LANTimes article. Q&A with UUNet, PSINet and GTE CEOs (Part I)
wcmh.com./lantimes/98/98apr/804b022a.html
Is one ISP the same as the next? To network managers
charged with picking through the myriad of pricing plans
and service options, the difference between ISPs often boils
down to cost and personal experience, with feature offerings
and service levels taking a back seat.
But choosing the right service provider has become more
important than ever. Businesses are growing increasingly
dependent on the IP services and connectivity expertise that
ISPs provide to deliver data both inside and outside the
corporation. At the same time, ISPs are extending their
reach, building global networks that will carry corporate
data with broad service guarantees and preparing for an
upcoming wave of voice services that could turn the market
for long-distance services upside down.
To help IS managers make their moves wisely, LAN Times
Senior Editor Brian Riggs sat down with UUNET
Technologies Inc. CEO John Sidgmore, PSINet CEO Bill
Schrader, and GTE Internetworking Services President Paul
Gudonis to discuss some of the most significant challenges
facing ISPs and the increasingly critical services they are
providing to business customers.
All three companies are ISP veterans. About 30 years ago,
BBN Corp., GTE Internetworking's name until last year,
developed the Internet's predecessor, ARPANET. And in
the late 1980s, UUNET and PSINet began offering some of
the first commercially available connections to the Internet.
As access services became commodities, these ISPs had to
reconsider how they would provide services to corporate
customers who were demanding more secure, more reliable
Internet services. The key lay in controlling the infrastructure
over which ISPs provide services. BBN and UUNET
gained this control by merging with cash- and
infrastructure-rich telephone companies GTE Corp. and
WorldCom Inc., respectively. PSINet has chosen a
go-it-alone strategy, opting to stay independently owned and
operated, purchasing fiber capacity from interexchange
provider IXC Corp., and filing for status as a competitive
local exchange carrier (CLEC).
All three are moving quickly into an international playing
field. UUNET, through the planned merger of WorldCom
and MCI Communications Corp., has the potential of being
a subsidiary of the company that owns the majority of the
Internet's infrastructure. Late last year GTE Internetworking
started offering outsourced VPN connections internationally
and, through its acquisition of data center operator Genuity
Inc., expanded its Web server hosting services
internationally. PSINet has expanded its services
internationally by setting up subsidiaries in Germany, Japan,
Canada, the United Kingdom, and elsewhere. And last
month, PSINet purchased the rights to transatlantic fiber that
will connect its networks in the United States and Europe.
ISPs are now beginning to dabble with telephony, the latest
wave of IP services. IP fax services are already available,
and GTE Internetworking, PSINet, and UUNET are
preparing to launch voice offerings over their international IP
networks.
As ISPs play out their global games of strategy and
conquest, corporate network managers will have to decide
which players to partner with, as well as determine where
they fit into the game.
Representatives of NETCOM declined to be interviewed
for this article.
LAN Times: As an ISP, what worries you most and keeps
you up at night?
Bill Schrader: I have two primary concerns. The first is the
WorldCom [Inc.]-MCI [Communications Corp.] merger. I
believe that's a good thing and they should go ahead with it.
With that said, I think they could exert some unfair power
over the rest of the marketplace because of their [combined]
economic power. There is a risk that they would do
something extraordinarily strange like change the pricing
model for all interconnections between networks, the
resulting large network, and the rest of the ISPs' networks.
My second concern is government interests [in regulating the
Internet and ISPs], not just in the United States but
everywhere. That includes encryption constraints by the
U.S. government and other countries. Congress wants to
"help" the Internet, but we don't need their help. We don't
need any government involvement or government regulation.
We don't want them to fund the development of the Internet
anymore. There are so many billions of dollars being
invested right now that we don't need any more government
funding.
John Sidgmore: Our primary issue right now, and probably
for at least the last year and a half to two years, is scaling the
network. Our technology base and our network are growing
at rates no other industry had ever seen. We've been
experiencing roughly a thousand percent per year of growth.
That means that every year the network is ten times bigger
than it was the year before. Three years from now, our
network gets a thousand times the size of our current
network. Our engineers say that if you're not scared about
that, you don't understand what you're doing.
