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When broadband carrier Level 3 Communications Inc. last month announced a strategic alliance to get a network presence in colocation provider LayerOne Inc.'s transport exchange facilities, the move signaled a significant advance in the growth of "Internet hotels" for fiber-based network services.
These interconnect facilities or data centers are being built at crossroads along the fiber backbones to help speed the transport of data, voice and video. Their customers are CLECs, ILECs, ASPs, ISPs, enterprises, and private fiber carrier networks wanting to bypass the copper-based incumbent telephone companies.
Since launching in January, LayerOne has completed four of its 15 planned telco hotel installations--three in Chicago, Minneapolis and Dallas where LayerOne is a tenant, plus a fourth in Miami where LayerOne owns the hotel building. LayerOne is a tenant in a new St. Louis hotel coming online in November.
Level 3, whose Internet Protocol-based network competes with fiber carriers like Qwest and Williams, gains guaranteed access to all LayerOne optical exchanges as the hotels are built, although pays the same regulated fees as other carriers. "The hotels are a neutral level playing field for all carriers," says LayerOne CEO Alexander Muse.
The hotels fill a vital need, he says, despite all the talk about next generation Internet. "We've created 25 million miles of fiber fragments that are still not connected to each other, and we're expecting up to 500 million miles of fiber installed within the next five years.
"It's all about extending the market so networks can connect," he says.
There are about 30 hotels being built across America today, and another 100 to 200 hotels are needed for more than 6000 carriers nationwide, he says. "How quickly all these hotels get built largely depends on the capital markets."
"Given the insatiable demand for bandwidth," says Michael Crawford, senior director of global gateway services for Denver-based Level 3, "there's quite a lot of money moving into this sector. It's a synergy between the capital centers and the data centers for large scale domestic and international connectivity."
The deal between Level 3 and LayerOne is one of many similar first steps now being taken, says Peter Christy, research director and fellow at Jupiter Communications. "We're seeing the emergence of fiber as a maturing technology, but meanwhile, we have to wait for the plumbing to get connected and for some 'killer app' to show up that drives fiber construction into the last mile.
"A bundle of 400 fibers can carry in one second as much traffic as the copper Internet now carries in a month, but the dream of networks with unlimited capacity can't come true so long as optical signal have to pass through the existing telephone equipment. Optical interconnects in office buildings may be the answer."
As fiber gets built out over the next three to five years, he says, "We can leverage the technologies being developed for lowering costs and growing the infrastructure as fast as possible."
Christy thinks the first markets to get Internet hotels will be the "NFL cities" because of their demographics. Down the road, "I don't expect to see every home connected by the fiber in my lifetime," he says, "but Jules Verne fantasy worlds are now a real possibility."
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