C&W: Construction and waiting

Carrier plans for worldwide IP voice; U.S. backbone turns away customers Construction is in the cards at Cable & Wireless, the U.K.-based voice and data carrier. Some of it will be done over three years, creating the telecom world's largest all-IP voice network. And some construction can't come fast enough for C&W USA, the U.S. subsidiary that has been turning away new data customers since mid-September so that it has the bandwidth it needs to serve its current clients.

The IP voice network was the subject of a memo of understanding announced last week between C&W and Nortel Networks, which will be paid $450 million to construct the technology needed for packet-based voice over the next three years and $1 billion to manage the system for seven years after it is built.

"We really believe we'll be one of the first in the market to do [all-IP voice] on this kind of scale and this kind of breadth," said Michael McTighe, CEO of C&W Global Operations. "For C&W, it's clearly a more cost-effective solution. Putting in place IP-based voice products is significantly cheaper than adding additional circuit-switched capability today. And migrating to a single network means a much easier network to manage going forward."

A voice minute transmitted over an IP network costs one quarter the price of a minute sent over a circuit-switched network, McTighe said.

"Our expectation is that 80% of Cable & Wireless voice traffic will migrate to IP," said Nortel chief operating officer Clarence Chandran. "Think in the low billions of minutes annually."

The C&W IP voice backbone will cover Europe and North America. Though a definitive agreement is not signed - but probably will be before the end of 2000 - the two companies have agreed C&W will control the network architecture, the design of the IP voice platform and customer relations. Nortel will manage circuit switches on the current network, build the IP voice platform and migrate traffic gradually from the former to the latter.

For the last two years, C&W has homed in on data services, and Internet hosting and content delivery at the expense of voice traffic. Earlier this year, the carrier formed a new business unit to coordinate its push into Internet and data services.

The new network would allow C&W to provide customers with integrated voice and data services over a single IP network and permit easier deployment of a number of advanced services, including desktop videoconferencing, IP Centrex and call center features such as "pushing" Web pages to callers, McTighe said.

"This is a watershed in IP technology," said Eric Goodness, director at Gartner Dataquest IT Services. "For Cable & Wireless, it's a tremendous vote of confidence in IP technology, which may finally be showing signs of breaking out of the minor leagues. For Nortel, it could be an endorsement of their convergence program and boost their status as a supplier of next gen networking solutions."

C&W was careful to stress that in outsourcing its voice network, it was not moving toward becoming a "virtual carrier." "We are intent on being a facilities-based IP service provider," McTighe said. "We have come to the conclusion that, to do it effectively and in a timely fashion, we have to partner with others."

Meanwhile, C&W USA is facing some growing pains of its own. On Sept. 7, the subsidiary froze bandwidth sales for the U.S. market until Nov. 17, when it lights up more OC-48 routes. The apparently unprecedented step of turning away new business was meant to protect the capacity required for the company's existing customers.

"We've gotten into a situation where the demand for our service has exceeded the available supply," said Rob Ayers, marketing vice president for C&W North America. "We made the conscious decision to make sure existing customers get the service level agreements we sold them and not to fill any additional orders until the mid-November time frame."

C&W USA's backbone currently consists of a mesh of OC-12 and OC-48 fiber. The addition of more OC-48s by November will increase the overall capacity of that backbone by a factor of five. Further upgrades to OC-192 fiber in 2001 will boost C&W USA's capacity even more.

"We just did not expect the kind of demand that we've gotten for the high-speed circuits, in particular the OC-3s and the OC-12s," Ayers said. "We're putting massive quantities of terabytes onto the backbone, and the lead time for getting the network out there is something like nine to 12 months."

When it realized it would be caught short on bandwidth, C&W USA considered leasing capacity from other carriers to use in provisioning new lines but decided that method would take almost as long as waiting for its own upgraded network.

"It's really being responsible," Ayers said. "It's painful to have to slow things down, but we don't want to damage our customer relationships." The carrier is offering up to two free months of service to customer wannabes who have their line orders delayed by the freeze.