IP Convergence: Beyond VoIP, Beyond Cost Savings

Om Malik wrote about us earlier today in his post Internet Backbone Consolidation continues. Hey Om, we love the coverage, but why'd you have to dredge up the ancient past? While you were dredging up dirt from the bottom of the ocean did you happen to see any of our fiber optic cables? :-)

I quote:

Having atoned for its past sins, Global Double Crossing is back in the growth mode, and says it will buy FiberNet, a metro area network provider for about $96.1 million. It is no different from a recent buying spree by Level 3 Communications. Level 3 is trying to transform itself from a pure vanilla backbone provider to a more metro services company. That’s where the money is for now.

That whole global double crossing thing is ancient history, and we proved to have some of the most convservative accounting of fiber swaps of any of our peers in the industry.

I am also not sure that Om grasps the challenges that the old IXC's face. It's not that Global Crossing or Level 3 are trying to transform themselves into a metro services company, it's just that having robust metro networks are a critical component of improving the economics of your business. If every customer that you connect to your network requires an access loop, those charges that you incur for the loop negatively impact the margin of your sale. It is only natural for a company to seek out ways to improve margin by buying suppliers, is it not? Not only does it enable improved economics but it puts more of the total solution under our direct control, which can enable us to offer higher SLAs, something customers are always demanding. Such an acquisition does not imply a desire to be a different business, the reality is that we want to improve the business that we have.