To Be or Not to Be ... a Vendor

SP FiberCity Weighs Options for DWDM Product it Created

However, FiberCity ran into a hitch. After querying all the major vendors, FiberCity couldn't find the right offering of DWDM technology for the metro environment at the right price point. "This was wonderful equipment, but it was designed for New York to London, not 111 8th Ave. to 55 Broadway," says Daniel Flohr, FiberCity's founder and CEO.

So, shortly after the FiberCity received its first round of financing in January 2000, the company developed its own DWDM, which has been in commercial use for almost a year now.

xchange's editor-in-chief Gail Lawyer spoke with Flohr about what the future may hold for FiberCity's proprietary metro DWDM technology.

X: How does FiberCity approach delivering enhanced services to customers in the buildings it serves?

Flohr: We wanted to build a gigabit Ethernet-based network. No one is talking about replacing Ethernet as the local area network protocol, so we felt that if we could extend [that] from the office right through the CO and eventually even further across the country, we could build an inexpensive, very high bandwidth, reliable network.

Ethernet equipment is enterprise equipment and it's built for enterprise reliability. It's not built for carrier class reliability. We picked an easy way to make gigabit Ethernet a carrier class reliable protocol. The technique we use [is called] parallelism. The building connection to the CO is four separate diversely routed gigabit Ethernet connections. If the fiber is cut, you'll lose some of the gigabit Ethernet, but you'll still have the other ones up and running

So we need to do multiple gigabit Ethernets on every single building, use as little fiber as possible, put multiple buildings on the same fiber ring. It's simply screams out that you have to multiplex the fiber signal so you'll have many fiber signals on the same strands of fiber at the same time. And the technique for that is DWDM.

X: How did the major vendors' existing DWDM products stack up pricewise?

Flohr: We met with all [the vendors] and requested quotes from all these folks on DWDM in a metro environment, with our specific needs. The price ranges that came in for DWDM ranged from $200,000 per building to $800,000 per building. The ability of that carrier-grade long-haul equipment to scale down has the typical problems that all the big carrier guys have when they try to move their equipment downmarket.

We knew we couldn't do the network without DWDM. We couldn't build the cost model, make it viable, and build the multiple protocols of reliability into the Ethernet without DWDM.

So we began our own development project with DWDM, [which] was complete in the summer of 2000. It began field trials in August, and then went into full commercial deployment in November and continues to this day. We built it for 3 to 10 percent of what equivalent equipment on the market costs.

X: Have you ever considered becoming a vendor of this type of equipment?

Flohr: It's a timely question in light of the market. When we developed it, all of a sudden it was like maybe we've made something here of value. To this day in fact, we're really not sure whether our services company is what's valuable and the DWDM is the enabler of that, or whether it's the DWDM that's valuable and our services company is the demonstration platform for that.

After two years of the BLECS essentially wasting $4-$4.5 billion of venture capital money, the marketplace today seems to be more interested in our DWDM vs. investments in more service companies that are going to go out of business.

Our service model is different, it will survive, but it is very focused. Setting up as a manufacturer, marking up the products, building brand and distribution channels is of no interest to our company now. It's not what we were chartered to do, and it is very expensive to do.

X: What's next for your proprietary DWDM technology?

Flohr: We are now in licensing negotiations with a half dozen equipment manufacturers that are looking for a niche or a completed product. We're negotiating with those folks, as well, to sell the equipment outright.

In any event, FiberCity will retain rights to use it, which means we'll build it at cost for our network. At worst, if other people figure it out and build it on their own, we'll be on an even playing field.

But we feel that we have a real sustainable market advantage because of our costs.

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