The UK telecoms company Fibernet Group Plc, has finished its TANet UK-wide fiber optic communications network, six months early and for only 7m pounds. The company chief executive Charles McGregor decided that Fibernet was to be more than just another local area network equipment reseller and integrator, so in 1995 applied for a telecommunications license […]
The UK telecoms company Fibernet Group Plc, has finished its TANet UK-wide fiber optic communications network, six months early and for only 7m pounds. The company chief executive Charles McGregor decided that Fibernet was to be more than just another local area network equipment reseller and integrator, so in 1995 applied for a telecommunications license and in June 1996 floated on London’s Alternative Investment Market to raise the capital to build itself its UK for the transfer of bundled video and data over the Wide Area Network, so as to grow its business outside resale. Fibernet’s Charles McGregor claims it has built a network that rivals that of high profile Energis Plc, for around 1% of the cost, if he is correct in estimating Energis investment in its network as somewhere between 500m pounds and 650m pounds. The key factor in Fibernet’s favor seems to have been a familiarity with the technology, as it is also a high speed LAN equipment integrator it was familiar with the technology of ADC Kentrox, Cabletron Systems Inc, Cisco Systems Inc, and Asynchronous Transfer Mode developer, Fore Systems Inc. Fibernet is also familiar with the problems in building high speed ATM based fiber networks, that apparently remain similar on the LAN and WAN. McGregor claims that the way the company has saved money in the build out is two fold, firstly by leasing fibers from GEC Plessey Telecommunications Ltd, GPT, affiliate Fibreway, that has the novel approach of burying fiber optic cables alongside canals. It also leases fiber from Racal Telecom, a division of Racal Electronics Plc, that acquired British Rail Telecom in 1996, and owns thousands of miles of fibers running alongside the UK’s railways, which is considerably cheaper than laying its own. Fibernet has a very attractive business model, it discounts heavily over other operators, it can install the equipment at a customers premises, and the technology it has chosen is attractive, ATM over Synchronous Digital Hierarchy, using GPT SDH equipment, and Fore ATM switches. This gives it key advantages over other operators, because it can offer three types of connection to its customers, Permanent Virtual Circuits, Smart PVCs, and Switched Virtual Circuits. Fibernet claims to be the only UK operator offering SPVCs and SVCs, as although the capabilities exist on equipment carriers have chosen not to enable it. But if you use SPVCs and SVCs they have serious advantages over the bog standard PVCs. PVCs are connections that are held open on a network the whole time, the equivalent of a wire running directly between two points, SVCs are the opposite, connections are decided when they are made, and can be broken immediately afterwards. The advantage is that a company can buy one connection onto the network, and send traffic to any other point. In a PVC scenario, all the offices of a company have to be directly or indirectly connected to each other, with fixed PVC connections, which is more expensive topology to install. Fibernet, which is only bringing in 1m pounds of revenues from its network, and 7m pounds from its integration business, claims that TANet will be profitable at the end of 1998, and it is in the process of applying for further licenses to build the network out into Europe. This could happen any time from the end of 1998, take 18 months and cover the whole of western Europe, and be funded by a rights issue, and other funding, and cost between 18m pounds and 40m pounds depending on how much fiber can be leased. McGregor claims that the company will be able to increase the capacity of its network, from the current 2.5Gbps capacity, by using Dense Wave Division Multiplexing, which is getting cheaper to implement as it grows in popularity, and the capacity can be doubled for 10% of the cost of laying new fiber. Fibernet is quite probably a good business case for other competitive operators to follow, as it claims it is streets ahead in pricing and technology, but fears the marketing of British Telecommunications Plc’s competitive ATM WAN service CellStream.