February 7, 2000

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IT At The Speed Of Light
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Eliminating bandwidth constraints also will let ASPs offer a wider variety of applications. "As more bandwidth becomes available, it enables new applications like ad hoc conferencing and multimedia," says Marco Boerrief, VP and general manager of Webtop and applications software at Sun Microsystems.

Some companies already are reaping the benefits of ASP services running over optical networks. Westburne Inc., a wholesale distribution company in Montreal, is outsourcing a customer management application to ASP FutureLink Corp. The app runs on a remote server and is accessed over a dedicated optical link. "It's very painless, and it works," says Jim Lysyk, industrial sales manager at Westburne Electric Alberta, a division of Westburne Inc.

Lysyk says his company has saved about 10% on its IT costs by outsourcing the application, but the real benefit has been in allowing him and his staff to focus on their core business. "This is definitely the way to go."

Other users say they're looking forward to the day when optical networks let them outsource apps, but complain that they may still have to wait awhile. "Outsourcing applications to an external supplier would make my workload a lot easier, but it will take a long time before Sony starts doing this," says Andrew Wilson, project manager at Sony United Kingdom Ltd. in Weybridge, England.

Nevertheless, some say it's inevitable that the ASP model will overtake business networks, due in large part to optical networking. Optical networks will get to the point where they make the location of the application from the user "genuinely irrelevant," says James O'Donnell, vice provost of IS and computing at the University of Pennsylvania in Philadelphia.

This trend also could turn the PC software market on its head, threatening Microsoft's hegemony. So far, Microsoft has been slow in aggressively developing software solutions for thin-client computing, choosing to support the technology via its investment in Citrix Systems Inc. "It will be hard for Microsoft to tear themselves away from Windows to get ASP applications right," predicts Larry Peterson, a professor of computer science at Princeton University. "They've had trouble doing this before." Still, don't count Microsoft out. "Nobody's gotten rich betting against Bill Gates yet," O'Donnell says.

Clearly, optical metro services have serious potential, whether they're used to deliver big bandwidth, VPNs, or even applications. That means businesses need to know two things: when these services will appear and who will offer them. The answers depend largely on where the business is located.

"Services are at least a year away from being solidly available, and even then they'll only be offered within the 30 metro main markets where there's a critical mass of businesses that need a lot of bandwidth," says Maribel Lopez, a senior analyst at Forrester Research.

So who will deliver these services? The pioneers are a new category of small startup providers, typically focusing on offering services within and between buildings. These companies include Allied Riser Communications, Broadband Office, and Urban Media Communications, all of which say they will offer services based on next-generation optical provisioning platforms by July. Businesses will be able to use these outfits as one-stop shops for all their voice and data needs, as well as value-added services such as VPNs. Most of these startups also plan to act as ASPs.

In the meantime, there's a turf war going on between these upstarts and other providers to sign affiliation deals with building owners. There is about 15 billion square feet of office space in the United States; about 1.5 billion has been snatched up in affiliation deals, Urban Media estimates.

Still, optical metro service won't become widely available to businesses until larger competitive local exchange carriers and regional Bell operating companies join in, and that won't start happening until next year. "The regional Bell operating companies will wait until they see that people are eating their lunch before they finally make a move," Mielke says.

Then there are cable-TV operators, which could turn out to be the sleeping giants. "They're fiber-rich, and that gives them a huge opportunity to build out their distribution networks from their head-ends," says Tom Randstrom, product marketing manager for Cisco's optical transport business unit.

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Illustration by Campbell Laird

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