Regional Optical Networking Workshop

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Regional Optical Networking Workshop

• Vendor Experience
• Steve Cotter Internet2 / National LambdaRail

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Vendor Experience Incumbents

• Experience
• Initially reluctant to sell dark fiber but
  getting the message
• May not have the corporate infrastructure in
  place to support dark fiber sales
• Typically have a better footprint both
  intercity and in the metro
• May run across older fiber types (G.652/653 vs.
  G.655)
• Tend to be process bound 50 business days
  means 50 business days
• Less flexible on many fronts

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Vendor Experience Greenfields

• Experience
• Selling dark fiber is part of their business plan
• If it wasnt from the beginning, it is now
• As a result, have the corporate infrastructure in
  place to support dark fiber sales
• Footprints are smaller, more selective
• Intercity segments follow the major
  communications routes
• Metro fiber markets presence may be limited
• Networks either constructed from scratch or
  pieced together through acquisitions
• Typically next-generation fiber types (G.655)
• New builds tend to be all one fiber type making
  engineering easier
• Found them to be less process bound often able
  to move quickly
• More aggressive in price and liberal in
  interconnection policies

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Vendor Experience Metro Fiber Providers

• Experience
• Selling dark fiber is part of their business plan
• Often would like to sell you multiple fibers or
  lit services as well
• Footprints vary
• Some of the smaller providers only have fiber in
  a few markets, may only hit certain buildings
  (on-net)
• Dont all hit each others POPs may not be able
  to get everywhere you want to go
• Typically see SMF-28 fiber (G.652) in the metro
  market, although some have LEAF or equivalent
  (G.655)
• Metro fiber providers also tend to be less
  process bound
• More aggressive in price and liberal in
  interconnection policies

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Vendor Experience A New Class is Emerging

• Those that have filed Chapt. 11 vs. Those that
  havent (yet)
• Experience
• Those emerging from Chapt. 11
• Able to get far more aggressive pricing fiber and
  services
• Continuing to drive prices down even lower
• They can do this because
• Infrastructure costs are now much lower
• Dont have large debt obligations hitting their
  operating margins
• Those that havent filed Chapt. 11
• Incumbents are seeing their business models put
  under considerable strain
• Few Greenfields have strong balance sheets AND
  are cash flow positive
• Those that barely survived the telecom downturn
  are at a distinct disadvantage going forward
• There may be another round of telecom woes just
  around the corner (McLeod)

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Before Deciding on a VendorDo your Due Diligence

• Footprint
• Are your locations on their network (on-net)?
• Off-net sites can get expensive to connect to
• Getting fiber from multiple providers can lead to
  high interconnection costs and construction
  delays
• Facilities
• Do they have enough space / power and at what
  cost?
• Are they leasing space from another provider and
  reselling it to you?
• How secure is the facility?
• Are they open to different cabling options?
• Example putting in bulk cables between cages to
  eliminate monthly cross connect charges?

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Before Deciding on a VendorDo your Due Diligence

• Access
• What are their access policies?
• Can your people get access to the sites to
  perform maintenance or do you have to use their
  remote hands?
• Whats their lead time for granting you access?
• What are their escort policies / fees?
• Total Cost of Ownership
• Research all of your costs
• Identify monthly/annually recurring costs as well
  as one time charges
• What are their remote hands and eyes fees?
• Dont forget to include annual property taxes if
  applicable
• What optical gear is required to light it?
• Compare TCO of different providers over 5, 10,
  20 years
• Realize that the cost of the dark fiber is only a
  portion of your total costs

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Before Deciding on a VendorDo your Due Diligence

• Other things to consider
• What are your growth needs over time?
• Will you be using DWDM or lighting more pairs?
• Will you need to hit other sites in the future
  may be cheaper / less disruptive to buy more
  pairs
• What reciprocal arrangements do they have with
  other providers?
• WilTel has access to all of SBCs ducts for
  putting in their own fiber
• Some companies have standing agreements with
  other carriers to swap fiber in certain markets
• Is there something you can offer them?
• Joint testing of a startups equipment in a live
  network

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Before Deciding on a VendorDo your Due Diligence

• Other things to consider (contd)
• Is there something they can offer you?
• Could you get access to their lab to do equipment
  tests?
• Will they provide you lit services while you
  negotiate for and light your fiber
• FiberCos Metro Starter Kit provides for a credit
  toward the IRU purchase if lit services are used
  in the interim
• Will they do a larger deal? Grouping together
  other services may bring your overall costs down.
• Installation services
• Commodity Internet
• NOC services

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Vendor ExperienceNegotiations

• In essence, think of this as a real estate
  transaction
• Process can be long and drawn out
• FiberCos twice negotiated contract can shorten
  the process considerably
• The deeper the discount, they more theyll want
  in return
• Only agree to what you can live with
• Providers often ask for
• Exclusive fiber provider status
• Last right of refusal on future purchase for
  certain period of time
• Packaged deal other services included
• Remember they need to make a profit or they
  wont be around very long
• They can make money off of you, just not as much
  as they do off their corporate customers

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Vendor ExperienceSummary

• Takeaways
• Financial strength of the company is a
  consideration, but not the only one
• Footprint makes a difference
• Cheap fiber isnt always cheap
• Look at interconnection, cross connect and
  colocation costs, remote hands pricing, escort
  fees, etc.
• Everything is negotiable
• You get what you negotiate

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