Some companies have found a clever way to take advantage of the oversupply of fiber-optic circuits. They are buying unused fiber links at bargain prices and equipping them with Fast Ethernet or Gigabit Ethernet equip-ment to create a cheap, high-speed private network.

Kaiser Permanente plans to disconnect nearly 150 T1 lines (1.5 Mbps) it buys from SBC Pacific Bell to serve 12 sites in Southern California and replace them with fiber-optic circuits running Gigabit Ethernet in a ring that ties together all the sites. The health-care provider's network "is a mess," says Joseph L'Italien, a senior programmer at Kaiser Permanente. "I want to disconnect it and put in our own backbone, because fiber optics is the only way to do it."

The group's doctors send so many large files containing X-rays and MRIs that it's exhausting the network's bandwidth, forcing Kaiser Permanente to upgrade or cut back on the network capacity allotted to administrative apps such as finance and billing, L'Italien says. "We've got to do this or we're going to reduce the efficiency of these other departments."

Pacific Bell will manage the fiber for Kaiser Permanente and charge the same monthly fee that applied to the T1 network, because fiber is inexpensive to install and operate, L'Italien says. Pacific Bell gets to reclaim the copper T1 circuits for voice traffic.

Equipment for Kaiser Permanente's network will cost about $5,000 per site.

There's growing interest in building private networks by putting Ethernet over idle fiber capacity that hasn't yet been "lit," or outfitted with electronics. This approach would eliminate the need for many businesses to buy similar Ethernet-based services from competitive data carriers, many of which went out of business in the past few years.

Businesses are discovering the advantages of building their own networks, says Eugene Lee, VP of worldwide enterprise marketing at Cisco Systems. "There's this unbelievable amount of fiber in the ground," he says, and customers can combine cheap fiber capacity with the unbeatable price and performance of Ethernet technology.