New Edge flattens WAN prices

New Edge Networks today announced a three-month trial of flat-rate Wide Area Network Service that will allow customers to reduce what they are paying to connect remote locations. The trial service, aimed at customers with 50 or more locations, is believed to be an industry first.

The trial service, announced at the 95th annual National Retail Federation Convention and Expo in New York, is designed to let customers get the same service at all their locations for $99 to $159 a month per site, even if some sites have to be served on frame relay circuits that can cost up to $800 a month. It will be available to customers if at least 85% of their sites are on New Edge’s Bigfoot network and can thus get DSL access. The lower of the two prices applies to companies with fewer off-net locations.

New Edge believes that it can make an acceptable profit margin by reaching more customers – particularly retailers – said Greg Griffiths, vice president of marketing.

“We profile our users and what they would like to see, and all of them would like to see flat-rate pricing,” he said. “From a business standpoint, they have store managers and retail managers who are graded and get their bonuses based on store profitability. To have one store with an $800 circuit and another with a $100 circuit affects profitability of the stores but is no reflection on their work. It’s a lot simpler for them to manage if all sites have the same cost structure.”

Currently, the choice for customers who have some sites that don’t have DSL access is to use much slower dial-up, eliminate those sites’ access to real-time data or applications or pay for a frame relay circuit at prices that range from $225 a month to $800, Griffiths said.

“We are fortunate to have the biggest footprint in the country – about 90% of sites will be on our Big Foot network,” he said. “We plan to test this for three months, look at the results once everything is in place and see if we’ve met our profit thresholds.”

New Edge will use 128 kilobit per second frame relay service to make the remote connections, he added. Prior experience shows those circuits are more expensive in independent telco territory, although the prices vary even among former Bell companies.

“What we’ve done is taken a look based on history, so we know what percentage typically qualify up front, what percent fall out to frame, and what fall out to different frame zones in our cost structure, so based on that we can extrapolate a total blended cost,” he said. “Where we run into trouble is usually where we can’t get a frame circuit from a former Bell company and have to use an independent telco or MCI. Verizon is also more expensive – they tend to be 2.6 times the cost of the other Bells.”