August 2000

BLECs: I Want My MTU

BY RICH TEHRANI

In fact, MTV inaugurated their station with this video from The Buggles almost 20 years ago. At the time (I was after all an impressionable youth) I remember people telling me that music videos would soon be the primary way that we will listen to music, and radio would soon be unnecessary. I believed what I heard... Who was I to argue? It seemed like the whole world was going MTV crazy.

Using the 20/20 hindsight of the best Monday-morning quarterback, it has now become apparent that video did not kill the radio star. More correctly (and much less eloquently) video enhanced the opportunities artists now have to entertain their fans through a new and unique medium. In other words, video altered the radio star.

Indeed, MTV became a super-important influence in music culture and it reminds me of another similar change in the communications market that is about to take place. In the past months, there has been an absolutely incredible proliferation of companies providing equipment that allows high-speed Internet access to multi-tenant buildings. Whether they be hotels, motels, apartments, or businesses, the opportunity to provide Internet access to a concentrated group of people allows service providers to take advantage of wonderful economies of scale.

A new term is beginning to emerge, BLEC or Building Local Exchange Carrier, that denotes a service provider who will take advantage of this emerging opportunity. Smaller and swifter than an ILEC, they are able to make lucrative deals with landlords and hotel management, allowing a variety of payment schemes while they are busy equipping their customers with a no hassle on-ramp to the information superhighway. I had an opportunity to ask some questions of two companies that supply equipment to this rapidly growing market. I encourage you to read the following interviews and determine for yourself, will BLECs kill the ILEC star?

CAIS SOFTWARE SOLUTIONS
Jill King, director of marketing, CAIS Software Solutions, responded on behalf of CAIS.

What is a BLEC or Building Local Exchange Carrier?
A BLEC is a service provider that is focused on delivering services within a specific building. The service provider identifies prime properties such as business traveler-oriented hotels, executive style apartments or office buildings, and then contracts with the property owner or manager to deploy a network within the building. BLECs achieve significant economies of scale in operating costs by aggregating traffic at the building and using a single broadband connection for local access. Because of their exclusive contracts with the buildings, BLECs can generally retain high margins even though they offer better pricing than any other competitor. The service provider is responsible for the cost of the equipment and maintenance within the building. In return, the BLEC receives increased revenue, low administrative and support costs, and value-added services.

How does CAIS Software support the BLEC model?
CAIS Software's IPORT Broadband Provisioning System (BPS) facilitates high speed Internet access in building-centric networks. Once the BLEC has deployed their in-building network, IPORT BPS automates subscriber activation, authentication, billing, and bandwidth management according to per-building, per-port, or per-user policies. It helps broadband service providers lower costs, increase revenue, and market new services. It is a complete and proven solution to support rapid deployment and high customer usage satisfaction.

What are the benefits to the BLEC deploying CAIS Software's IPORT BPS?
IPORT BPS benefits the service provider in several ways. First of all, it makes it much easier for new customers to subscribe for service, increasing subscription rates and generating more revenue. It facilitates rapid deployments through its auto-configure and installation monitoring capabilities. The IPORT SelectSpeed bandwidth manager enables service providers to offer a variety of tiered service levels to ensure that there is an appropriate service for each customers' needs. IPORT BPS provides Web-based monitoring and system management to ensure high reliability and performance. Finally, IPORT OneTouch provides a method for a BLEC to differentiate its service by either offering easy access to advanced services, or offering an advertiser-supported service at a reduced cost to the end user.

What is an example of a business model for a BLEC?
BLECs operate on a revenue share model with building owners/managers. They must secure the rights to the building, invest up-front in an in-building network, and then sign up as many subscribers as possible in the building. Compared to a standard ISP, they have higher capital costs and much lower operating costs, so they are more susceptible to penetration rates.

What are a few deployment examples?
You can check them out online at www.caissoft.com/pr-timewarner.asp and www.cais.com/company/comp_press_00-02-09.htm.

SOLUTIONINC
Andrew McLeod, chief operating officer, SolutionInc, responded for SoutionInc.

What is a BLEC or Building Local Exchange Carrier?
A BLEC is a service provider for broadband services (voice, video, and data) in-premise to various types of building structures. They run the gamut from RBOCs (Cincinnati Bell Telephone, Bell Atlantic) to CLECs, next-gen ISPs, national/regional/urban DSL providers, and to market segment-focused BLECs such as Wayport, STSN, Onsite Access, Darwin Networks, Reflex Communications, and CAIS. The latter are primarily focused on the low-hanging fruit markets where demand is high -- hotels, multi-dwelling units, and Class A/B office space.

