By Nick Patience
PSINet Inc has announced a raft of agreements with fiber providers, network and satellite equipment vendors and submarine cable systems, which it claims, will position it as an internet super carrier. PSINet’s chairman and CEO Bill Schrader said the expenditure involved is within the $1.4bn capital expenditure that PSINet has warned Wall Street it would spend between 1999 and 2001.
First, the deals: PSINet is acquiring 16 dark fibers across the US from IXC Communications, stretching about 14,000 miles. The two companies know each other well, with PSINet having acquired 10,000 miles of dark fiber from IXC in 1998 in return for IXC getting a 20% stake in PSINet. The 4-fiber system will be lit by the end of next year using optronic equipment PSINet is purchasing from Nortel Networks Inc (see separate story). The additional 12 fibers will be supplied to PSINet when IXC builds them.
In addition, the two companies also entered into co-location and interconnection agreements whereby IXC will provide space in its transmission sites. In July IXC announced that it was to be acquired by Cincinnati Bell Inc for $3.2bn in stock and assumed debt. Schrader told us later that the expectation is that the company will have more capacity than it needs with this deal, but if that proves to be inaccurate, additional investment over and above the $1.4bn may be required before the end of 2001.
PSINet is also purchasing two diversely routed fiber pairs on the FLAG Atlantic-1 (FA-1) transatlantic cable system with a capacity of at least 800 gigabits per second. The route is in ten segments connecting New York, Paris and London and the FA-1 cable is scheduled for activation in first quarter 2001.
In addition PSINet has signed an agreement with Loral Orion Inc, a division of Loral Space & Communications Co, to purchase two satellite transponders that were due for launch yesterday and earth station equipment for facilities in the company’s Latin American network, linking Brazil, the southern cone and eventually, South Africa, directly into PSINet’ fiber network. It can also reallocate some of the capacity to other regions as part of the agreement, including Eastern Europe, India, the Middle East and Africa. The Orion 2 satellite is due to come online in December.
Meanwhile, PSINet says it has filed for license in Hong Kong for the right to terminate a 320-gigabit per second submarine cable connecting Japan and Hong Kong. PSINet’s owns 20% of a new submarine cable consortium, the other participants in which are yet to be revealed. PSINet is putting the equivalent of about $386m into the Hong Kong project. The submarine cable is one part of its bid to operate local wireless fixed telecommunications network services (FTNS) and become the number one or two provider of IP telecommunications services in Hong Kong. The cable consortium has filed an application with the Hong Kong Office of the Telecommunications Authority (OFTA) and is waiting for approval.
Regulatory approval is also being sought for PSINet’s new PoP in downtown Manhattan, which was opened yesterday with a ribbon- cutting ceremony. PSINet applied through the local carrier, Bell Atlantic and approval from the New York State Public Services Commission (PSC) is expected to come some time this quarter, according to Schrader. PSINet will be reselling Bell Atlantic’s symmetrical DSL local services as part of the deal, comprising an 11-node OC-48 Sonet ring in Manhattan. PSINet says the PoP along could add $20m to $80m to the company’s top line when it is fully operational. Finally, PSINet announced a new internet universal transit product called PSINet Transit to connect other ISPs to the internet across PSINet’s global network. PSINet’s shares closed yesterday down 1% at $32.00 after spending almost all the day in positive territory.
