Nacchio (Qwest) interview. Very nice references to ASND
globaltelecomsbusiness.com
Excerpts:
Q: What have been the costs involved in the network build? Which suppliers have you been working with?
Nacchio: If you look at the physical assets, our US network probably costs about
$2.5 billion. I say about that amount, because we had an interesting financing
technique. We basically built most of it with other peoples' money, by over-building the
fibre and selling off sections to GTE and Frontier. If you talk about actual technology
suppliers, the fibre all comes from Lucent. It is a non-zero dispersion shifted fibre. The
optical electronics are all provided by Nortel. Our routers principally come from Cisco
and our voice switches from Nortel. They are basically DMS-250s. We are also
deploying an Ascend ATM/Frame Relay backbone. They are our principal suppliers.
Q: What are the network's advantages for delivering high-level applications?
Nacchio: To put it bluntly, the advantage is that you can get these applications. If you
look at the big backbone data networks in the US, you basically find that those
backbones are DS3 level speed. They are relatively low-speed. We are talking about
giving people OC48, OC192, you know two and a half, 10 Gbps backbones.
We are the only guys with that capacity. In fact, you will find that today we are pushing
the technology in routers. The routers are not fast enough to handle the capacities we
are bringing on-line so we are actually pushing people to build new technologies,
people like Cisco. Who needs very high-speed applications? Universities. We won the backbone for the new development of Internet2. Telemedicine, particularly high
resolution requirements. The entertainment industry: today they make more
computer-simulated movies in multiple locations where they need very high-speed
backbones.
Let us look at the people who sell and manage data networks services. In the EDS/IBM global network division, you find that these people need high-speed
backbones. At certain government locations they have massive database transfers. The
need for very high-speed, high-end applications generally arises from specialized
government applications, universities and high-end business. We are witnessing very
rapid developments. Today our challenge is to keep up with demand. We actually have
more business than we can physically put into service. When we did our first quarter report, we announced a backlog of $1.4 billion of service orders in very high-speed
application areas. We are working very quickly to get it up. So I see a burgeoning
market developing around us and we have the advantage of taking the entrepreneurial
risk. Therefore we are the first guys to the market.
Q: Do you see the company as pioneers in the digital age?
Nacchio: Absolutely. I think it is fair to say that others would say that we are on the
cutting edge of a transformation in the way networking is done in the digital age. We
are pushing convergent networks. We are pushing high-speed applications. We are
even pushing the technology providers, who traditionally used to push the telephone
providers. Routers are too slow for the network, rather than the reverse.
Q: Could you provide some details about the contracts Qwest has with other
operators for the sale of dark fibre in the Qwest network?
Nacchio: about $395 million. We also sold about $150 million of dark fibre on a contract to WorldCom and we have a bunch of other smaller providers who have
taken sections of dark fibre from us, mostly regional and local players. We have some
dark fibre sales to the RBOCs and some to the cable companies. We are also selling a
lot of capacity to mostly ISPs. Almost every big-name carrier in the US is one of our
customers on the wholesale level.
Q: Qwest recently signed a $430 million contract with the US government to
provide a custom-made VPN service. What was the importance of this
contract?
Nacchio: I think it is similar in importance to the value and legitimacy we received with
the Bell deals and with Internet2. A very sophisticated technologically-aware customer,
in other words the US government, chose the Qwest network over all the other
choices that they could have had. So I think it was not only fiscally very significant: it
was also symbolically very significant.
Q: Can you talk about the importance of recent agreements with Cisco and Ascend?
Nacchio: The importance of those relationships goes beyond the traditional customer-supplier relationship. If you look at the convergence phenomena, it is not simply convergence for communication carriers. It involves convergence for equipment manufacturers. I believe that we are witnessing a major race to develop the essential office of the future. Does is it come out of the traditional telephone space with the major providers like Lucent, Alcatel, Nortel - or does it come from the data space with providers like Cisco, Ascend and others?
I think both sides realize that they have to compete with non-traditional competitors, as the voice and data world merges. Those arrangements were struck with Qwest not just to sell its equipment: I think those suppliers understood the significance of being at the cutting edge to learn what would have to be their future generation of product line. Since Qwest was pressing that change faster than anyone else, it was a great place for them to form an alliance and have a living laboratory. |
