Tuesday, October 5, 1999 Published at 16:12 GMT 17:12 UK
Business: The Economy
Cabling up America
Telecoms hope to link lucrative business consumers with their high-speed networks
By News Online's Kevin Anderson
The US telecommunications industry is in the midst of an expensive revolution.
The plan is to link the entire country with new networks of high speed fibre optic cables.
But the cost of the new networks, particularly as they roll out in big cities, is one of the factors behind the wave of mergers that is currently transforming the industry.
Well-established telecommunications giants such as MCI and aggressive newcomers such as Qwest, Nextlink and Level 3 Communications are fighting a battle, city by city, in a rush to lay the fibre optic cable that is the backbone of the information economy.
To do that, they have deployed an army of construction workers to dig trenches through the streets of major cities across the US to lay large bundles of fibre optic cable.
"Access to the end user is where the next boom is going to be. It's great to have a backbone, but without access to the end user, it's next to useless," said Jilani Zeribi, a senior analyst with the IT consultancy Current Analysis.
Greg Hinkleman is the owner of Nationwide Trenching. His company builds the long-haul networks that will link the metropolitan fibre rings being built.
Business is booming, he said, and it has been since Congress voted to ease regulations in the telecommunications industry in 1996.
Before 1996, communications companies were segregated by market sector in the US. Companies that provided local telephone service could not enter the long-distance telephone market and vice versa.
Although the wires of cable television companies could carry voice traffic, they were barred from entering the telephone market. In 1996, all that changed.
"They are getting into each others' business," Mr Hinkleman said.
Making it pay
Qwest says 2,300 of their employees have worked a combined 16 million hours to lay 880,000 miles of fibre optic cable across the US.
By the end of the year 2000, Qwest will add more than 200,000 miles of fibre optic cable in building its metropolitan networks.
In smaller cities like Sacramento, California, Qwest will lay hundreds of fibre optic cables in a 50 mile network, but in larger cities such, the network will be two to three times that size, according to Augie Cruciotti, a senior vice president with Qwest.
And as Mr Zeribi said, "metro fibre networks are infinitely more expensive than long haul networks."
Long haul networks are the high-speed fibre optic lines that criss-cross the nation and link major cities. They are often referred to as backbones.
In comparison to long haul fibre networks, "it's a lot harder to get permits to rip up city streets and disrupt traffic," and the cost is an even bigger impediment, he said.
To maximise its return, Qwest has identified key customers in the cities where it will build its network so it can map the best route for its fibre, Mr Cruciotti said.
The hunger for bandwidth
"There is such an insatiable demand for brute bandwidth," he said. "From a demand perspective, it's hard to see a risk."
Businesses are clamouring for higher speed connections to improve their access to the Internet and to improve the performance of corporate networks, he said, and he only sees the demand growing.
An ultimately high-speed access could come to individual households.
AT&T is planning to use existing cable television company lines to roll out broadband Internet access.
And regional telephone companies are experimenting with high speed connections using existing telephone lines.
The Economy Contents