The CO's Changing Landscape - Technology Information

Telecommunications, June, 2000 by Brian Butler

Competition won't disappear. Hundreds of CLEGs and integrated communications providers (IGPs) are building networks in Tier 1, 2 and 3 cities at a blinding pace. Meanwhile, ILECs are digging in their heels in their home regions while simultaneously moving Out of their territories to compete as CLECs.

Gabriel Communications, a broadband service provider operating in or developing 15 markets in the Midwest, has an aggressive business plan to expand its footprint beyond that region. The complex and costly nature of today's hub office architecture--based on a Glass 5 switch surrounded by gateways, routers and data switches--makes rapid expansion challenging. Issues indude:

* Money. A well-equipped central office (CO) typically costs $2 million to $4 million per city.

* Time. Entering the market early and rolling out services quickly enhances sales.

* Expertise. Bundled voice/data and enhanced services require a Class 5 expert, an ATM expert and an IP expert to install and provision the various elements in each new CO. The tight labor market affects the number of hub offices that can be built and operated concurrently.

* Complexity and environmentals. Each hub office requires substantial floor space, properly conditioned to support the "always available" requirement of local service.

But a new technology called the collapsed GO or GO in a Box, allows for quicker expansion for less money than the traditional hub office architecture. This technology allows providers to cap the investment in Class 5 switches and gives much more flexibility and speed entering new cities and offering services.

The emerging products are advanced switches that integrate TDM, circuit switching, ATM, frame relay and IP networks and services into a single box with all the associated signaling and interworking such as SS7, multiprotocol label switching (MPLS) and voice traffic over ATM (VoATM) built in. Some solutions even have an integrated SONET add/drop multiplexer (ADM) so the box can be connected directly onto a SONET ring without the typical cost of an additional SONET multiplexer.

The collapsed CO solution significantly diminishes:

* The time it takes to build a new network and turn up service in a new city;

* The complexity of provisioning, operating and troubleshooting bundled services;

* The financial commitment required to serve a new city;

* The size of the team required to build and operate a hub office; and

* The difficulties in creating and delivering integrated, enhanced services that touch both voice and data networks.

Gabriel has made a significant strategic commitment to adding digital subscriber line (DSL) access to its broadband services offerings, which requires the installation of DSL equipment in ILEC COs in each new market. The aggregation of DSL traffic is the first application to be delivered from the new collapsed GO platform. It will initially be used to offer voice over DSL (VoDSL) services; as the platform matures, other voice and data services will be added, eliminating the need for expensive and time-consuming Class 5 switch upgrades.

This strategy helps CLECs gain a competitive edge over ILECs. It doesn't make sense to use 1970s-based ILEG technology to compete with ILECs. It's important to move quickly and cost effectively to attract customers with unique products and services. Here are some results this new platform can be expected to bring:

* Hub office capital equipment costs at least 50 percent lower than the costs of traditional, multidevice COs.

* Hub space and build-out costs that are significantly lower, since the footprint, power consumption and heat output of the new platform are a fraction of the traditional network.

* Dramatically reduced installation time. Traditional Class 5 switch installation and acceptance is typically two to three months. The collapsed CO installation takes two to three weeks.

* Improved inventory management, since reduced complexity minimizes the number and type of maintenance spares and growth equipment that must be kept on hand;

* Improved productivity, since the reduced complexity of the platform minimizes the number of individual communications experts required to manage a hub site.

The collapsed CO model allows CLECs that are focusing on serving the business market to spend their time, money and energies rolling out services, rather than using them to purchase, configure and manage yesterday's technology.

Service providers that are able to meet the rapidly changing needs of their customers will win the race to provide users with affordable, service-rich, bundled broadband services. Though the decks might be stacked against an IGP breaking into a market dominated by the incumbents, new competitors that embrace a future-looking architecture will compete and compete well.

Brian Butler is vice president of engineering and co-founder of Gabriel Communications. Previously he was vice president of network management and service operations at Brooks Fiber Butler holds degrees in civil engineering from the University of Missouri and business administration from Lindenwood College.