DISOWNING THE NETWORK

Given the ever-rising number of bankrupt and troubled telecom carriers, large enterprise customers now find it challenging at best to confidently select a long-term, low-cost provider of telecom services. Consequently, many of these customers are following the lead of large universities and research organizations by acquiring their own dark fiber networks and, in some cases, their own national optical networks.

Lehman Brothers, Ford and Colgate-Palmolive have acquired their own dark fiber networks, and Boeing plans to deploy its own private national optical network. Level 3 recently announced it would provide the dark fiber to connect most of California's universities and research centers, and a number of universities in the United States have acquired their own dark fiber networks.

Some of these organizations choose to own the dark fiber outright. Others opt for a “condominium” model, in which different organizations own separate fiber strands within a single cable and light up their own individual strands with the technology of their choice, with third-party fiber companies managing the fiber on its owners' behalf. Also emerging are condominium wavelength networks, in which enterprises own and control separate point-to-point wavelengths and a third party — often an equipment manufacturer or service provider — operates and maintains the optical equipment and fiber.

Although traditional carriers see this phenomenon as a competitive threat, a number of carriers and vendors realize these networks present significant business opportunities. For CLECs, customer-owned networks mean not having to make huge capital investments in infrastructure. More importantly, if a CLEC already has significant fiber assets, it can generate large revenues by selling the excess strands.

For ILECs, bandwidth is rapidly becoming a commodity, but the future of telecom lies in providing services, not selling low-margin bandwidth. When customers are free to purchase services independently of infrastructure, they will most likely select trusted, name brand national service offerings. Companies that can offer nationwide switched voice and data services will have a significant advantage in attracting this business.

The computer industry was once a business in which companies leased services, but as technology evolved, computers became affordable and businesses began buying their own. Though the PC undermined the old mainframe computer business, it created a new, much larger industry. Customer-owned networks could have the same revolutionary impact.

DOSSIER: BILL ST. ARNAUD

Occupation: Senior director of advanced networks, CANARIE, Canada's advanced Internet development organization

Location: Ottawa, Ontario

Current reading: “Guns, Germs, and Steel: The Fates of Human Societies” by Jared Diamond; “In Harm's Way: The Sinking of the USS Indianapolis and the Extraordinary Story of Its Survivors” by Doug Stanton

Favorite Web site: (excluding his own, www.canarie.ca) www.howstuffworks.com

Next project: “Building my own backhoe.”