• United States
Executive Editor

Corvis takes matters into its own hands

Mar 12, 20043 mins
System Management

Sometimes if you want to get things done you have to do them yourself. Take Corvis, for example.

Sometimes if you want to get things done you have to do them yourself.

Take Corvis, for example.

The company started out as a hardware provider, making long-haul optical transport and switching gear, with the aim of powering all-optical service provider networks.

Several things stood in the way of established carriers going forward with building these networks. First, it would take a long time because no carrier can convert its massive network investment overnight. Second, the long-haul bandwidth glut came along about the time Corvis was ready to sell its gear. And third, the bottom fell out of telecom, freezing network capital expenditures.

So Corvis took matters into its own hands about a year ago, buying up service provider Broadwing, which happened to have a Corvis-based network it built from scratch. Its business model was to provide great gobs of long-haul bandwidth to other carriers and the largest corporations.

One result of the deal was to boost Corvis’s revenue. Breaking down the company’s revenue, the Corvis hardware sales were less than 1.5% of the Broadwing service sales. Clearly the buy was good for Corvis the hardware vendor.

Now it’s even more apparent that Corvis is becoming a service provider with the purchase this week of Focal Communications for a total of $210 million. Focal is a local exchange carrier, and its purchase means Corvis/Broadwing now has a way to offer access to its core network directly in many key markets without involving some other carrier.

This is building a carrier network the old fashioned way, by actually installing gear the carrier owns on a network it controls. Since this is a from-scratch network primarily built from a single vendor’s gear, it should enjoy all the efficiencies that such an architecture affords. This is the model of the original AT&T, only this time the company has competition.

It is a good move for Corvis, especially with the major established local carriers getting protection from regulators against having to lease access elements of their networks at cut rates to competitors. While these regulations are very much in flux, it is clearly better to own an access network than to lease it under terms that are subject to change, possibly for the worse.

Corvis/Broadwing doesn’t hit all cities with its network, but it hits 10 of the major ones, and that is a good start. With telecom starting to show signs of recovery, it is a good base for the company to start from as things continue to improve.