Thousand Points of Light?
by David J. Wilson
Progress spinoff Progress Telecom
gears for major fiber optics role.
state-of-the-art control room at Progress Telecom
Corp. traces every fiber optic line in the company's
system. It can instantly locate problems.
Robin Donina Serne
as few great actors simply "appear"- that is, they
usually have honed their skills for years in little
publicized venues- St. Petersburg's Progress Telecom
Corp. may find itself in the spotlight as its parent
vanishes under the rubric of Carolina Power & Light
Co. If it happens, those who look behind the curtain
will find that the 1998 creation of Florida Progress
Corp. can trace its corporate history back several
more, it's a part of the Florida Progress story that
won't disappear into North Carolina, because CP&L's
fiber optics unit, Carinet, is being merged into Progress
Telecom, which will remain headquartered in downtown
St. Petersburg. That move, together with the company's
cooperative agreements and alliances with NorthEast
Optic Network Inc. (NEON; Nasdaq:NOPT) and FPL Group's
FPL FiberNet, will give Progress Telecom reach of
the entire eastern seaboard, a network of more than
3,000 route miles. And, then, there's Latin America.
before Progress Telecom's president and CEO Ron Mudry
goes into detail about how many billions of gigabits
of data can be moved in one second through fiber optic
cable, it's worth stepping back to a slower time,
when it took an entire room full of IBM computers
to crunch a few numbers.
the 1950s Florida Power Company, like many other utilities,
began developing an internal communications infrastructure
for the simple purpose of establishing a reliable
independent telecommunications network. Over the years,
that included setting up its own microwave towers.
By the mid-1980s, the utility was leasing space on
those towers to government entities and wireless companies.
In time, fiber routes were developed, and in 1990
FPC leased its first dark (unlit equals unused) fiber
route. By the mid-'90s more than 25 government and
business carriers were leasing fiber and/or structure
attachment space. Looking for a chance to diversify,
FPC formed Progress Telecom, and the rest is history
at Internet speed.
says Mudry, "we're a carrier's carrier. Basically,
our primary product is to sell broadband capacity
to other carriers." Customers include MCI WorldCom,
Level (3) Communications Inc., various ISPs (Internet
service providers), and CLECs (competitive local exchange
carriers) such as New South Communications and Verizon
Wireless, among many others.
Progress Telecom is selling would amaze any of those
computer scientists of the 1950s. Its installations
of OC192 units (various numbers indicate the rate
at which data can be transmitted through fiber) "can
transmit up to 10 gigabits, or 10 billion bits of
data, per second." To get a perspective on that, Mudry
says, "your typical motion picture is about five gigabits.
So you could download a typical movie in about half
a second." He also points out what many forget in
this era of flashing graphics and downloadable music:
The rates of transmission really refer to the number
of times you can send pulses of light through fiber.
"You're just sending a series of zeros and ones."
these speeds seem astounding enough, we're at the
early development stages of fiber optics technology,
in the Telecommunications World
new technology or aspect of it either throws
up new terminology or twists old definitions
into new shapes. Frequently heard around telecommunications
companies are terms such as these.
is an arrangement under which large ISPs (Internet
service providers) with backbone networks agree
to allow traffic from smaller ISPs to use those
backbones in return for the smaller networks'
carrying backbone network traffic to their end
points. If that's still confusing, imagine that
a large company owns Interstate 4, but dozens
of smaller companies own the local roads that
surround it. Peering is essentially the series
of on and off ramps that allow traffic to move
freely to its own particular destination. Thus,
"last mile" often referred to by telecommunications
companies is the connection that must exist
between the broader network and your home or
office. Commercially, it's much more profitable
to carry huge volumes of corporate traffic around
the country than it is to carry your e-mails
or photos or jokes to your mother in Des Moines.
Hence, broadband networks of great capacity
may exist nearby, but who is going to connect
you to it? In highway terms, here's the I-4
and your connection to it is a narrow, one-lane,
two-way road. Who wants to finance making that
into a six-lane highway?
- D.J. Wilson
now have "the ability to transmit multiple signals
through the same fiber by using different colors.
Before, if you wanted to increase your capacity, say
increase your 10-gigabit channel, you would have to
use another pair of fibers. But with DWDM (dense wave
division multiplexing), you can transmit multiple
colors of light through the same fiber. We're deploying
DWDM throughout the system now. It has the capability
of 32 different colors, upgradable to 128 colors through
a single fiber. And that's not the limit. It's just
the current box. Lucent [Technologies Inc.] is experimenting
with 1,000 colors of light."
matter how much data can theoretically be transmitted
through specs of light, Progress Telecom's job is
installing and maintaining the fiber lines that facilitate
the process. From its rudimentary beginnings, it has
grown exponentially. It began selling broadband services
to other carriers within the 32-county area of Florida
Power Company's franchise. "But it's growing rapidly,"
Mudry says. "We currently provide services as far
north as Atlanta on our own network and via a leased
network, which will soon be ours." With the Carinet
merger, "we'll go all the way to Washington, D.C.,
through the Carolinas, Raleigh, Charlotte, and so
on, into Atlanta. We'll reach basically from Miami
to Washington, D.C." After the merger dust has settled,
Progress Telecom will be a wholly-owned subsidiary
doesn't appear worried that many others are scrambling
to become players in the building and maintenance
of fiber optics networks. "We do both long-haul services,
inter-city and local loop access, so we're building
out metropolitan fiber networks. Many are building
and have built national long-haul fiber networks,
and there's a lot of capacity. One of the things that
differentiates us is that we have a very strong presence
and reach into second- and third-tier cities in addition
to primary markets. Part of our strategy is to be
able to provide long-haul services from primary markets
into second- and third-tier cities that are currently
addition, we're building local loops in order to connect
buildings within a city back to those long-haul backbone
networks. We'll be building out to the central offices
of telephone companies like Verizon, as well as BellSouth
and SprintFlorida ... and we'll go to places called
carrier hotels, places where many carriers will come
together and interconnect their networks."
