LR Picks Private Service Finalists

Perhaps the most exciting area in telecom, new services are bubbling over with ideas that aren't coming from Bell Labs kinds of operations. Startups are taking notice of the demand for new ways to use the network -- either to save enterprises money or to simplify their operations -- and the result is a wave of promising new applications from the private-company arena.

The creativity and resourcefulness found in many of the entries is a clarion call to the big guys to watch their backs. The CLEC hordes might be pushed into a corner for now, but the new wave of services is no small threat. True, some can complement the RBOC/IXC models, but others are like 18-wheeler headlights coming down the wrong side of the highway.

All of this is made possible by the onward march of technology. Voice over IP (VOIP) is one obvious culprit, threatening to upend the century-old business model for telephone calls. The encroachment of data networking into the telco space is creating some intriguing possibilities as well.

Here are our bets for the services likely to make a difference. Finalists in the Private Company, New Service category of the Leading Lights Awards are those offerings that wield next-generation technology to produce a service with promising revenue prospects and a shot at market leadership.

  • DynamicCity's Utopia project.

    This finalist is a bit unconventional -- but that's exactly what makes it interesting. Municipal fiber networks are popping up all over North America, and DynamicCity and Utopia -- the Utah Telecommunication Open Infrastructure Agency -- offer an interesting method for solving the last-mile bottleneck.

    The short formula is this: Sell "revenue bonds" backed by the future revenue of the network. Build the fiber infrastructure, which is managed by DynamicCity, but leave the services access open to any service provider that wants to provide voice, video, and Internet. DynamicCity calls this the OSPN, for Open Service Provider Network model.

    Utopia's "Phase 1," launched in July and managed by DynamicCity, is a partnership of 14 municipalities in Utah (see Utopia Launches Phase I). It's delivering 100 Mbit/s of fiber connectivity directly to homes in those communities. Utopia says its average cost of delivering FTTP is an impressive $1,171 per subscriber.

    Given the significant political and economic barriers to developing the last mile, innovative municipal approaches such as this are helping to drive fiber access.

  • Masergy Communications Inc.’s Intelligent Transport

    With this offering, launched in June, Masergy can tick the right boxes of the most demanding enterprises. It's a global Ethernet service with multiple quality of service (QOS) levels and a Web-based management tool, the Service Control Center, that puts users in control (see Masergy Intros 'Intelligent Transport' ).

    Demand is certainly out there -- Heavy Reading’s research shows that extending Ethernet to all locations in a large network via virtual private LAN services (VPLS) is a major issue for enterprise users that have increasingly mobile workforces. And Masergy has built a reputation for being reliable and economical -- the latter being key, as enterprises aren't all so keen on paying for the Ethernet services they crave (see Enterprises: We Want Our Ethernet!). The Goliaths of the international services sector need to sit up and take note, especially as Masergy continues to bolster its networking capabilities (see Masergy Makes Layer 3 Jump and HR Sees Ethernet Services Explosion).

  • Skype Technologies SA's Skype 1.0

    Since Skype burst onto the scene in August 2003, its peer-to-peer VOIP package has been downloaded by more than 32 million users. Skype’s free multi-platform software allows users to make free calls over the Internet and low-cost calls to traditional land-line numbers. The company boasts that its service offers superior sound quality and uses a wider sound spectrum than traditional telephones, so you at least won't sound like a cheapskate making free calls on your computer. But wait, there's more: Skype offers conference calling, instant messaging, and file transfer services -- practically anything an office could want.

    Created by Kazaa co-founders Niklas Zennström and Janus Friis, Skype has formed partnerships and alliances with heavy hitters such as PChome Online, Plantronics, and Siemens AG (NYSE: SI; Frankfurt: SIE), and carriers Colt Telecom Group plc (Nasdaq: COLT; London: CTM.L), iBasis Inc. (OTC: IBAS), Level 3 Communications Inc. (Nasdaq: LVLT), and Teleglobe International Holdings Ltd. (Nasdaq: TLGB). With backing from top-tier venture capital firms including Bessemer Venture Partners, Draper Fisher Jurvetson, Index Ventures, and Mangrove Capital Partners, Skype is poised to expand its blossoming service even more during the next year.

  • Virtela Communications Inc.'s MPLS Service Fabric

    Virtela's latest service links an enterprise to a multitude of Multiprotocol Label Switching (MPLS) networks, just as the nebulous Internet links them to multiple Internet Protocol (IP) networks. Usually, an enterprise would be forced to tap multiple service providers to create this kind of global MPLS network; Virtela hopes to attract customers by having done that work already (see Virtela Expands Into MPLS).

    This gives a large enterprise (or a small one with offices on multiple continents) a single MPLS carrier, so it isn't dealing with different providers in different regions of the world. On paper, the enterprise also gets a more robust service, because Virtela's web of networks provides a multitude of alternative paths should one network node fail.

    Virtela announced the service in October, by which time it had roughly a dozen customers up and running. The company claims its proprietary algorithms -- which find the optimal routes among the networks being tapped -- make the service tough to duplicate. There's also the legwork to consider -- the company covers 190 countries through deals with more than 200 service providers, the kind of span that doesn't happen overnight. Finally, Virtela has a track record, as it's already providing a similar service for IP VPNs (see Virtela Scores $11M for VPN Net).

The winner will be announced at our Awards Dinner after Light Reading's Telecom Investment Conference in New York City on December 15th.

— The Staff, Light Reading

  • For more information on the Leading Lights Awards, click here.

  • For more information on Light Reading's Telecom Investment Conference, click here.

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