Price war looms in corporate 100Mb market

Hundreds of megabits for hundreds of pounds

By Guy Kewney, NewsWireless.Net • Get more from this author

Posted in Data Networking, 15th January 2008 10:22 GMT

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A corporate Ethernet price war could be on the cards, with a newcomer using Next Generation Network (NGN) technology to offer 100 megabit Ethernet for £800 a month.

Commercial Internet and other services have been, traditionally, based on legacy systems and up to six months ago the bulk of customers were asking for managed MPLS (multi-protocol label switching). But the costs of providing what modern business customers require under MPLS, SONET and other legacy protocols is very much higher than it is with a full new technology service.

Exponential-e will launch a new service today, which the firm's founder Lee Wade told The Register is intended to be "entirely disruptive". But he added that the price would not be the sole attraction for customers.

Exponential-e bases its NGN service on Alcatel-Lucent routers - a very similar technology to the Level II section of BT's 21CN - and so Lee Wade is pretty optimistic about getting a successful rollout that will be completely compatible with OpenReach's eventual product, currently being trialled in the UK. But he reckons he can do the new service "at cost, or break even" and provide several extra services, all for a fraction of the cost of managing legacy networks.

It's a gamble, Wade admitted. If he doesn't sign up new customers, he'll face discontent from existing customers who want the new price, and his bottom line will look wretched in a year's time when all the contracts start coming up for renewal.

"But the appeal is the versatility of providing VoIP, and internet, and WLAN, and virtualisation products," he said. "Right now, we'd quote £45,000 a year for this sort of service on managed MPLS. We can quote you prices starting at £800 a month for PowerNGN. But then we can go on and offer extra services, too.