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Wired for
Business
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Small and
mid-size businesses should expect the same telecom services as larger
companies.
By Liese Hutchison
Smaller businesses still need access to the Internet, phone lines
and data transmission lines just like the larger players. However,
economies of scale dictate that large companies can afford to wire
facilities with state-of-the-art telecom systems, while smaller
companies can’t take on that huge cash outlay. Does it mean that
smaller companies aren’t wired? No, say Jim Mihalich, senior project
manager at American Fiber Communications. His company is laying
the fiber optic systems along Washington Avenue and says that project
is an example of how small companies receive the latest in telecommunications.
“What has to happen is that an entrepreneurial business must go
into an area and set up the infrastructure hoping that a common
local exchange carrier (CLEC) will pay to use that infrastructure
to support the businesses in the area. We do that. We go into areas
and lay bandwidth on speculation that carriers such as Birch Telecom
and Williams Communication will have clients that will buy the services,”
he notes.
As the Telecom Act of 1996 continues to affect the marketplace,
CLECs seek out new sources of revenue. One source is multi-tenant
unit buildings that are communities often housing dozens of small
and mid-size businesses. According to Dun & Bradstreet, there are
approximately 1.3 million small and mid-size businesses in the United
States—many of them located in multi-tenant office buildings. These
businesses spent more than $47 billion for voice communications
services and more than $14 billion for data and Internet services
in 1998. By 2002, these figures are projected to reach $53 billion
and $40 billion, respectively.
In addition to Washington Avenue, American Fiber has laid fiber
around the TWA Dome and Busch Stadium and is currently working on
Cupples Stations. To date, American Fiber, which is headquartered
in Edwardsville, Ill., has laid 60,000 linear feet of duct in downtown
St. Louis. Mihalich says by his and other companies taking the risk
of laying the infrastructure and creating the backbone, smaller
companies can be wired while sharing the costs.
In addition to entrepreneurs wiring streets or renovated buildings,
tenants in multi-tenant buildings can also expect telecom services
through bundling. Ron Smith, senior applications engineer at CT-Innovations,
says, “The scale of economies means carriers must bundle services
and technology and lease that back to smaller companies. Whether
in a multi-tenant unit where businesses share backbones for voice
and data or by offering services to a geographic region, smaller
companies are being wired for speed,” he says.
A third avenue for smaller companies (besides being located along
a geographic area speculated on by fiber companies and CLECs or
being housed in a multi-tenant building) is a new service, Internet
Protocol (IP) telephony. IP allows the phone line and the computer
line to be one and the same line, companies don’t have to pay a
lot to have excellent telecommunication services, Smith says. “A
company before IP that had 10 employees with 10 computers would
have to have 20 lines; now they only need 10 lines, which results
in savings for the business,” Smith notes. “In addition, landlords
can spend less money wiring their buildings because they only need
to install one cable for the phones and the computers. Less cable
equals less out-of-pocket expense.”
According to Fred Brussee, CEO at CT-Innovations, “The advent of
IP leads to significant enhancements in service quality, technological
integration and ultimate cost savings in both infrastructure and
bandwidth for the business customer. Building ‘smart buildings’
is simply a way to bundle the technology and resell it to smaller
users who gain some of the benefits of the scale of economies involved.
However, the same technology is available to single tenant or multi-site
companies that are large enough to justify the up-front investment
in replacing their obsolete telephone system. With IP technology
and bundling of services, smaller businesses now have access to
the reliable communications package previously available only to
large corporations.”
Liese L. Hutchison is an assistant professor in the department
of communication at Saint Louis University and a free-lance writer.
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