Hurricane Katrina destroyed nine BellSouth central offices in the Gulf Coast region, BellSouth’s CTO said this week.
LAS VEGAS — Hurricane Katrina destroyed nine BellSouth central offices in the Gulf Coast region, BellSouth’s CTO said this week.
The lost COs served 20,000 lines on the Mississippi coast and on the peninsula south of New Orleans, said Bill Smith, BellSouth CTO. BellSouth is deploying digital loop carrier systems to restore service, Smith says.
Reconstructing the COs, however, will depend on whether people repopulate those affected areas.
“The ones that were totally destroyed were typically small offices,” Smith says.
BellSouth has 4.7 million lines in the Katrina-affected areas of Alabama, Louisiana and Mississippi.
Eleven other COs are still out of service but in various stages of restoration, Smith says. Two in heavily devastated areas of downtown New Orleans will be restored this month and in mid-November, he says.
BellSouth is sticking to its initial estimates of $400 million to $600 million in costs associated with the most destructive storm in U.S. history, which devastated New Orleans and the Gulf Coast in late August. The carrier expects to take a $100 million charge against earnings in the third quarter to cover costs associated with asset impairment.
In a wide-ranging interview with Network World at the Telecom ’05 conference here, Smith said BellSouth has all of the technology assets it requires to compete with the mega-carriers formed from the mergers of SBC and AT&T, and Verizon and MCI. Owing to a recent nationwide MPLS interconnect agreement with Sprint Nextel, Smith says it is not incumbent upon BellSouth to acquire additional facilities in order to compete.
“We believe that we’ve got the capabilities to compete effectively, particularly with the recent announcement with Sprint,” he says. “Prior to that agreement, it was a challenge.”
The challenge for SBC and Verizon, Smith notes, is that they are acquiring carriers that have a declining revenue base. Though the services are still profitable, it will be hard, if not impossible, to generate top-line growth.
“I think we can be very competitive because it’s new revenue for us, and as long as it’s profitable revenue the fact that it’s being priced down from what it used to be to what it is now is irrelevant to us,” he says. “An incumbent provider has that concern to deal with.”
Smith says BellSouth chose Sprint over Qwest, with which it has an existing nationwide wholesale arrangement, because testing demonstrated that BellSouth could extend the same SLAs and service classes it offers regionally for managed VPNs on its nine-state IP backbone end-to-end across the Sprint network.
“We were able to reach commercial and operational terms that we thought were attractive,” he says. “There are some subtle differences in the way different carriers have implemented SLAs.”
Nonetheless, he did not rule out similar agreements with other carriers. Smith also dismissed the potential conflict with Sprint as a wireless competitor — BellSouth owns 40% of Cingular Wireless while Sprint just acquired Nextel for $35 billion.
“If we can execute an agreement with Sprint that allows us to be more successful in the enterprise market, the fact that we compete with them in the wireless side doesn’t keep us awake at night,” he says.
Cingular’s recent selection of Lucent as its supplier of IP Multimedia Subsystem (IMS) components for wireline and wireless voice, data and video integration has led to speculation that BellSouth might follow suit. SBC, which owns the other 60% of Cingular, did so.
Smith says BellSouth has selected an IMS vendor but has not yet announced which one.
“I think IMS is as important to the future of integrated network services as intelligent network features were to the traditional circuit switched network,” he says. “At the same time, IMS is in this stage of infancy because we’ve still got work to do in the industry to define it more succinctly, more explicitly. I think we’re going to be surprised and amazed at the power an IMS system gives you for intelligent control.”
Though IMS is immature, its value is clear. The same cannot be said for WiMAX, however.
BellSouth has pre-WiMAX wireless broadband services up in New Orleans and Athens, Ga., and a trial in Palatka, Fla. But the carrier is hard pressed to find an exclusive role or application for WiMAX.
“I really believe WiMAX is a great supplement to all the other things that we offer,” Smith says. “It’s unlikely in my mind that WiMAX becomes the only communications access vehicle.”
In densely populated areas, Fiber-to-the-Node provides much more bandwidth at a lower cost per user than WiMAX, Smith says. WiMAX or pre-WiMAX could provide some portable broadband connectivity for users living in a location for a short period of time, he says, like a college campus, where the frequent churn would make wireline DSL unfeasible.
Indeed, BellSouth’s service in Athens, home of the University of Georgia, is intended to entice students to become BellSouth broadband customers once they leave college and assume long-term residency. But WiMAX may become more compelling once laptops ship with integrated, standard-compliant capabilities that make cost a non-issue.
“Today the cost of the consumer modem is still a fairly significant in the business case,” Smith says. “If you’re having to subsidize a piece of CPE pretty heavily on the front end, if you don’t get that customer staying with you for a long period of time it is a real drag on the business case.
“At this stage of the game, the biggest unknown is what does the marketplace for this stuff evolve to be.”
