IXC looks to next Net backbone

IXC, a wholesale long distance carrier and fiber optic data service provider, is expected to announce details of a coast-to-coast "next generation Internet backbone" on Monday. The company said it will unveil its new network, designed to "eliminate congestion and guarantee performance."

The announcement will include executives from NYSERNet, a New York-area nonprofit organization that builds network infrastructure for research and education, and AppliedTheory Communications, an Internet service provider and an affiliate of NYSERNet. Monday's announcement also will include other vendors, an IXC spokeswoman said.

NYSERNet is a regional deployment partner for the Internet 2 community, sparking questions about whether IXC's Internet backbone will carry traffic for the second-generation Internet project.

Internet 2, a consortium of 135 universities, was established to help reduce Internet congestion. IXC competitor Qwest is a partner in Internet 2, which is similar to Next Generation Internet, a government initiative.

"Internet 2 came together to solve the problem of the Internet becoming too congested and not adequate for research needs," said Jim Brennan, director of government programs for NYSERNet.

Some in the industry speculate Internet 2 and the Next Generation Internet initiative might eventually merge into one advanced project.

But IXC's pending announcement has some analysts wondering.

"I don't know if that means they're adding new technology or laying more fiber. The company has a credibility problem," said Tom Friedberg, an analyst at Janco Partners, an investment bank specializing in the telecommunications industry.

Joe Eshoo, an associate analyst at investment bank A.G. Edwards, speculated the announcement "could be a new contract to provide backbone services."

Friedberg said IXC has had problems reselling long distance minutes in the past.

He said company has fallen out of favor with some Wall Street analysts after posting quarterly losses and warning that expenses would be higher than expected.

IXC did, however, beat Wall Street predictions by 7 cents per share last quarter and was upgraded at the time to "accumulate" from "maintain" by A.G. Edwards.

IXC is one of a handful of emerging telecommunications carriers that are building new fiber optic-based data networks. The new breed includes Qwest, Level 3 Communications, Frontier, Williams Communications, and IXC, but Friedberg noted: "They're the smallest of the major intercity networks."

IXC is building a 13,000-mile fiber network scheduled to be completed in early 1999, according to Eshoo.

Analysts have said the ambitious construction projects could lead to a glut of bandwidth and plummeting prices for long distance phone calls. Building a strong data services business, which is expected to generate higher profit margins, is one way for new-age carriers to offset lower voice revenues.

But IXC's next-generation Internet backbone, whatever it consists of, could be short lived.

Some analysts have speculated that many of these new networks will be sold to larger telecommunications industry players.