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Business News – Williams Communications to Extend Long-Haul Fiber Network

Posted: 04/2000

Business News

Williams Communications to Extend Long-Haul Fiber Network
By Khali Henderson

Carriers’ carrier Williams Communications (www.williamscommunications.com) will extend its broadband fiber optic network to carrier customers in 50 top U.S. markets as part of a new three-year, $421 million initiative that gives the wholesaler greater control over local connectivity its customers require.

Analysts say the local buildout also begs the question of Williams’ retail strategy. While the company has remained staunchly wholesale-only since it launched in January 1997, this new move is not without precedent. Its predecessor, WilTel (sold in 1995 to MCI WorldCom Inc.,
www.wcom.com), eventually offered its services to the retail channel.

“Expanding Williams’ access services at the edge of our network is a direct response to our customers’ needs for ready local access to our carrier-focused global network,” says Howard E. Janzen, Williams’ president and CEO. “This ‘last mile’ is crucial as we complete the largest next-generation network in the U.S. and prepare to link that network with international gateways.”

To oversee the local network deployment and the development of DS-3 to OC-48 private line and wave services within the targeted markets, Williams has formed a local access services group. Jeff Storey serves as the new group’s vice president.

The Williams network extension from its data centers to high-density buildings, carrier hotels and selected central offices (COs) complements the existing strategic agreements it has to link its national network with local providers’ telecommunications facilities in dozens of U.S. cities.

For example, it will augment the local assets of Metromedia Fiber Network Inc.
(www.mmfn.com), and Winstar Communica-tions Inc.
(www.winstar.com) which Williams currently uses to provide local access for
its customers.

The company says the move will support the local access requirements of many of its customers, including SBC Communications Inc.
(www.sbc.com), which is expected to use a number of the Williams Communications local facilities to implement its national rollout of local services to 30 markets.

Williams expects to create on-net sites by the end of the year in the 50 targeted markets. This will coincide with the completion of its 33,000-mile, long-haul fiber optic network.

The first 10 cities targeted are Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, New York, Philadelphia, San Francisco and Washington, D.C.

Funding for the project is provided through a financing package that Williams completed in October in conjunction with its initial public offering (IPO). First-year capital expenditures are expected to reach $149 million.

“Once its broadband local access facilities are in place, Williams will be in a position to offer end-user-to-end-user voice and data services, which begs the question, ‘Why not cut out the middleman?'” say analysts at Current Analysis Inc.
(www.currentanalysis.com).

“Of course, the answer to this question is that Williams has extremely limited experience marketing and billing for direct customer relationships. It also has a relatively weak product and services portfolio compared to those of direct competitors such as AT&T [Corp.,
www.att.com] and MCI WorldCom. The question remains nonetheless, and Williams has three whole years to come up with an answer,” the analysts say.

 


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