Hermes teams with colt Telecom to expand pan-European services

Hermes teams with colt Telecom to expand pan-European services

By EDWARD HARROFF

Hermes Europe Railtel (her) and colt Telecom have upped the ante in the newly deregulated pan-European telecommunications service market. Melding their radically different niche market approaches, these two alternate public network operators announced that they will jointly offer services that complement their core competencies--international long-distance networking for her and local connectivity for colt. Initially, the two companies will offer their joint international services between London, Paris, and Frankfurt. This Synchronous Digital Hierarchy (sdh) network service demonstrates how alternative carriers can react quickly in a market that is dominated by former telecommunications monopolies (e.g., France Telecom, Deutsche Telekom, and British Telecom).

her, leveraging the dark fiber-optic sdh networks of its European railway partners (Hitrail BV), will use its internationally managed bandwidth to connect colt`s metropolitan networks. Both players will now be able to offer more "one-stop shopping" to their respective customers.

The her network interconnects major European cities with high-capacity fiber-optic rings equipped with sdh transmission nodes operating at 2.5 Gbits/sec. Network bandwidth offerings will be from VC-12 (E1, which is 2.048 Mbits/sec) to VC-4 (E4, or 140 Mbits/sec) or stm-1 (155 Mbits/sec). Multiple stm-16 links will be introduced from 1999 using wavelength-division multiplexing (wdm) technology. The wdm capability should also allow higher-rate (stm-64) links to be introduced later.

her is already operating the initial segment of a network that will have approximately 17,000 route-km of fiber-optic cable designed to interconnect most major European cities (see figure). Commercial services were launched in November 1997. her`s marketing director, Gerald Caccappolo, reports, "The her operational network interconnects Brussels, Antwerp, Rotterdam, Amsterdam, London, and Paris. And this backbone network has 24 `carrier` customers, including colt Telecom, Demon, Ebone, Esprit, Euronet, Global One, Ixnet, and WorldCom."

Infrastructure funding

Unlike WorldCom, her is owned and funded as a joint venture. This consortium is similar to other new national network operators that are trying to leverage investment in dark fiber networks by teaming with a telecommunications partner that builds and manages the sdh network infrastructure. The current her participation split has changed over the past few years, with Global TeleSystems Group Inc. (gts) increasing its equity portion to a clear majority (50% in 1995 to 79.1% in 1998). The other 11 national European railway partners are represented by Hitrail BV (50% in 1995 to 12.6% now), Belgium`s sncb-nmbs railway (6% in 1998), and Sweden`s SJ railway (2.3% in 1998).

her is fortunate to have 140 employees and therefore is not plagued by the shortage of skilled network staff that has affected other new public network operators. On the negative side, Steve Wallage, an analyst at Dataquest, San Jose, CA, sees her`s real challenge as "to implement and manage complex end-to-end network services. This team-up of colt Telecom and Hermes Europe Railtel is good news for European business customers looking for international backbone network services."

her will expand its geographical coverage to Spain, Italy, Hungary, the Czech Republic, Slovakia, and Poland by 2000. As gts is already active in some of the former Soviet republics, Caccappolo forecasts other gts public telecommunications operators (ptos) becoming future her customers for international traffic on its fully implemented network. The total network investment is expected to amount to about US$600 million.

According to Caccappolo, "sdh technology is expensive and the big chunks of bandwidth needed--2.5 Gbits/sec and 10 Gbits/sec--make it difficult for a single national carrier to build a contiguous sdh network across Europe [by itself]. Hermes`s network is unique because her is unaligned with any particular carrier, and unit costs are shared among several carrier customers."

EC deregulation

The Hermes/colt combination is one of the few bright spots so far in the competitive run-up to this year`s opening of Europe`s basic voice services market, estimated by the European Community to be worth some 105 billion ecu (US$120 billion). The only other trans-border alternative pto player is WorldCom (see Lightwave, June 1997, page 1) which is using the her network in Brussels until its own fiber-optic network is operational.

EC reformers had other ideas when they started on the road to telecommunications reform back in the mid-1980s: the creation of a single market, one in which new pan-European service providers could roll out seamless services in any European country. Instead, regulatory and market differences are fragmenting the market, and only a tiny number of service providers are bidding for public voice licenses in more than one country. According to Dataquest analyst Falk Muller-Veerse, "New public network operators are divided into niche groups that focus on specific segments: city carriers, national long-distance networks, regional networks, resellers, or other service providers. The first three groups will invest several billion deutsche marks over the next few years to build their own sdh infrastructure, while the other two won`t push much fiber into the ground." q

Edward Harroff writes from Bellevue, Switzerland.