When we recognized this thousand percent per year growth
rate, we realized that we would never be able to continue to
scale as a relatively small independent ISP. So we sold the
company to a telephone company in order to have better
control over the underlying infrastructure. Even though
UUNET was the largest of the ISPs, it still was hard for us
to see how we would be able to raise hundreds of millions of
dollars in capital every year. So we sold to MFS and they
eventually sold to WorldCom so that we could get closer to
the fiber infrastructure, which is the primary cost in our
business. When we attached ourselves to this telephone
company, we convinced the telephone company that the
Internet was going to be the most important piece in the
entire communications industry and that's been pretty much
verified by now. Given that the Internet was going to have
this thousand percent per year demand and voice networks
have something like eight percent per year growth, it
wouldn't take very long before the Internet became the
dominant piece of the puzzle. Therefore, we had to build
scale in a major way and build our fiber networks in such a
way that they could be best used by Internet networks. We
have been on a tear to build out capacity as fast as we can in
the United States in the local loop, and on all business
routes, under the oceans, and in every major city in Europe.
We're using capital [from WorldCom] as quickly as we
possibly can. Of course, that capital gets allocated to
UUNET as UUNET's demand grows.
Paul Gudonis: We need to make sure that we don't have
various governmental roadblocks toward the adoption of
Internet commerce by our customers. Whether those are
policies around encryption or security, content, E-commerce
laws, or taxation. The extent that any of these barriers
become roadblocks to the growth of global Internet
commerce would tax my customers and therefore impact the
industry.
LT: Describe your corporate customers' biggest concerns
and how you are addressing them.
Gudonis: The Internet has gone from being an engineer's
tool and science project to being mission critical to
businesses today. In discussions with CIOs three years ago,
no one was saying to us, "I'm going to put my
mission-critical business processes on the Internet." Today
CIOs are demanding high performance and high reliability
because they are putting mission-critical processes on the
Net. That's the change. The market is moving toward
robust, network-centric computing and reliable access to
intranets and servers for transaction processing. Five years
ago [the Internet] was not designed to support
mission-critical transactions. So we are putting in network
facilities, we are using RSVP [the Resource Reservation
Protocol] and other Quality of Service [QoS] technologies.
And we are setting up hosting centers around the world. We
already have a dozen data centers for server operations
around the world.
Schrader: Our corporate customers are primarily
concerned about [Internet service] reliability. They want us
to have bandwidth, off-net connectivity, and improved
services. That's why we're buying fiber in the United States
and bringing it into the United Kingdom. That's why we have
a 100 percent guarantee for our Web hosting service.
There's no myth to [Internet unreliability]. There's a real
reliability issue and you'd be surprised at the sources of the
problems. It can be as simple as a customer having trouble
trying to download Web pages from PSINet because the
[interconnection between PSINet and a telco] is not being
managed properly. [The connection] could not be managed
properly by any telephone company in between [the end
user and the ISP], but there's no way for the end user to
know this.
When you move from an eighty-year-old [telephone] system
that has no innovation at all to the Internet--the most exciting
innovative network in world--you've got to expect the
results of innovation, which is new applications that get
carried over the old structure which don't quite run perfectly
all the time. Computers are demanding and extremely
flexible in how they do things, compared to a telephone
instrument that either gives you a dial tone or doesn't.
Sidgmore: Corporate customers' concerns really haven't
changed a lot [over the years]. [Internet] quality and security
are really the two fundamental issues at large corporations.
Large corporations traditionally had private networks,
whereas now they use [various kinds of] public networks.
Even if they used public networks, they weren't as diverse as
they are today. They certainly didn't transfer [data] over
dozens of networks like the Internet does. I think as people
grew up in that environment, they became used to quality,
security, and a certain cost level. Then the Internet came
along with this explosion of IP technology and a huge change
occurred in the dimension of the cost structure, which a lot
of people gravitated toward naturally. But, it also came with
a big difference in the quality level and in security.
As we have seen those concerns shaped over time, I think
we see the corporate environment as one where customers
really want to be able to buy a broad spectrum of services.
They want to look through their application sets and decide,
application by application, how much security is really
required, how much quality is really required, and how much
they're willing to spend.
So, we want to be in a position of offering a seamless,
continuum of services where you've got low cost, lower
quality services on one side and high cost, highest quality on
the other. At the end of the day, that's where we're all going
to wind up, maybe two years from now. It depends on the
application. If you were in the federal banking community
and you were going to wire around the world hundreds of
millions of dollars on electronic instructions, you probably
would be very worried about the security. If you were selling
CDs over the Internet, you'd probably worry slightly less. |
