Luria taps frame relay, speeds communication - L. Luria & Sons

Discount Store News, Jan 16, 1995 by Richard Halverson

NATIONWIDE DSN REPORT -- A technology of the '90s, frame relay, is giving retailers, like L. Luria & Sons, the ability to move cheaply mountains of data around their chains on shared phone lines, as well as allowing them to talk from store to store, send E mail, make credit card authorizations and keep such programs as bridal registry--all on the same phone circuits.

Frame relay has become so cost efficient that it even is replacing satellite links for some customers, such as Home Depot and Luria's.

As the name suggests, frame relay packages vary amounts of information into specific "frames" and then relay that information over shared phone lines.

Since all customers share the same phone lines, they also share the cost, which which can be as much as half the cost of linking stores with privately leased phone lines that sit idle most of the time.

A frame relay net is much like a party line involving numerous customers. The cost is cheaper. Yet, unlike a party line, no one else can eavesdrop on the data each customer transmits, since each frame of information is secure and carries a specific customewr's name on it. Also, unlike a party line, everyone can talk at once or transmit data in pauses between each customer's communications. And a frame relay system provides multiple paths for communications in case one line is "busy."

Florida-based Luria's opted last October for frame relay service from Intermedia Communications Inc., Tampa, Fla. A regional carrier, ICI provides a meshed network that allows each of the 54 Luria's stores to communicate with each other, as well as with headquarters. Scotty's, a Florida-based home center chain with 109 stores, is another ICI customer.

It would take about 250 private leased lines to provide the same capabilities to Luria's and at a significantly higher cost.

Michael Vieren, vice president of product development for ICI estimates that Luria's will save about 45% over the cost of its previous leased-line system and have greater capabilites in the bargain.

The Luria's system allows stores to talk to each other, over what amounts to hot lines linking every store to each other, as well as headquarters, send E mail, keep its bridal registry up to date and transmit daily POS data. Luria's spent an estimated $250,000 on leased hardware for each store. ICI calculates a two-year payback period for the system.

Measured against the potential cost savings of frame relay, though, are the costs of learning how to use it effectively. Through pacts with other frame relay networks, ICI can provide service to 350 cities around the country in all 50 states, as well as 150 cities in Canada and 250 other cities around the world, Vieren said, even though it is a Florida regional network.

Frame relay is only four years old and ICI was one of the early pioneers. Sprint and MCI got into business three years ago, but AT&T held out until last year.

The decentralization of data processing, with a network of linked personal computers in the field taking the place of a main frame computer back at headquarters, is a major factor driving the frame relay industry, Vieren said.

As an infant technology, the frame relay industry garners estimated revenues of $80 million to $160 million per year. Sales are doubling every quarter and could hit $8 million in '95.

Another cost advantage for frame relay is that service costs the same, no matter how far the distance. In contrast, private leased lines cost more the farther they extend.

In the case of ICI, customers can use the system as much as they want for the same flat rate. In comparison, private leased lines often cost more the more customers use them, said Bob Gliemi, major accounts manager for ICI. Another disadvantage is that a frame relay network is simple to expand when a chain opens new stores, he said.