|
|
Cbeyond Communications LLC celebrates the one-year anniversary of the turn up of its first network next month. So far the company has attracted about 1,000 customers in Dallas, Denver and its initial market, Atlanta. Cbeyond is leveraging softswitch control and packet-based connectivity to offer small business customers with between five and 100 employees a wide variety of services, for which it can allocate bandwidth dynamically as needed over a single pipe. The architecture allows small businesses to afford the types of communication services typically only available to large enterprises, says Cbeyond CEO Jim Geiger. Editor in chief Paula Bernier talked to Geiger about how the company makes that possible and what else to expect from the company this year.
X: What services does Cbeyond offer today?
Geiger: We install a T1 to small business customers and over that T1 using packet technology we do voice long distance, voice local, Internet access, e-mail, hosting and ancillary services. We use packet technology. The importance of that is we dynamically allocate that bandwidth. So the bandwidth is not channelized, it's used efficiently.
X:What's the pricing set up?
Geiger: We have one package that is our minimum package, BeyondVoice 1, which is $550 for a one-year contract. It includes five fully featured voice lines, 2,000 long distance minutes, five e-mail accounts, calling cards, 800 numbers and up to 1.5mbps of high-speed Internet access. That's the base package. For a one T1 connection you can buy additional voice lines. Most customers do that for at least one additional voice line.
In the first quarter of 2002 we will introduce BeyondVoice 2, which has two T1s/3mbps. Those two T1s are fused using MLPPP, which allows full dynamic bandwidth across three megabits. (BeyondVoice 2 includes the same services as the original offer, but in greater numbers and with Internet access as high as 3mbps.)
X: What are the company's plans to add additional services going forward?
Geiger: Unified messaging will be first -- fax to e-mail, voicemail to e-mail. We will offer that in first quarter of 2002. Managed VPN will come available in the second quarter of 2002.
X: Your marketing materials say that the fact Cbeyond uses softswitch control and packet infrastructure means it will be able to offer new services not possible in the legacy environment. Like what?
Geiger: We think unified messaging is quite challenging for legacy environments to offer because of proprietary signaling between circuit voice switches. It makes it more difficult to integrate. We just use a media server housing the app and that uses SIP to our call agent and softswitch. So it's standards based and has an open API, which makes it a lot easier to integrate it.
X: I understand Cisco Systems Inc. is your sole vendor. What specific Cisco products does Cbeyond use?
Geiger: Cisco's 2400 series IAD as our CPE. An ESR10000 at the physical collocation site. It's an aggregation router; it aggregates T1s. The CAT6509 core router, 3660 gateways and the softswitch is the BTS10200.
X: What about the transport facilities?
Geiger: We lease the T1s from the central office to the customer from Bell. We buy transport from the CO to our PoP from other carriers including Global Crossing, Level 3, Yipes and MCI WorldCom.
X: Do you plan on building your own transport network in the future?
Geiger: Today we really enjoy the delivery cycle for the T1s. It's five days in Dallas and 10 business days in Atlanta. So they're ubiquitous, they're reliable. We still like UNEs, but over time it will be hard not to move to DSL technology. And it's less expensive than the T1s we're buying and reselling. We'll opportunistically migrate to it when we think the right conditions exist in the market.
X: You mention that your next-generation operations support systems provide Cbeyond with significant reductions in costs. Would you care to elaborate?
Geiger: We know what it costs to supply comparable services over legacy. Ours are roughly half of legacy infrastructure costs. Most of what we deployed is success-based, meaning we don't have to invest until we win the customer.
X: Who are your OSS suppliers?
Geiger: Daleen Technologies Inc. for billing, Vitria Techology Inc. for middleware, Siebel Systems Inc. for CRM and order workflow and entry, CheckFree Corp. for online. One hundred percent of our customers are billed online; nearly 20 percent pay us online.
X: What is Cbeyond's financial situation?
Geiger: Madison Dearborn is our lead investor. Battery Ventures, VantagePoint Venture Partners, Morgan Stanley Capital Partners and our officers and founders also are significant investors. We have raised $141 million in capital. We've used about a third of that. The cash allows for a cushion through our free cash flow period through our first five markets, which we plan to build by the end of this year. Houston is the fourth market and the fifth has yet to be announced. Also we have $240 million of equipment financing. We refer to it as private debt financing.
X: What will enable Cbeyond to succeed where so many have failed?
Geiger: We know what problem we were trying to solve when we went into business -- bringing small businesses tools of large businesses at prices they could afford.
We expect to reach break-even per customer in 17 months, break-even per market in 24 months.