A BLEC will typically construct, own, and maintain the broadband network that delivers these services inside the building. They will frequently have an exclusive long-term contract to service the building. These networks may be constructed on many types of transmission media: copper (CAT5 or existing telephone wire via xDSL), fiber, cable, or wireless. These networks may use broadband traffic management hardware (active components) from various vendors such as 3Com, Cisco, Nortel, and Lucent. The key component of all Visitor and Community-based Networks (VCNs) is the server software intelligence that manages end-users access to and use of the network. BLECs are building networks in: hotel and conference centers, multi-tenant buildings (office towers/complexes), multi-dwelling units (apartments and condominiums), airports/libraries/business centers (public access spaces), mass transit, medical/educational campus environments, and corporate boardrooms.

How does SolutionInc's products, the SolutionIP Server Software suite of VCN products, support the BLEC model?
The SolutionIP suite, which includes a branded and targeted solution for each VCN market segment, competes directly with the CAIS Software iPORT product. These VCN server software applications are characterized by features that support flexibility for mobile Internet users with a focus at SolutionInc on creating radically simple networks that allow end users to get connected and work or play anywhere anytime. Key features offered are:

• A self-provisioning access software feature so that any end user with an Internet device can plug into a dataport provided by a BLEC and gain instant always-on Internet access by launching their browser and accepting the charges associated with that building's network.
• Self-provisioning features for advanced networking tools, such as the creation of on-the-fly virtual LANs within a building, on-the-fly choice of static versus NAT-ed (fake) IP addresses for using secure applications such as VPNs or network-based games.
• Building-specific content via a forced portal feature to foster one-to-one relationships with occupants/end users on the network.
• Provide billing process automation based on various unit charges (per month, per day, per minute, per byte, etc).
• Security features to provide end users with secure transmission capability over the BLEC network.

What are the benefits to the BLEC deploying the SolutionIP Server Software (or CAIS Software's IPORT BPS)?

• Eliminates the need for truck-rolls and support calls to get users connected.
• Provides radically simple networks that allow end users to get connected and work or play anywhere anytime securely.
• Facilitates cost-effective moves, adds, and changes for occupant connectivity in long-term building spaces (MDU/MTU).
• Simplifies/automates billing requirements.

Above features and other network administration and end user features of these VCN server software products are aimed at reducing the total cost of ownership for BLECs to construct, own, and maintain broadband networks while allowing the BLEC to continually expand the products and services available to the end-user without the requirement for forklift upgrades to the network.

What is an example of a business model for a BLEC?
This is the question that defines our business and products as compared to CAIS Software Solutions. CAIS Software is a wholly owned division of BLEC CAIS Internet -- an early leader in the deployment of BLEC networks in the hospitality and multi-dwelling unit market segments. We believe that it will be difficult for CAIS Software to sell into this space because the other BLECs see CAIS Software (i.e., their parent company) as direct competition, and they're correct. Other market segment focused BLECs such as Wayport and STSN also have VCN server software products that compare to SolutionInc's SolutionIP and CAIS's IPORT.

We are still at the "emotive" stage in the development of this BLEC market -- business leaders are making decisions to use their own proprietary VCN software solutions rather than adopting the business model of building networks based on best-of-breed technologies. SolutionInc Limited is winning business in the United States and around the world because our business model is pure -- our money, people, and resources are 100 percent focused on producing the very best VCN server products for BLECs. We are not a BLEC/service provider; we are not an OEM. We are focused on what we do best: enabling radically simple broadband networks for BLECs. We are confident that we have better products than our competitors, and that our business model focus will allow us to stay out ahead of the pack, eventually creating customers out of BLECs that are today trying to be all things to all people.

A BLEC will secure a building access agreement from a building owner. This agreement may or not be exclusive. The BLEC will construct the network. The building owner may or may not pay for part of the network construction costs. The BLEC may offer a revenue-sharing arrangement to the building owner for supplying exclusive or non-exclusive access to the building(s). It is early for this relatively virgin market segment and there are no hard and fast rules. Generally we find that ownership (read revenue) follows equity -- thus the more funds for network construction provided by the building owner, the greater the share of the revenues they will receive. Many of the more mature (a relative term given the infancy of the market) BLECs that we are talking with, or selling our products to, are pursuing the business model of supporting the network build-out costs 100 percent within their business and capitalization plan, with the intent of taking a longer-term return on investment by charging end users for Internet access, bundled voice/video/data services, and other broadband content, products, and services yet to come.

This can be seen with Cincinnati Bell Telephone's recently announced Suite Advantage product -- a BLEC network-based service offering that will include bundled-rate products for voice, video, and data services to multi-tenant building owners focused on small to mid-sized companies. This BLEC network/service product is based on SolutionIP technology. BLECs will control the access to mobile end users. Therefore, as they achieve critical mass in the total dataport count, they will also be able to derive revenues (licensing, advertising, and royalties) from content/product/service providers who wish to "push" content/product/service at the end users on the BLEC-controlled networks.

