|
(COMTEX) Williams Plans to Beat Competition on Price Return of the Ba
Williams Plans to Beat Competition on Price Return of the Backbone Player Boon
for ISPs
Jan 12, 1998 (INTERNET WEEK, Vol. 4, No. 2) -- Three years after the
sale of its data transportation unit to WorldCom [WCOM], Williams
Communications [WMB] re-entered the data transportation market as its
non-competitive clause expired Jan. 5. It is determined to compete with
WorldCom, Qwest Communications International Inc. [QWST], IXC
Communications Inc. [IIXC] and Frontier Corp. [FRO] on price. "We can
meet or beat any competition out there on the market," Frank Semple,
president of Williams Network and vice president of Williams
Communications, tells Internet Week. Tulsa, Okla.-based Williams' entry
into the market for data transportation will allow for more flexibility
on pricing of data services and new revenue potential for ISPs.
"Finally ISPs will get a wholesale bandwidth supplier that won't try to
compete with them," says Brett Azuma, an analyst with Dataquest. The
market price for data transportation, which was at 6 to 7 cents per DS0
mile 18 months ago, is currently at 3 to 4 cents per DS0 mile. Industry
insiders expect Williams' entry into the market to drive the price down
to 1.5 to 2 cents per DS0 mile. The reason Williams is able to compete
on the price is its positioning in the market. "Because of the way we
do business and our real strong strategic partnerships, our benchmark
costs for these network products are lower than those of the
competition," says Semple. "We won't be undercutting the market,
though." Williams, which is nation's largest transporter of the natural
gas, has re-entered the market place as a "carriers' carrier," a
wholesaler dedicated to the business of transportation and not
interested in providing other kinds of data services like all other
data transportation companies do. Williams started laying first fiber
optic wires alongside with its pipelines in the mid-1980s. Three years
ago it sold its data transportation unit, Wiltel, to WorldCom for $2.5
billion, retaining one strand of its fiber optic network. The deal,
closed Jan. 5, 1995, included a three-year non-competitive close which
excluded Williams from the data transportation business. The clause
expired this year and Williams announced its reentry into the market.
"We want to stay in the transportation business because that's where
our company's strengths are," says Semple. To succeed, Williams wants
to offer its customers best value for the price and establish a limited
number of strategic partnerships. "Williams wants to be a high-end,
high-volume technology company," says William Hyler, energy analyst
with CIBC Oppenheimer. "Wait for more news from them and other
regionals." One of the dangers analyst see in Williams' position is the
demand for company's services, when large corporate clients will be
enticed to turn straight to Willimas instead of purchasing backbone
access from a telco or an ISP. "It's hard to resist when customers are
knocking down the doors," says Azuma.
The Network
The value for the basic services the company sells, which are data
transportation and co-location, is based largely on the available
facilities. Williams has currently deployed 11,000 miles of the OC48
fiber optic cable expanded to OC192 capacity with wave multiplexing
technology across the country. The company announced it will have the
total of 18,000 miles of fiber optic cable deployed by the beginning of
next year. The growth of the network will be done through construction
and acquisition. "Our capital investment program from now to the year
2000 is $1 billion," Semple says. This investment plan rivals
WorldCom's "$1 million a day" expansion program. Also, Williams is
pursuing an aggressive acquisition strategy. For example, on Jan. 5 the
company bought 350 miles of fiber linking Jacksonville and Miami for an
undisclosed amount from MediaOne [UMG], newly independent division of U
S West. Another source of network growth for Williams will be swaps of
dark for light fiber the company plans to engineer in the regions of
the country where its competitive position will allow for such
transactions. "We will be selling and swapping the dark fiber we own,"
says Semple. " The fiber that we need for our customers we will light."
Williams' expansion of its SONET-based ATM network will be a major boon
for Ascend Communications Inc. [ASND], since its switches were chosen
as the best fit for Williams' network. The company announced it will
purchase $150 million worth of Ascend's GX 550 ATM "smart core"
switches. Semple says after evaluating carrier class switching
technology on the market the company chose Ascend's ATM switches for
their technical characteristics. Among other network equipment vendors,
Williams also has a strong relationship with Cisco [CSCO], since one of
Williams' units involved in video transportation services actively buys
equipment from that vendor. It also purchases equipment from Nortel
[NT]. The customers that Williams is marketing this service to are
RBOCs, CLECs and ISPs. The company expects to put a sizable amount of
telephone traffic on its network, which will be surpassed as soon as
late this year by rapidly increasing data traffic. Currently the
company's network is capable of handling about 50 million simultaneous
phone calls. Williams buili its network to handle data, voice and video
traffic.
Partnerships
Williams has entered into strategic relationships with several
companies utilizing its network. Intermedia Communications [IXIC] has
signed a letter of intent with Williams to purchase $260 million worth
of capacity over 20 years. "This gives us a right to buy at least the
capacity we've agreed on," says Bob Rouse, VP of operations for
Intermedia. "We see all these telephone calls and old traditional way
to do telephony transitioning into Internet connectivity and net
telephony," he says. Currently the fourth largest telephone traffic
carrier after AT&T [T], WorldCom/MCI [MCIC] and Sprint [FON],
Intermedia's goal is to be in the first ranks of the companies offering
net telephony. Williams also invested $15 million for a 12-percent
stake in Concentric Network [CNCX], a multimedia business-to-business
ISP in Cupertino, Calif. In return, Concentric has access to Williams'
fiber. The third significant partnership is with U S West, which agreed
to purchase bandwidth from Williams five years. "We don't expect to
have more than 10 strategic partnerships," Semple says. (Frank Semple,
Lynne Butterworth, Williams, 918/588-3692, Robert Rouse, John
Strickling, Intermedia, 813/829-2864, William Hyler, Oppenheimer,
212/667-7000, Brett Azuma, Dataquest, 408/468 8213)
-0-
Copyright Phillips Publishing, Inc.
*** end of story ***
|
