Qwest DLEC Pushes Boundaries

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Stepping outside its home region with local digital subscriber line (DSL) services, Qwest Communications International Inc. said it plans to offer data local-exchange carrier (DLEC) services to businesses in Washington, D.C., and Baltimore.

The rollout is part of Qwest's plan to offer DLEC services in 25 major metro markets by year-end.

The Denver-based company is offering high-speed Internet connectivity (beginning at 256 kilobits per second); Web hosting and design services; local-area network integration; and long-distance telephone service to small and midsized businesses. Qwest rolled out DLEC service in several California markets last year. Its Washington-Baltimore launch is the first Eastern foray.

Qwest targeted local businesses by building local fiber-optic networks in ring configurations in selected metro areas, effectively creating local loops. The company has completed networks in 11 markets and expects to finish work in 14 more this year, said senior vice president of local broadband services Steve Haggerty.

Qwest is building on its healthy DSL business in its home region, a 14-state area in the Midwest it inherited through last year's purchase of US West. It counts more than 255,000 subscribers.

Haggerty, who said the company "has only been in the last-mile business for under a year" outside of its home region, said Qwest is "there as the guiding spirit for local loops."

Qwest will place DSLAMs (digital subscriber line access multiplexers) in central offices owned by the incumbent telephone carriers: Verizon Communications in the Baltimore-Washington corridor and SBC Communications Inc. in California. Qwest's colocated DSLAMs will then be tied in with its local fiber networks.

The company's local fiber networks-and the lateral connections from the rings-are built to serve concentrated groups of business customers. The ring topologies are "highly dependent on the (individual) city," said Haggerty.

In downtown Los Angeles, Qwest has built three small fiber rings and 22 lateral connections to serve business customers, including four large carrier hotels.

Initially, the local fiber loops are being built with Cerent Corp. (now part of Cisco Systems Inc.) and ONI Systems Corp. gear to create OC-48 (2.5 gigabits per second) SONET (Synchronous Optical Network) rings, said Haggerty.

In some cases, Qwest is deploying Ciena Corp. dense-wave division multiplexing boxes to serve as traffic aggregation points or to deliver individual wavelength services to customers-typically other large telecom carriers, including overbuilders.

Haggerty left the open the option to offer voice-over-DSL services, noting that Qwest is moving into the "industrial-strength" category.

Qwest's move into national DSL services comes as other providers-among them Covad Communications, Northpoint Communications Inc. and Rhythms NetConnections Inc.-are barely clinging to life.

What makes Qwest's entry into national DSL different?

"Deep pockets," said Current Analysis senior analyst of network services Rob Carlson.

Because Qwest is an incumbent local exchange carrier (ILEC) in its home region, it's well diversified and enjoys significant cash flow, Carlson noted. Qwest also maintains a healthy Internet backbone service.

Gaining access to local facilities has been the weak point for struggling national DSL providers, noted Carlson. For Qwest-which has been successful selling DSL in its incumbent territory-"it's not going to be quite as easy when the other guy owns the facility," he cautioned.

Cable operators also want in on the potentially lucrative market for business broadband services. The most notable entrants are Adelphia Communications Corp.'s Adelphia Business Solutions unit and Cox Communications Inc.'s Cox Business Services division. Those two companies have shown diverging levels of commitment to the high-speed business market.

Last month, Adelphia Business Solutions reduced its national staff by 8 percent and said it would offer services in 75 to 80 cities. It had scaled back from plans to set up shop in between 175 to 200 cities.

Conversely, Cox Business Services is "very aggressively" rolling out business services, and hopes to roughly double its year-end 2000 approximate revenues of $97 million this year, spokesman Bobby Amirshahi said.

In northern Virginia, Cox will resell Verizon telephony services to enterprise customers, said regional vice president and general manager Jim Sutton. Cox business also intends launch high-speed-data services in Fairfax County in March, he said.

Upon installation of a Nortel Networks "DMS-5000" switch in late July, Cox Business intends to launch its own commercial voice service in the market. Sutton said the Cox unit has from six to eight fiber rings up and running in northern Virginia, and plans to add several more.

Cox Business will offer commercial-class symmetrical cable data services to at speeds of 256, 384, 512 and 768 kilobits per second or higher, as well as asymmetrical services, Sutton said.

The company will also offer Ethernet and Gigabit Ethernet connectivity to businesses "as soon as [it] possibly can," he added.

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