IXC joins with Telenor, Clarion, to tackle Europe via fiber network

By ROBERT PEASE

IXC Communications Inc. (Austin, TX) is reaching its telecommunications arm into Europe through a joint venture called Storm Communications Ltd. IXC, a national carrier with a coast-to-coast U.S. fiber-optic network, will team with Norway`s state-owned Telenor International and Clarion Resources Communications (Atlanta, GA) to take advantage of opportunities in the growing European market to provide international switched voice, fax, and data services to carriers and resellers. The services will ride largely on fiber-optic infrastructure.

Storm, headquartered in London with sales offices in Germany, France, and the Netherlands, has already signed contracts with European carriers such as COLT Telecom Group plc (London), WorldCom International (Jackson, MS), and Esprit Telecom Group plc (London) to provide international telephony and data services.

The joint venture began in mid-1997 through a common interest in Clarion shared by IXC and Telenor. Clarion is a customer of IXC`s network, and Telenor has majority ownership in the company. Once a finalized agreement was reached and the company staffed, Storm officially launched in September 1998. The three parent companies hold shares in Storm, with IXC and Telenor each controlling 40% and Clarion owning the remaining 20%.

"Telenor was looking to expand into Europe as we were," says Meri Braziel, senior vice president of European operations for IXC. "We had common interests and goals, such as putting a switch platform in place and offering wholesale services, so we decided to do it jointly."

IXC also has current interests in Latin America and the Far East, while Telenor`s global presence includes Africa, the Middle East, and some of Asia. Both companies already had traffic going into Europe, so there were no overlapping competitive advantages to consider, resulting in a natural fit for jointly creating Storm. Leased facilities on several undersea fiber-optic routes such as Global Crossing`s Atlantic Crossing (AC-1) between the United States and Europe provide the transcontinental access.

Both IXC and Telenor brought unique experiences to the bargaining table. IXC`s experiences of growing a company in a competitive marketplace and building a long-distance fiber network were very important to Telenor. The company`s first expansion into Mexico provided IXC with additional insight into growing an international network.

"We knew how to sell in a highly competitive market, which is new territory for a postal, telegraph, and telephone [company] like Telenor," says Braziel. "The markets on the continent are just beginning to deregulate, except for the U.K., which has been deregulated for about 10 years. But those other European markets represent a tremendous opportunity."

Telenor offered its understanding of the European market environment and a wealth of experience in the inner workings of the telecommunications industry in Europe, particularly on the regulated side.

"Telenor has been involved in these countries for many years," says Braziel. "So as issues come up, they know all the right people to get those issues resolved much more quickly. That`s been very helpful to our joint venture."

Storm will also be taking advantage of a growing European Internet and data market. IXC is a firm believer in the Internet and its growth, observing first-hand its impact on the U.S. telecommunications industry. For example, IXC has made several Internet-related acquisitions this past year, buying into such companies as AppliedTheory Communications Inc. (Great Neck, NY). IXC recently released wholesale and retail Internet protocol (IP) services in the U.S. market over its Synchronous Optical Network-based network that supports all protocols, including frame relay, Asynchronous Transfer Mode, and IP.

Braziel says the biggest contributor to Europe`s lag behind the United States in the Internet marketplace is the lack of Internet hosts in Europe. About 80% of the hosts are in the United States, so much of the Internet data must travel from Europe, through a U.S. host, and back to Europe. "As there becomes more hosts in Europe," says Braziel, "you`ll see a huge expansion of Internet data services. With Storm, we`ll be able to take advantage of those opportunities."

Storm gives IXC a good foothold in Europe, with gateway-switching hubs in London and Frankfurt, along with points-of-presence in Amsterdam and Paris. Plans for expansion are underway for additional switching sites in Spain, Italy, Belgium, Austria, and Switzerland by the end of 1999. But IXC`s global network aspirations aren`t limited to Europe and Mexico. "We`re definitely developing relationships in other areas and looking at other markets," says Braziel. "A few of those areas of interest include Japan, Australia, New Zealand, and Hong Kong."

For now, though, IXC and Telenor will work together through Storm to become a strong European competitor. With the combination of an established European telecommunications operator and a firmly entrenched U.S. telecommunications network carrier, it appears the competition in Europe has two new players trying to take them by storm. q