Making the Metro Connection
By Evan Blackwell
from the March 19, 2001 issue of Broadband Week
Imagine you want to publicly launch a metro networking company, and you're looking to garner some extra buzz and attention in the growing market space. For starters, you should enlist a former FCC chairman to help found your company and serve on your board. Next, convince heavyweights AOL Time Warner and Cable & Wireless to be your first customers and drum up about $435 million in a first round of funding.
It might sound a bit far-fetched, but that's precisely the formula being followed by Sigma Networks, a San Jose-based broadband network company, which sprung on the scene in late February to some immediate fanfare and speculation.
To let CEO John Peters tell the story, Sigma Networks is a broadband fiber optic company that aims to provide links in major metro areas between the Internet backbone, data centers, traffic aggregation points and last-mile service providers.
"Over the last few years, there's been a huge amount of money in building backbone networks. At the same time, there's been huge build outs of broadband access infrastructure and build outs of data hosting facilities," Peters says. "What's missing is the interconnect layer that brings those pieces of infrastructure together."
Bringing those "pieces" together is Sigma's sweet spot, and despite the company's short lifespan thus far, it has already begun creating that interconnect layer. Before the company officially launched a month ago, company founders had been working together for the last year. That's why Sigma Networks, just five days after launch, announced that it's first network in Washington D.C. was operational and ready for service. The next network in San Francisco is scheduled to be operational by the end of the second quarter.
The company calls its product the Metropolitan Area Interconnect Network (MAIN) and says it will provide the greatest number of interconnection points via the largest number of bandwidth suppliers.
The MAIN is designed to provide full interconnectivity in a metro area so that a single connection gives a carrier access to any other network or hosting facility, while staying neutral and offering customers the ability to choose between different technologies like circuits, packets or wavelengths. Sigma has also invested in a sophisticated OSS structure that it believes will allow it to offer faster bandwidth provisioning times, a differentiator from local telco competitors.
Of course, in a marketplace that's starting to attract more and more attention with established players like Telseon, Yipes Communications and GiantLoop, the gaudy dollar amount of initial funding Sigma received certainly drew attention to the company. Also drawing attention is the presence of Reed Hundt, former FCC chairman, who serves as one of the company's founders and Marc Andreessen, the co-founder of Netscape, who also sits on the company's board.
"It certainly has brought great attention for us," Peters said. "We've had no problem getting attention from our potential customers, because they're in a lot of pain right now."
Sigma's initial client list seems to back up Peters' statement. The first released list of Sigma Networks clients reads like a roll call of powerful carriers in the communications industry: AOL Time Warner, Cable & Wireless, Enron, Covad Communications, Broadwing, PSInet, 360networks and Universal Access have all signed agreements for Sigma Networks services.
Naturally, the overwhelming positive buzz also has bred some skepticism as well. But, as Randall Haley, an optical networking analyst with The Strategis Group, explains, so far there's reason to be optimistic about the company.
"There's been lots of stories about people who try to pad their board with big names just for publicity. That doesn't seem to be the case with Sigma," Haley says. "These people are experienced in the field, and the fact they started with so much money is a testimony to that."
Steve Young, a senior analyst with The Yankee Group, adds that many eyebrows were raised when the company first launched, and that all those eyes will be keeping a close watch on Sigma Networks.
"There's so much skepticism in the market right now. It was really a bold announcement," Young said. "It might have surprised some people, but not in the sense that the money should have been spent elsewhere."
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