unlikely soon to be a cessation in the demand for
greater capacity, i.e., greater bandwidth. "Users
are requiring it. Just like on your computer and your
continue to grow, and the backbone networks ... have
been upgraded tremendously over the past couple of
years, but getting [that capacity] down to the end
user, there's the problem."
Telecom is not an end-user provider, of course. "But
we're building closer to the end user by fanning out
within the city to these major peering points."
and the Southeast generally is "a very attractive
market," says Mudry. "Twenty percent of the [national]
telecom market is in the Southeast, and it's the second-fastest-growing
area after California. The wholesale market segment
that we're in is expected to grow at a rate of 20
percent a year nationally. If the Southeast is one
of the faster-growing segments, we expect that our
market would grow even faster."
also a prize for being in Florida, Mudry says. "Florida
is essentially the gateway to Latin America. We have
all this undersea fiber optic cable that comes in
from South America, landing generally in Southeast
Florida. That traffic, once it arrives here, has got
to travel right through our state to Atlanta or Washington,
the two nearest peering points on the Internet." That
runs right through Progress Telecom's territory.
of our strategy is to build out to those undersea
fiber optic cables to be able to pick up and distribute
that traffic within the United States. We physically
lay cable or buy it from somebody else, and then we
will get it into the buildings that house the electronics
that transmit and receive the data." In Miami, Mudry
says, Progress Telecom will either receive from or
carry data to other telecommunications company. "We're
building a local loop in Miami right now." For this
to work, the company has to be a designated provider
for various South American carriers or be considered
a preferred provider, because access to the connection
points is "very limited," he says.
it's worth courting that market, Mudry maintains.
"I've seen various reports, but the Internet market
within Latin America is projected to grow from about
$600 million last year to $35 billion 10 years from
now. That's a growth rate of over 100 percent a year
for the next five years. It's phenomenal." One of
the new cables being laid will have a capacity of
"192 OC192s, or 1.9 terabits [1.9 trillion binary
digits] per second," he says. "That's an indication
of how explosive people believe the demand is going
to be over the next three, five and 10 years."
Progress Telecom's relatively short existence, there's
been a lot of strategizing. Mudry works down a list
that includes continuing to build out local loop access
networks to connect with, in effect shortening the
"last mile." "We'll get closer to the customer, bringing
the bandwidth as far downstream as we can, then interconnecting
it with the long-haul backbone network." That will
help expand the "reach of national companies into
second- and third-tier cities. We think we'll have
a very attractive footprint once we complete our combination
with Carinet, and are connected with the entire Southeast.
Between us, we have more than 100,000 fiber miles
of network. And after we complete our own expansion
between Florida and Atlanta, including Jacksonville
and other routes we've identified, we'll have close
to 6,000 route miles and, I think, more than 140,000
this takes highly trained people, and Progress Telecom
is growing. Mudry says that while there were about
130 employees in August, he expects to have between
150 and 170 by year's end. The Carinet staff in Raleigh
stands at about 50, but he expects that to grow to
about 65 in six months.
says he believes wireless is going to be "an important
technology in serving the last mile needs of the customers.
It's cost prohibitive to build fiber into every single
[commercial] building, just as it is to build fiber
into every single home. Other technologies such as
digital service lines and cable modems are alternatives,
but I think fixed wireless will also play a role in
Progress Telecom chief isn't as ready as some to say
with certainty that data transmission has become a
commodity business, at least not in smaller markets.
"If you're talking about transmitting data from New
York to Los Angeles, a lot of people can do that,
and it's pretty commoditized. But as you look at second-
and third-tier cities, there's not enough people providing
service to these markets, and demand is far outstripping
supply. We see that even in the primary markets from
Miami to Atlanta. It's far from a commodity in my
view." A bay area example, he says, could be contrasting
downtown Tampa, where there are many providers, with
St. Petersburg or Clearwater, where there are fewer.
"I think the long-haul business will be commoditized
before the local loop business."
matter what the time frames are, success in the telecommunications
business is going to come down to customer service
and system reliability, Mudry says, adding that "provisioning
intervals is one of the most critical issues facing
the industry today: How fast can you turn the service
up?" Some can't meet commitment dates, he says, commenting
that Progress Telecom has made it a point of pride
to "be able to turn circuits up much faster than our
competitors and to meet our dates. That can be much
more important than price in many cases. There's a
lot of fiber in the ground, but a lot of it's not
lit today." (That is, it's not yet attached to the
electronic switches needed to receive and transmit
is reticent with figures, but says that the combined
revenues of Progress Telecom and the CP&L company
Carinet in 1999 were about $30 million. He anticipates
more strategic alliances will solidify the company's
leading role in telecommunications along the East
Coast. If he's right, Florida Progress Corp. will
have left behind the seeds of an important corporate
© Maddux Report L.C. 2000