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Big Apple, Big Pipes

Light Reading
News Analysis
Light Reading
8/11/2000
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Surely the paper was wrong! OC768 service available in New York City? Was it a typo? Had we entered a time warp?

So said a July 27 article in the New York Times. A startup carrier called Enkido Inc. claimed to have OC768 service (40 Gbit/s) available in the Big Apple. Furthermore, a source from Deutsche Telekom AG (NYSE: DT) said he was using it.

Light Reading today reached Nayel Shafei, the president of Enkido. "No, it's not a typo, we have OC768 service available today. Come over and see -- but you'll have to sign an NDA."

Such directness is apparently typical of Shafei, who not only claims to have OC768, but also 10-Gig Ethernet and uncompressed high-definition television on offer. We couldn't get over to Hackensack, N.J., where Shafei says he's got three vendors' switches running OC768. However, Deutsche Telekom's North American CTO, Hans Roeterink, confirmed with Light Reading that the carrier is using an OC768 connection in New York. But he won't say what they're doing with it.

Shafei isn't so shy. Deutsche Telekom, he says, is using Enkido's OC768 service to support high-speed Internet connectivity in the United States. And Shafei says another carrier is also using OC768 to back up services in several large, international colocation facilities in New York, also called telco hotels.

Shafei, a former product VP at Qwest Communications International Inc. (NYSE: Q) launched the dark-fiber carrier one year ago with his own money. A year later, still owning 90 percent of the company, he claims to have earned $60 million in revenue, without taking venture capital. His network comprises 20,000 route miles of dark fiber and 20-year leases on colocation facilities in New York, Los Angeles, and San Francisco.

How can Enkido offer these kinds of services, when many businesses haven't even heard of them yet?

The secret, Shafei says, is that all these cutting-edge services are running on prototype equipment, paid for by vendors and customers willing to subsidize the work. "Vendors give us equipment because they get the equivalent from us in terms of help in product development," says Shafei. "Customers pay us up front to finance technology they need badly and can't get anywhere else. No other carrier today offers this."

Apparently, the formula is working. Shafei says a growing number of vendors are working with Enkido, including Cisco Systems Inc. (Nasdaq: CSCO), Cyras Systems Inc., and Lucent Technologies Inc. (NYSE: LU). "Plus others. We aren't afraid of new architectures," Shafei declares.

Cyras, for one, confirmed that it has put a prototype OC768 platform into Enkido's lab network and that Enkido has been "very helpful" in giving design insights to Cyras. However, Cyras spokesperson Gary Clemenceau said he hadn't heard that the box was being deployed in any live services. Lucent, while confirming that it had a prototype OC768 platform running in many labs worldwide, wouldn't say whether Enkido's was one of the testbeds.

Still, there are skeptics. Jim Lawrence, program director at consultancy Stratecast Partners, was puzzled by the claim of OC768. "I thought the Times reporter misunderstood," he says. Even if Enkido's running such cutting-edge services, he says, they'll probably look a lot different when they finally hit widespread deployment. "OC768's expensive, and I question its ability to support a high number of WDM channels." He's not convinced that some isolated experimental networks will take off in the real world.

Shafei scoffs at such cautionary statements. "The real challenge of unleashing the broadband economy is slashing down the price of optics," he says.

"We may issue an IPO later, in order to help us acquire other companies," he says. "It's fiscally irresponsible to go out too soon. We're not here to make a quick buck."

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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