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Technology Stocks : Frank Coluccio Technology Forum - ASAP

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To: Frank A. Coluccio who wrote (599)12/5/1999 10:44:00 PM
From: ftth   of 1782
 
LOCAL HEROES: Optical odyssey.
Telephony, Nov 29, 1999 pNA

Let's take a little adventure. Say you've got a nice, albeit small, network of your own that serves a good healthy Tier 2 city or two. Then you go to your computer, you log onto a Web site. You sign up to be part of a CLEC community.

Bam. Just like that, you've got a national network. Not only that, it's a network that interconnects optically. Yes, real, honest to goodness optical cross-connects. And switches, too! Yesterday, you were just a little competitive carrier. Now, you're using state-of-the-art equipment to take your users on a voyage across the country.

Sound like you may be venturing into untested waters? You bet your Trojan horse you are.

"We're not just another network provider." An understatement from Jane Jones, VP of sales, marketing and customer care for Extant, the company that wants to start you on this trek across the optical wilderness.

But going optical wasn't always the plan. "Our goal was always to build a state-of-the-art network. Our technological strategy has evolved over time," Jones says.

And though it may be the word "optics" that sparked your attention (don't worry, we'll get to that), Jones wants to make it known that you need to look beyond the sexy new network. "It's important to see that the lead-in for the company is not the network, it's the clearinghouse," she says.

The definition of a clearinghouse can be, well, unclear. She explains: "Some are international - they focus on being an IXC and just swapping traffic from multiple networks. We're taking it to a much higher level."

For Extant, a clearinghouse is a place where carriers can meet, socialize and travel over each other's networks. It also means a place where CLECs can find access points, Jones says. "One of the powerful things that CLECs have in competing with ILECs is that there are a lot of buildings that CLECs collectively own, but there are not a lot of places to go to find out who has access to those buildings," she says.

"Our clearinghouse interconnects all the people that join in this community."

As soon as a CLEC signs up, they have Web-enabled interconnection possibilities with all the other carriers in the network. Jones: "That's where the simplicity starts."

Then this Web site also becomes a way for a carrier to market itself to all the other Extant partners. "You immediately open yourself up to new business," Jones says.
The site also enables carriers to see how much traffic is carried over whose networks, which should help with billing issues.

So again, the basic idea is: Sign up, and just like that, you've got a national network.
Which takes us back to the sexy part. Extant has a $250 million agreement with Tellium to deploy optical cross-connects throughout its network, with deployments in eight cities (out of 23) by the end of the year. In 2000, Extant will also deploy Tellium's Aurora 512 Super Switch.

This deployment of completely new technology will allow Extant to "leap frog" its competition, says Lee Butts, Extant's director of marketing.
"An optical network will give us the opportunity to offer boatloads of bandwidth and services," Jones says. "So as we grow, there will be a lot of room for [Extant partners] to grow and stay competitive."

The company analyzed different technologies and decided that with an all-data network with high-bandwidth applications, there was a strong need for the efficiency of optics.

"For the highest bandwidth applications, especially full-motion video, bandwidth has to be separated from Sonet," Jones says. "Optical is one of the only technologies that can do that."
Nick DeVito, director of product marketing for Tellium, agrees that this is a true benefit of the technology.

"Our switches take the provisioning and intelligence and put it in the optical layer," he says. "That eliminates a whole layer. There's a lot of efficiency that comes from that, plus there is a big cost savings."

The vendor is extremely excited about Extant being one of its first (and biggest) customers. "They're offering easy on-ramp access for CLECs to get into the business," DeVito says. "Their business model and [our] technology are a very good match."

Extant hopes for the advantage of being an early adapter. Jones says the company also has the advantage of deep experience and research into the market. "We just happened to start doing research from 50,000 feet," she says. "Our CEO [Larry McLernon] has been watching deregulation through the market since the '80s. That's how we saw that CLECs really needed something like this."

And the CLECs that need this the most? The small ones, she says. "All these companies are trying to be the old AT&T. They focus on the big cities, and they have these national networks and offer local and long-distance service. The poor people left to defend are the Tier 2 and Tier 3 CLECs because they don't have the money to compete against these bigger players," she says. "What we offer puts them on an even playing ground."

Extant will start beta trials this month with Tier 1 CLECs, Jones says, an advantage because they have "the most to give and the most to get." It will also be beneficial to the network to get "the big guys in place," she adds. The company then will target CLECs that focus on smaller markets and move on to ISPs, integrated communications providers and DSL providers, Jones says. Although, "we haven't yet defined our product offering" for the latter, she adds.

And again, the carrier is excited about its big fancy new network, but what it really cares about is you, the CLEC, and getting you where you need to go. "We're one of the only companies left that's not competing against them," Jones says. "We're creating that place where you have business partners, not just competitors."
Let the journey begin.
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