The exploding growth in the dot-com world with thousands of entrepreneurs developing new products and services online gives the impression of a disorderly, disconnected universe.
Not true. Web-centric businesses, those companies whose business relies in some part on the Internet, are being created and flourish because they are supported by strong communications backbones and specialized services (such as location of mission critical equipment in sites that give them easy access to a high capacity, high speed transmission network or “backbone”) customized for specific business needs. This “backbone” like that in the human anatomy provides support, shape and houses the core that carries messages from end-to-end. However, the cyberspace backbone is not of bone or even copper wire, but of glass fiber and is driven by the Internet Protocol (IP) technology.
Two Web-centric businesses that rely on an IP network backbone illustrate this new universe. Center 7 is an application service provider (ASP) providing Internet start-ups with the ability to outsource their network and infrastructure needs, and Digital Broadband Group is a company that provides free digital subscriber lines (DSL) to its customers. DSL is a service that allows a consumer or business to get high speed access from a local provider that is connected to the Internet at all times.
The web-centric environment operates with high-speed connectivity, close profit margins, and must deliver dependability and reliability to its customers. It uses burgeoning amounts of bandwidth from a supporting backbone network, along with related communications services without which it’s unable to deliver on promises to customers. This community is highly competitive, and known for its speed and volatility. It also demands superior performance from its business partners. Thus, the backbone provider must meet, as well as prepare to meet, existing and unanticipated Web-centric business demands.
The Communications Backbone
The backbone is the IP network that is based upon packet switching and a virtual endless supply of bandwidth or transmission capacity. The IP backbone is the enabler of Web-centric communications , upgrading technology, expanding capacity and increasing speed to meet the voracious appetites of these new business entities. The projected demand illustrates the economic drivers of the technology-driven web-centric environment.
By the end of 1999, over 259 million users worldwide caused Internet traffic to double every 100 days. Online shoppers spent more than $15 billion last year, double the amount in 1998. Business-to-business electronic commerce (e-commerce), by a number of accounts, exceeded $100 billion in 1999 with some forecasters expecting this market to mushroom to $7 trillion by 2004.
Wire versus Fiber
The traditional telecommunications companies began their businesses with copper wire and circuit switching technology over 100-years ago. This technology no longer meets the dynamic needs for speed and capacity of Web-centric businesses. Fiber is the cable of the Web-centric world and it is constantly being reinvented to keep ahead of this new business sector.
Fiber optic cables, which once contained as few as six fibers, now can easily contain 1,200 fibers or more each about the size of human hair. And Dense Wave-Division Multiplexing (DWDM) enables multiple lasers and transceivers to share a single optical fiber by using different wavelengths of colors of light simultaneously. More than 40 wavelengths can be transmitted in a single fiber today and the typical channel bandwidth has risen from 2.5 Gigabits per second (2.5 billion bits of information) per second to 10 Gigabits per second.
The next generation of multiple conduit fiber networks will stretch from Hong Kong to Frankfurt, providing new businesses with over 34,000 times the capacity of the one cable available only three years ago.
Bandwidth Glut or Endless Demand
Preparing to do business with web-centric customers requires an adjustment in business growth models. As the NASDAQ market makes clear on a daily basis, new companies are rushing to serve what they perceive as a niche market opportunity, made possible by the Internet. How do you keep a backbone strong in the face of unknown demand?
The first global network built entirely on IP technology is being constructed by Level 3 Communications and is an example of the new business model. Instead of laying one cable and pouring concrete over it, as was done by legacy telecommunications companies, Level 3 is laying 10-12 1 1/4-inch conduits along its network. Instead of building traditional data centers with wiring located above suspended ceilings and behind cabinets and walls, Level 3 is building Gateways (which are portals to its network) with wires and cables easily accessible to upgrade the newest fiber, technology, or to meet increases in bandwidth demand.
Silicon economics predicts that with growth in usage, prices for bandwidth will decline, and that over time the cost of moving information a bit per mile per second over an IP network will drop as much as 50 percent per year, every year. What is sometimes forgotten is that bandwidth demand is not static at any price and the price will inevitably go down as technology improves.
Web-centric Versus Brick and Mortar Businesses
It isn’t the businesses that are new, it is the way business is being conducted that differentiates a Web-centric firm from a brick and mortar establishment.
Amazon.com sells books and tapes; Lucent Technologies provides components, software as well as business systems to businesses; and RCN provides bundled telecommunications services to the residential market.
The entertainment industry has spawned another category of Web-centric business applications such as Vertical Productions Link, which provides on-line back office systems for movie production companies. Other web-centric entertainment companies include STV, which provides streaming television programs developed for delivery over the Internet, and Sony Online, which runs multiple user games’ online over an IP-based backbone.
In addition to connectivity to an IP backbone, Web-centric businesses often need to colocate mission critical equipment in a reliable, secure environment, complete with software and professional personnel support services provided 24 hours a day, seven days a week. Colocation is one of the fastest growing businesses for backbone networks.
The ability to insure rapid growth from a few hundred hits a day to being able to pass a hundred million transactions a day, is made possible by access to an IP communications backbone. Web-centric companies, revolutionizing the way businesses reach their customers, are bypassing the traditional telecommunications environment. Thanks to innovative companies, IP technology is being utilized to build a backbone that can grow and expand along with the marketplace.
Timothy L. Rahtz is Sales Director for Level 3 Communications’ Los Angeles Gateway.