Don't turn your back on all new, young ventures

With the failure of so many young telecom ventures it's tempting to turn back to the big old incumbents and leave it at that. But some of these newfangled carriers still seem to have a future. Take Yipes Communications. Only 18 months old, Yipes has regional Gigabit Ethernet fiber networks in 20 cities, a nice service portfolio and some impressive customers. Co-founder and Chief Marketing Officer Ron Young says the company has raised $280 million (all equity), doesn't have any debt and has more than a year's worth of money in the bank.

Unfortunately for the old guard, it doesn't look like Yipes will dry up and blow away anytime soon.

Why should the telcos be afraid? Because Yipes is using modern data technology to compete with telcos that are trying to use voice-era technology retrofitted for data. Instead of layers of ATM and SONET, Yipes uses Gigabit switches and routers and Ethernet interfaces to connect to the customer. It's simpler, cost effective and ultimately more in keeping with where the world is and where the world is going.

The company's managed services, which include metropolitan- and wide-area offerings, scale from 1M bit/sec to 1G bit/sec in one-megabit increments. Customers can add bandwidth within three hours by calling and having the company tweak the Yipes-owned router on the customer premises. A Web interface in beta testing will let customers add bandwidth on the fly.

Young says that as of last March the average customer was contracting for roughly 5M bit/ sec worth of bandwidth, a figure that jumped to 25M bit/sec in August and was a couple orders of magnitude greater than that in December.

Young insists price isn't the main customer motivator, but it is hard to imagine major companies entrusting a newcomer without that incentive. A 3M bit/sec Yipes access link costs $450 per site, per month, up to one-half the cost of a traditional T-1 pipe.

The company recently added managed firewall and Web hosting services, and will be climbing the food chain as it matures. The plan, Young says, is to interconnect with the public switched telephone network and begin offering voice services sometime this year.

Very ambitious. But this is one upstart that might just be able to pull it off.

This story, "Don't turn your back on all new, young ventures " was originally published by Network World.

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