BLECs are building a name in broadband for buildings

IT managers of businesses housed in multitenant buildings are having to familiarize themselves with a different breed of carrier: building local exchange carriers.

Unlike their competitive local exchange carrier (CLEC) and incumbent (ILEC) counterparts, BLECs are concerned exclusively with bringing data and voice services to office towers, industrial parks, hotels and apartment complexes. While CLECs and ILECs focus on building out broadband networks that terminate at the edges of buildings, BLECs concentrate on running broadband inside buildings.

"The goal of a BLEC is to create an in-building broadband network," says Steven Weinberg, an analyst with Chicago research firm New Paradigm Resources. "Their strategy is often to partner with a real estate manager to bring added value to buildings. The managers can use the broadband services as a selling point."

There are several potential advantages BLECs can bring to building owners and their tenants.

Businesses that stand to gain the most are those located in office complexes that are too far from a telco central office to get DSL service and too remote to be passed by a cable provider's network. Most of these businesses are small and midsize organizations, or branch offices of larger companies, and can't justify several thousand dollars per month for a T-1.

Market demand

Jeff Moore, an analyst with market research firm Current Analysis, notes that most office buildings in the U.S. don't have fiber connections, so there is a market for BLEC services.

BLECs typically bring broadband into a building by installing a DSL Access Multiplexer (DSLAM), Ethernet switch or ATM switch in the building's basement. These basement boxes connect back to a telco central office via T-1 or T-3 connections. Tenants who want to subscribe to the BLEC's services are then connected to the switch or DSLAM. The more tenants that sign up for a BLEC's service, the more bandwidth the BLEC provides between the central office and the building.

Some BLECs provide voice services in addition to basic broadband data. Edge Connections, which serves customers in Atlanta, Boston, New York and Washington, D.C., is one such provider, using DSLAMs and voice gateways to enable voice service over DSL. Other BLECs rely on ATM to provide voice services.

Some BLECs are looking to bring value-added data services to building tenants. Everest Broadband Networks, which has more than 600 buildings under contract in the U.S. and Canada, offers e-mail and Web hosting services to its clients, says spokesman Mike Granieri. Next year, Everest plans to expand its value-added services portfolio by allowing customers to purchase applications from multiple application service providers (ASP) through Everest. Customers will access those applications through a portal that requires only one user identification and logon -- an in-building version of what ASP aggregators such as Jamcracker and Agiliti are offering.

The service advantage

One not-so-obvious potential benefit BLECs can offer building tenants is superior service. While out-of-building ILECs and CLECs can take weeks to provision new services for tenants, BLECs can often provision the same service in days because they already have most of the equipment they need on hand in the building, Weinberg ssays.

BLECs aren't the only carriers that offer in-building broadband services. Some CLECs are also getting into the market. For Vitts Networks, a Manchester, N.H., CLEC, in-building broadband services are a growing part of the provider's business.

Drake Hill Commons, a leasing agent and tenant of a North Hampton, N.H., office complex, recently contracted with Vitts to provide broadband services to the complex's tenants. Drake Hill real estate broker Mark Lacomb says his company needed a provider for in-building broadband because the complex is more than five miles from the nearest central office, well outside the range of DSL. Selling office space would be difficult without the broadband option, Lacomb notes.

"Almost everyone needs connectivity beyond dialup," he says.

To serve the complex, Vitts installed a DSLAM on-site. Vitts has two T-1s running between the DSLAM and the nearest central office, but can increase the bandwidth if required, says Bill Creamer, Vitts' executive vice president of sales.

Drake Hill and two other building tenants are currently getting 270K bit/sec service, while another tenant has a 780K bit/sec connection. Vitts also provides the businesses with e-mail.

Lacomb says an important part of Vitts' service is that Vitts takes care of all the billing.

"We didn't want to saddle the property manager with having to worry about billing," Lacomb says. "So whoever came to provide service to the building had to do a breakdown and bill each tenant individually."

Do your research

While BLECs can provide corporate tenants with services they might not be able to get from other providers, potential BLEC customers should research their providers before signing a contract, experts advise.

Like many CLECs, some BLECs have been hammered by the stock market. For example, Allied Riser Communications, a Dallas-based BLEC serving 53 metropolitan areas, was trading at $48.75 in March and was down to less than $2 as of late November. Cypress Communications, an Atlanta-based BLEC with operations in 23 markets, had a 52-week high of $29.93, but was recently trading at less than $1.

Another factor to consider is that many BLECs know the real estate market better than they know the telecommunications market.

"Many of these companies are rooted in the real estate business and the question is how much they know about telco," New Paradigm's Weinberg says. Because BLECs must themselves buy telecommunications services such as T-1s and T-3s from third parties, BLEC customers should research the reliability of the BLEC's provider, he adds.

This story, "BLECs are building a name in broadband for buildings" was originally published by Network World.

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