What are a few deployment examples?
As mentioned above, the Suite Advantage product being deployed now by Cincinnati Bell Telephone is an excellent example of a BLEC service offering targeting the MTU space, with clients such as CMC Properties in Cincinnati. CBT is expected to roll this Suite Advantage product out to various U.S. markets through their parent Broadwing. This BLEC service/product offering is based on our SolutionIP product. We are also working with BLECs such as Starview Communications, MDU Communications, and inter-touch to penetrate the MDU market -- apartments and condominiums -- worldwide. 

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This is incredible! I am watching the communications market advance into so many areas that it is almost impossible to keep track of the growth curve. We are experiencing firsthand the realization of a new world of competitive telecommunications. Regardless of whether you are responsible for purchasing or deploying telecommunications solutions internally or externally, you now have more choices than ever to consider. This is the best time ever to be involved in the incredible communications market.

One of the best ways to stay on top of a rapidly evolving industry is to read leading trade publications. But I've also come to realize over the years that although magazines are essential in educating, there is no substitute for attending leading industry trade shows, as they offer you the most in-depth education in the shortest time. To make informed product-selection decisions, you must witness live demonstrations of the latest products, and the most productive way to do this is to go to an event that allows you to compare products from different companies under one roof. The need for hands-on demos is the reason that TMC trade shows such as Communications Solutions� EXPO (formerly CTI� EXPO) are experiencing such dramatic growth. Our last EXPO in Vegas saw seminar attendance double to over 1,200 attendees.

We will be holding Communications Solutions� EXPO in Vegas once again this year, and for your convenience we are moving to the Sands Convention Center, which is connected directly to the Venetian, our primary show hotel. I personally can't wait to go. This hotel is one of the newest and most elaborate hotels in Vegas, where they boast that every room is a suite (with high speed Internet access by the way). Beyond that, there are even gondolas that you can ride in between the hotel and convention center! And believe it or not, you aren't required to walk through the casino to get to the exhibit hall from your room. You will, however, get to walk through one of the newest and most complete malls in the country. If you plan well, you can even get some Christmas shopping in -- but please wait for the exhibit hall to close first. I urge you to register today online at www.csexpo.com and avoid the long lines at the show. If you act now, you will even save up to $200.

INNOVATION
Perhaps the one thing Communications Solutions� EXPO is known for throughout the industry is that we are pioneers. We bring you the latest live attractions on the most important communications technologies before you can witness them at any other event. We don't like being second at TMC, and we are always looking for ways to keep you ahead of the competition. We love what we do and we work hard to attract only the most qualified attendees to our shows -- the people who are really interested in selecting the most appropriate products, furthering their careers, and staying ahead of the curve.

With our Fall 2000 show, for the first time ever you will be able to come to Communications Solutions� EXPO and delve into our world. Or worlds, as it may be. Let me explain... no, there is too much. Let me sum up:

We are partnering with leading companies in the communications field and building Communications Worlds on the exhibit hall floor, where you will be able to quickly immerse yourself into the latest technology and enjoy an in-depth learning experience while seeing the latest solutions in action. I could tell you more but I won't. The only way to get the details of what will happen at this event is to attend. Please don't e-mail me, I won't budge.

Communications ASP World
Communications ASPs are one of the fastest growing areas in our industry. Most everyone agrees that we will soon be outsourcing just about every facet of our communications. Regardless if you are going to become a Communications ASP or you are looking to potentially outsource your communications needs, you will benefit enormously from this attraction. There is simply no better place to come learn about the latest and greatest opportunities for your company. Expect to see technology that helps you become an ASP, and to see successful ASP services on display for yourself.

Wireless World
Here is another area of communications that is advancing faster than you can imagine. Some of the hottest wireless topics worth exploring are: wireless Internet, 3G, wireless local loop, in-building wireless, and WAP, or wireless application protocol. Regardless of whether you are looking to explore deployment of the latest wireless services or you want to incorporate productivity-boosting wireless apps into your enterprise, you'll be happy you attended this attraction.

CRM World
We are also going to feature CRM World. CRM has become synonymous with providing leading e-sales and e-service to your customers regardless of the medium. Being able to produce a consistent customer experience regardless of the customer interaction type is crucial to the success of any e-commerce endeavor. This applies to the enterprise and to the service provider. Today's customers won't stand for anything less.

We have had a long history of successful trade show educational partnerships with CellIT  -- the people who brought you the live multimedia blended call center in shows past -- and once again we will be working with CellIT to build an attraction you will benefit from. And one that you can't find anywhere else!

Can you tell I am psyched about this event? The editors of this magazine and other TMC team members want to be your partners in selecting the next generation of products and services you need. We count on you -- serious decision makers -- to make our shows successful, and you can depend on us to do our utmost to make sure all TMC events, such as Communications Solutions� EXPO, help you become more successful in your career.

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