Verizon Biz Net Promotes Caring, Not Sharing

Verizon Enterprise Solutions announced a new optical network for large enterprises this week that is capable of delivering up to 440 Gbit/s through any optical technology, be it Sonet, DWDM, Ethernet, or a combination of all three. (See VZB Adds Optical.)

Mike Marcellin, VP of product marketing for Verizon Business, says the new network will save customers money, but the cost savings will vary widely. He contends users could save about 30 percent or more.

With this new network, Verizon will be targeting large enterprises that are running at least two different types of technologies. An example of a target customer would be a company that has some offices running DWDM and others running Sonet. For each of these technologies, the enterprise would be operating a separate ring.

Verizon says it can come in and combine these networks onto a single private ring running through one central office, thereby reducing the amount of equipment necessary and making everything easier to manage and cheaper to run. If you're a PowerPoint fan, see the slides below:

"I think the ability to mix and match endpoints is a key differentiator," says Lisa Pierce, VP at Forrester Research Inc. , in reference to the convergence capabilities of Verizon's new service.

But Heavy Reading senior analyst Sterling Perrin believes the real benefits and cost savings would come if Verizon could offer a shared network infrastructure, integrating some of these network devices into Verizon's network, instead of building it entirely on the customer's.

"You'll get some cost savings from combining Sonet and DWDM, but they're not going to get the cost benefits of a shared infrastructure," says Perrin. He notes that in a shared infrastructure there is far less equipment that needs to be installed within the physical enterprise which makes costs significantly lower than having a single dedicated infrastructure.

But Verizon says that security is key for its target market, and that requires a dedicated network. "We have experience with both shared and dedicated networks. The dedicated is for customers who need the specific bandwidth and want security," says Max Bash, Executive Director of Corporate Marketing for Optical and Coordinated Services at Verizon Business. "They want to make sure that their purchase is secure and cannot be compromised."

Another concern is that Verizon's competition here may be its own customers. "A lot of these large corporations are perfectly capable of building these networks on their own," says Heavy Reading's Perrin. Perrin brings up a concern that the savings benefits from a single private ring network might not be attractive enough to lure large corporate customers, as opposed to a shared infrastructure, which would be a lot more interesting.

"It is possible, but almost prohibitively expensive," says Bash in reference to enterprises building their own networks. "The knowledge that is required to manage this is huge." Marcellin adds that customers get the added economies of scale from Verizon's relationships with the equipment vendors.

That key equipment vendor associated with the project, thus far, is Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA). Verizon will be using Tellabs' new 7100 product on initial installs but is looking to add more vendors to the project in the future.

Verizon does not yet have any customer announcements to make and has not complete any installations for the new network, either. After winning a customer, the installation process takes three to six months, depending on how large a deployment is required.

— Raymond McConville, Reporter, Light Reading

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