Virtual networks could offer a useful risk-reduction strategy in
the wake of recent provider bankruptcies.
The long-term financial problems of network carriers are causing
many boards to ask about the future of their enterprise networks,
writes
Ross Bentley.
Indeed, the signs are that the problems experienced by KPNQwest and
WorldCom could spread to other providers working under the same
over-ambitious business models and massive debt burdens.
But what are the options for firms that may be re-evaluating how
they buy network capacity?
Allen Timpany, chief executive of Vanco, a virtual network
operator, says user companies have three choices.
"Option one is to maintain the status quo or change carrier," he
says. "But by remaining with their existing supplier or changing to
another carrier, corporations could find themselves underwriting
considerable ongoing financial and business risks.
"After all, despite major cost-cutting programmes, unprecedented
redundancies and intensive restructuring, network carriers are
still facing a time of enormous uncertainty.
"The recent problems of multiple, high-profile organisations
suggest there are inherent flaws in the way all these companies do
business."
In addition, Timpany says that if a truly global network is to be
achieved it will be through multiple transmission providers.
The second option, he says, is for companies to do the legwork
themselves. "To offset the risks it is possible to sign contracts
with multiple carriers, providing back-up networks from different
providers," he says. "However, the administrative burdens of doing
this are considerable and there is no guarantee of service quality
or reliability. The onus will also be on you to manage the traffic
through a complex web of tier-one and tier-two providers.
"This would necessitate building a team of people with specialist
technical design skills, traffic management knowledge and contract
negotiation expertise," he says.
Option three, according to Timpany, is to sign up to a virtual
network operator. This is where Timpany has to declare a vested
interest - but what are the arguments in favour of this
choice?
"Rather than build their own infrastructure, the virtual network
operator assembles the best package of network components from
multiple network carriers in line with the customer's own
requirements," he says.
"Often that would mean back-up services from a different carrier to
the primary in-country supplier to increase disaster recovery
effectiveness."
Timpany says virtual network operators offer their customers
flexibility by utilising short-term contracts for transmission from
different providers, by providing the end-user with long-term
stability and continuity of service.
"Even if conditions worsen, customers have an extra level of
insulation from problems provided by an international team of
network planners and engineers, anticipating many risk scenarios
and delivering solutions to unexpected problems," he says.
Finally, Timpany claims that the virtual network operator takes a
proactive approach to service delivery. This is because these
companies stand or fall by the service they offer, so they are
always trying to deliver a higher value solution.
"They review service quality on a continuous basis to ensure
customers are always getting the best deal. And, unlike individual
carriers which leapfrog each other with technology developments,
the virtual network operator is committed to keeping customers on
the cusp of technology," he says.