Jerry Parrick

Offering high-bandwidth services to needy customers sounds like a good business plan. Unless too many service providers are chasing the same customers with the same products.

That's exactly the case with optical services, says Jerry Parrick, CEO of Yipes Communications, which offers Ethernet service in metropolitan areas.

“In the past couple of years there has been tremendous hyper-crowding,” he says. “Then suddenly the stock market turns down, and anyone without cash got caught.”

Despite changes in the economy, Yipes and competitors such as Telseon and Cogent Systems have found access to the venture capital market. That fact is likely attributable to what they're delivering: high-speed access in metropolitan areas at economical rates — characteristics made possible by the use of Ethernet technology.

“Ethernet is simple. It's cheap. It works,” says Doug McEuen, senior analyst with Pioneer Consulting.

The key is to disrupt the incumbents, Parrick says. And with 10 Gb/s Ethernet already an industry standard and 40 Gb/s in the works, “that takes Ethernet to a whole new level,” he says. “ATM and Sonet are being overrun by gigE.”

According to Parrick, customer demand hasn't slowed. “Fundamentally, the economy is still strong,” he says.

Echoing the sentiments of others in the industry, Parrick says the market downturn will be on a path to normalcy by the second half of this year.

“The companies that have trouble will disappear,” he says. “At some point others will copy the basics. If you are lucky enough to get a head start, you can make customer relationships sticky, where it's not just customers making transport decisions.”