re: fiber optic backbone companies partnering with the utilities
NEON, or Northeast Optical Networks (NOPT), has done what we've talked about here and elsewhere in the past. They've obtained the rights of way to run their fiber over Con Ed's and PECO's utility routes, and they now stand prepared to deliver greater amounts of bandwidth throughout the northeast corridor, as they prepare to contend for customers in some new places. A major advantage that they have is the diversity of their routes, not to mention what G. Gilder has described as their excellent choice of fiber. For the most part, the utility routes are different from those which are used by many of their competitors in the carrier space, which adds a great deal to the "don't put all your eggs in one basket" cachet.
See release:
www2.marketwatch.com
I find this interesting contrast to Telergy's strategy, which is also designed around partnering with utilities for the same reason. In fact, Con Ed was also named as a participant in Telergy's most recent news, although not specifically a "partner." In that release Telergy (a privately held company with its base in New York, who also partners with utility companies throughout the Northeast) advised that they would be using MasTec (MTZ) to create metro fiber networks in the nation's largest urban areas.
Message 10106186
Global Crossing (GBLX) has made a commitment to use a major portion of Telergy's network here in New York City, and elsewhere where they say they will attach to individual buildings in order to provide their customers with end-to-end service, building-to-building, anywhere in the commercial world. Even without mentioning MFNX and the telcos, it's getting to be very fiber rich here in the NE, and elsewhere. It'll be interesting to see how this sudden abundance works itself out, and whether any of the new economies afforded by new optical techs will be equitably distributed downstream to the end user. I mean, enough of it to make a difference, or will the carriers, even these newere ones, continue to latch onto old bogies for as long as they can. I suspect the latter, but one never knows.
The following is an interview with NOPT's CEO yesterday on CNNfn. Enjoy.
Regards, Frank Coluccio
----interview begins:
NorthEast Optic Network - CEO, CNNfn
11/24/99 16:29 (New York)
PRUDENCE SOLOMON, CNNfn ANCHOR, MARKET COVERAGE: Our next guest's company announced today two
major agreements. One with Consoidated Edison Communications, a unit of Consoidated Edison; the other with Exelon, a unit
of PECO (Company: PECO Energy Company: Ticker: PE; URL: peco.com.
NorthEast Optic Network (Company: NorthEast Optic Network Inc.; Ticker: NOPT; URL: neoninc.com has
had an incredible run and is currently trading (15:24:10) at - do we have that screen - last time I looked, it was up, trading at
$75, it was up nearly $14. The stock over the past year has gone from 7 1/2 to 71 with (15:24:20) a high of 79.
Joining me now is Vincent Bisceglia, chairman and CEO of NorthEast Optic
Network and he is in the Watertown, Massachusetts office. Welcome and
thank you for joining us.
VINCENT BISCEGLIA, CEO, NORTHEAST OPTIC NETWORK: Thank you, Prudence.
SOLOMON: Tell us about your agreement that you've struck, that
(15:24:30) was a major agreement for you.
BISCEGLIA: Sure. This is I believe the most important day in company's
history, announcing the expansion with Consolidated Edison, and also
Philadelphia Electric's Communication's division, Exelon. It allows us
to expand our fiber-optic network (15:24:40) from New England, all the
way southward to Washington, D.C., which is the richest bandwidth
corridor in the country.
SOLOMON: And how much are you paying to get into this network?
BISCEGLIA: Well, in exchange for (15:24:50) 10 percent each, to our
new partners, the company will receive an expanded fiber-optic networks
that includes the optronics necessary to transport the circuits over
these fibers, the colocation technology (15:25:00) and facilities that
were required to service our customer base. So it's truly a partnership
and an alliance with two very powerful electric utilities.
SOLOMON: Now, the investors like this news (15:25:10) today, as you
can see, I was saying early on your stock was up nearly $14. Mr.
Bisceglia, how much will you have to spend to build out the process?
BISCEGLIA: We expect to expend (15:25:20) tens of millions of dollars
over the next two years. I'd rather not get into the very specifics
relative to that alliance with our new partners. But needless to say,
we'll (15:25:30) end up with 10,000 fiber-optic miles of facilities
that we will be deploying over the next year. And in addition to that,
we'll be receiving some of the most unique (15:25:40) rights of way
that are geographically diverse and really as a very unique competitive
advantage for our company.
SOLOMON: And the expanded to serve a total market of what?
BISCEGLIA: Well, a (15:25:50) total market of approximately 30 million
people. About 1.2 million businesses exist in our serving territory,
and also 19 million access lines. So it's quite a market.
SOLOMON: And what do consumers benefit from this agreement?
BISCEGLIA: Consumer benefits will (15:26:00) be higher capacity for
end-user applications, such as Internet access, video applications much
like the one that we're talking on right now. It's actually being
carried over fiber-optic networks like neons.
SOLOMON: What is (15:26:10) the time frame for generating profits
here?
BISCEGLIA: Well, our company is currently forecasting EBITDA profits
next year, and we move on from there.
SOLOMON: Do you expect any regulatory hurdles?
BISCEGLIA: We do not believe so. We have (15:26:20) done quite a bit
of research here and our company currently has fiber-optic cable that is
existing over the current electric utility infrastructure in New
England. So this is (15:26:30) just an extension of that whole
strategy of utilizing these unique rights of way for communications, not
only electric energy power.
SOLOMON: So under the neon, you will develop and operate (15:26:40)
and market this combined network?
BISCEGLIA: Yes, we will utilize the neon brand from end-to-end,
offering seamless connectivity for our customers, throughout this
operating territory in the Northeast and Mid-Atlantic.
SOLOMON: Thank you so much (15:26:50) for joining us.
BISCEGLIA: Thank you for having us. |
