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Follow the metro market for very long and you hear a familiar creed-break the bottleneck. That's the bottleneck of bandwidth traffic attacking the country's largest metro areas.
Some metro providers are battling the problem with old enterprise technology like Gigabit Ethernet as the transport platform, and they're fighting the incumbent's aging legacy networks by offering screaming fast data at a low price to small- and medium-sized businesses. For one of these metro players, Denver-based Telseon, a slightly different model means business has never been better.
Telseon uses dark fiber within a metro area to offer its LogicalWire portfolio of managed Gigabit Ethernet services to ISPs, hosting sites and enterprises. It's integrating Ethernet technology at the core of the optical network and, unlike Gig-E competitors such as Yipes Communications, it's focusing on wholesale business to service providers. The strategy essentially means Telseon is becoming "a carrier's carrier" and it appears to be paying off.
"We're picking up some pretty good momentum," says John Kane, Telseon's CEO. "It seems like we're hitting on at least seven of the eight cylinders."
Already this year Telseon has signed extensive contracts with Level 3 Communications and 360networks. In addition, the company completed a $175 million third round of funding. Level 3, already one of Telseon's dark fiber partners, improved its reach by gaining access to Telseon's network connections within data centers that weren't previously served by its (3)CrossRoads Internet access portfolio.
"Level 3 is providing high-bandwidth capability to the areas they can touch, but they can't touch them all. (Telseon) can extend (Level 3's) reach to other data centers," Kane says. "Level 3 basically looks at us as a network extender."
Another of Telseon's dark fiber partners, 360networks, felt it needed to go one step further than Level 3 in its agreement with Telseon. With essentially no local assets for its global IP network, 360networks came to Telseon looking to gain access to its metro Ethernet services. Telseon was more than happy to oblige, enabling 360networks to extend its IP transit and transport services to customers co-located on the Telseon network.
Telseon claims one of its advantages over players like Yipes, XO Communications and Cogent Communications comes in its Web-based self-provisioning of bandwidth, which it was the first to offer to its customers. Telseon uses monitoring tools through a simple Web browser, enabling its customers to set up network connections rapidly with a high amount of scalability.
"It's a key for the entire market," says Mick Seaman, Telseon's CTO. "Somebody's got to offer scalability that allows a business to build out very rapidly. It simplifies the whole process of acquiring bandwidth."
Telseon set a goal of reaching the top 20 U.S. metro markets by the end of 2000, and the company achieved that milestone, now holding shop in more than 60 co-location centers. Telseon previously stated an ambition of spreading to as many as 50 metro areas by the end of 2001, and Kane said there will be opportunity for expansion this year that the company will certainly pursue.
At the same time, Kane says, the immediate focus is on enriching the services and going deeper in its 20 current markets. So far customers in those markets include AltaVista, Broadband Now, Engage and Storage Link.
"We're a metro exclusive business," Kane said. "Our vision is to create a metropolitan ecosystem where various people can be connected to Telseon's networks and be connected with each other to do business."
And despite the recent soft economy for the service providers, Kane has no worries about a slowdown in his business. In fact, he hopes the recent market turn of events will discourage service providers that may be thinking about going it on their own.
"I think it actually improves our position," Kane said of the slumping economic conditions. "Some of these guys thinking about going out and buying their own dark fiber might think again and turn to us."
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