RESELLER CHANNEL: Premium Blend

Posted: 1/2003

Premium Blend
Resellers Positioned to Fill Distributed Enterprise Broadband Needs

By Khali Henderson

LARGER BUSINESSES SUPPORTING growing remote offices and mobile and at-home workers are showing increased demand for broadband services, such as DSL. Lack of ubiquitous facilities-based providers, however, puts resellers that can aggregate multiple broadband networks in good stead to fulfill this growing need.

"We're seeing [distributed enterprises] play catch up in terms of high-speed connectivity for their remote offices and telecommuters, looking for providers that can offer them a wide |footprint, as well as relevant value-added services, such as managed security, not generally sold with low-end or consumer-oriented connections," says Kneko Burney, director of business infrastructure and services research for In-Stat/MDR.

The research firm estimates business subscribers accounted for at least 40 percent of total broadband subscribers (DSL, cable, fixed wireless and satellite) in 2001, with this percentage expected to increase slightly over the next few years.

"With more than 60 percent of the U.S. workforce in remote locations, including 32 million daytime telecommuters, the need for lower-end data solutions is undeniable and growing," says Burney. "Already, remote workers (branch offices and telecommuters) command roughly 30 and 40 percent of middle market and enterprise IT expenditures, respectively."

Burney says distributed enterprises are likely to address their changing main and branch bandwidth needs with dedicated lines as opposed to comparable broadband alternatives, although new multiloop DSL solutions may address this objection (see sidebar above.) However, a recent In-Stat/MDR survey also found 42 percent of enterprise decisionmakers indicated a preference for DSL over other broadband alternatives -- cable, fixed wireless and satellite Internet -- for their companies' smaller or remote sites.

Joel Sam, president of Broadband.com, an aggregator of broadband services, agrees enterprises' first preferences are for DSL, though they can't always get it. In those cases, an aggregator's ability to also source cable, ISDN and fractional T1s is valuable to winning the account.

Real estate service firm Lincoln Property Co. is one customer helped by Broadband.com. Lincoln needed high-speed connectivity solution for about 200 locations after its ISP had filed for Chapter 11 bankruptcy. Broadband.com provided Lincoln with free bulk qualification services for its locations through multiple service providers. Lincoln used this information to select a primary provider that best met their unique coverage needs and cost requirements. Broadband.com representatives managed the entire ordering and installation process, negotiating pricing and working with its team of dedicated account managers to reduce the installation timeframe and administrative hang-ups.

"Before I found Broadband.com, I was having an extremely difficult time finding DSL providers for some of my properties," says Mark Acosta, regional systems coordinator for Lincoln. "Broadband.com has taken that hassle completely away from me. Not only did they do the research and qualification, they also provided me with an organized and detailed service options report for all of my properties. The spreadsheet also consisted of important technical information such as line speeds, IP addresses and router passwords."

Another last-mile re-seller, Megapath Networks Inc., also is finding success landing multilocation businesses, including those with remote offices. Dan Foster, chief marketing and sales officer for Megapath, says productivity applications and cost avoidance (e.g. frame relay replacement) are the primary drivers for high-speed connectivity. In the latter case, an older frame relay deployment may run $800 per circuit, where an IP virtual private network (VPN) using DSL is about $150 per line, he notes.

Foster says Megapath interconnects with 12 last-mile providers and offers customers like Radio Shack a "homogeneous approach" in serving a larger percentage of a client's properties. Radio Shack's previous vendor, the now defunct Northpoint, served 1,400 of the chain's stores while Megapath serves about 4,000, Foster explains.

Volume pricing discounts, flexible billing options (e.g. aggregated or distributed) and a single point of contact also are areas where its resellers can get a leg up over cablecos and ILECs, which by their nature are regional, says Eden Godsoe, director of direct product management for nationwide DSL wholesaler Covad Communications Co. Covad offers service in 94 metro areas directly and through resellers like Megapath.

Spediant Takes Copper to Fiber Speed
Source: Spediant Systems

Spediant Systems is addressing the bandwidth and distance gap between DSL and fiber with what it's calling multiloop DSL, to enable broadband service providers to deliver the same level of service to all nodes in a multilocation deal.

"There are a lot of places without fiber," says Spediant's vice president of business development, Randy Nash. "It went into the Tier 1 cities and larger buildings, but Tier 1 2, 3 and 4 cities never got addressed [before the capex spending dried up]," he says.

Indeed, Communications Industry Researchers Inc. estimates there are 26,000 buildings and 214,000 commercial tenants with access to fiber. Moreover, three-quarters of these buildings are concentrated in nine metro areas, the research firm reports.

This is problematic for companies that want a 10mbps Ethernet service, since copper delivers up to DS1 speed. In contrast, Spediant's product takes multiple copper pairs to provide the full 10mbps.

"For service providers, the advantage is being able to market a 10mbps service to anyone instead of only those passed by fiber," says Nash. In addition, he says, it eliminates the expense of having to lay fiber, or worse, walk away from the deal.

The product, which costs about $2,500 ($2,000 for the equipment and $500 for an Ethernet port) to deploy, will be in trials during first quarter and commercially available in second quarter. ROI is two and a half months, based on a retail price of $1,000 per month, which Nash says is on the low side.