and Europe (for a market capitalization that has reached $2.5 billion), plans to link the continent with high-capacity optical networks that deliver full-service offerings for other carriers.

With headquarters in Zurich, Carrier1 wholly owns and operates a 9,000-km pan-European intercity fiber network connecting 11 countries. The company is now constructing at least 20 intracity fiber networks and, through its investment in the joint venture HubCo S.A., is building at least 20 full-service data-center facilities. The company has also secured all the necessary interconnect and operational licenses that allow it to provide network solutions and end-user-ready, value-added services.

Starting with core back-haul network operations, Carrier1 showed its first preference for Corning fiber by signing up as the first LEAF customer in Europe to build its German network. Seeking to reduce the massive construction costs, Carrier1 joined forces with Viatel and Metromedia Fiber Networks in Germany for a joint fiber build. This recently completed back-haul DWDM network is a 2,300-route-km, high-capacity, self-healing broadband fiber ring connecting 14 principal cities. Carrier1 deployed this German network in the first half of 2000.

The question about how to balance Carrier1's infrastructure expansions between its long-haul broadband capacity and the need to expand massive optical-fiber arteries into strategic urban centers was raised last year, in an interview with Carrier1 president and CEO Stig Johansson. At the time, Johansson was very conservative in his near-term prognosis for Carrier1's ability to address the local-loop demand for quality broadband optical networks due to financial constraints. Carrier1 has since distinguished itself by swapping fiber capacity in all key European markets against Carrier1's German national fiber infrastructure for long-distance links. With Carrier1's entrance into the key technology stock markets and increased wholesale traffic market share, two local-loop opportunities happened very rapidly in Paris and Amsterdam.

"Such city rings enable us to deliver our broad range of services to our customers in a much more efficient manner," says Neil Craven, vice president of Carrier1 Business Development.

Carrier1 is deploying MetroCor fiber from Corning in Amsterdam (for a 120-km city ring now under construction) this year and intends to deploy the same brand, as it continues its intracity build-outs in Paris, Milan, Berlin, and Frankfurt. Carrier1 has over 20 cities currently planned.

These new networks will enable Carrier1 to cut local tail costs (last mile interconnect changes) and significantly improve customer-provisioning time. The Paris build-out will closely follow Amsterdam, which is scheduled for completion this summer. Fiber connectivity to the major data and media centers will be a key source of competitive advantage for Carrier1. The capital-efficient approach that Carrier1 has already demonstrated in its long-haul network will continue to be replicated in metropolitan-area-network builds, as Carrier1 takes advantage of pre-sales, joint builds, and fiber/duct swaps.

Carrier1 was formed in March 1998 by two American venture groups that specialized in the telecommunications industry, Providence Equity Partners and Primus Venture Partners. Johansson leads a seasoned group of European telecommunications veterans that understands both the voice and data Internet Protocol opportunities that are emerging for facilities-based carriers in Europe's rapidly liberalizing telecommunications markets. Morgan Stanley helped to raise high-yield bonds that were included in its initial equity stake of $60 million that provided working capital for the German dig.

Carrier1 is Corning's first European customer for MetroCor, and the order obviously represents good news for Corning. Among other benefits, the deal allows the company to give new fiber construction contracts to a recently acquired division of Siemens Cable.

Corning introduced MetroCor last March. It is a G.655-compliant singlemode nonzero dispersion-shifted optical fiber that operates across the entire usable bandwidth from 1,280 nm to 1,625 nm. Corning designed the fiber to eliminate the need for dispersion compensation, reduce amplification along the network path, and facilitate the use of less expensive lasers. It is fully compatible with existing singlemode fibers.

MetroCor specifications, similar to Corning's LEAF fiber, have dispersion-optimized features (which control the level of dispersion of the optical signal in a specific wavelength range). MetroCor fiber has a reduced level of dispersion across the EDFA band compared to standard fibers and is also characterized by a negative dispersion in this range. In addition to increasing the uncompensated reach of these systems, negative dispersion allows directly modulated sources to be incorporated into the network and thereby generate significant cost savings, according to the company.

Clearly, Corning's positioning seems to increase the stakes for all companies in this very competitive optical local-loop fiber market.

According to Wendell P. Weeks, executive vice president of Corning's Opto-Electronics Group, "Starting with the selection of Corning LEAF fiber for their long-haul backbone, and now with the choice of MetroCor fiber for its metropolitan build-outs, Carrier1 continues its 'first-mover' status in the carrier marketplace." There are only currently three other carriers on the MetroCor fiber reference list: Williams, Telergy, and LightSpeed.

With the broad spectrum of alternate access-network technologies, John Marcus, senior analyst at Probe Research Europe, believes that "more market acceptance of this type of low-cost fiber is required to confirm that MetroCor is here to stay. Clearly, the acquisition of Siemens cable businesses will strengthen Corning's ability to deliver low-cost fiber deployment in busy European urban centers."