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Business News - Aerie Plans $3.5 Billion Broadband Backbone Challenge

Channel Partners

June 1, 2000

2 Min Read
Business News - Aerie Plans $3.5 Billion Broadband Backbone Challenge

Posted: 06/2000

Aerie Plans $3.5 Billion Broadband Backbone Challenge
By Gail Lawyer

Level 3 Communications Inc. (www.level3.com) and Qwest Communications International Inc.
(www.qwest.com) better watch out.

There’s a new company in town, and it plans to build a national broadband network that reportedly will have more capacity than any other single network in existence.

Aerie Networks
(www.aerienetworks.com) has announced it will build a 20,000-mile
network–with 8.9 million fiber miles worth of capacity and additional conduits–connecting more than 194 cities and serving more than 90 percent of the U.S. business market.

Aerie already has assembled 14,958 miles of rights of way from 12 natural gas, oil and liquid petroleum pipeline companies and communications companies. Construction is set to begin this summer, with completion scheduled for early 2003.

Aerie is different from the Level 3’s or the Qwest’s because it will provide only wholesale bandwidth, says Mort Aaronson, the company’s president and COO.

“We’re the first company designed to be a network host,” Aaronson says. “As a mass producer of bandwidth, the elasticity creates a new category of users,” such as content and application service providers.

In addition, the company’s intercity network is a good fit for companies building metro-area or regional fiber networks, because Aerie eventually will provide these companies access to a national backbone, Aaronson says.

Among Aerie’s selling points is its User Defined Network. Through an OSS the company is designing, customers will have a secure, web-based interface that allows them to change service levels, check available inventory and provision new users almost instantaneously.

Building and lighting the network will cost about $3.5 billion. VantagePoint Venture Partners
(www.vpvp.com) will financially back Aerie with its “A” round of financing. Other investors, which provided rights of way assets, include BP Amoco
(www.bpamoco.com), Buckeye Partners L.P., CMS Energy Corp.
(www.cmsenergy.com), Explorer Pipeline Co.
(www.expl.com), Kinder Morgan (www.kne.com), Marathon Ashland Pipe Line LLC
(www.ashland.com), National Fuel Gas (www.natfuel.com), Plantation Pipe Line Co.
(www.plantation-ppl.com) PG&E Corp.
(www.pgecorp.com), Sempra Communications (www.sempra.com), Sun Pipe Line Co. and
TEPPCO.

Aerie is in the midst of completing a private equity investment, and it hopes to complete a high-yield offering later this spring. And later still, the company hopes to do an IPO, Aaronson says.

A group of executives with experience in developing national networks founded Aerie. Aaronson was the former president and COO of KN Services Inc.
(www.kne.com); Tom Wynne, Aerie’s chairman, was COO at LCI Communications Inc.; CEO Peter was COO at
Qwest; CTO Michael Kleeman was a consultant for the Williams Companies (www.williamscommunications.com) and WilTel
(www.wiltel.net), when he worked for the Boston Consulting Group
(www.bcg.com) and Arthur D. Little. Gary Shaw, Aerie’s vice president and general manager of Right Of Way
Planning and Construction, spent 11 years in a similar position for Williams.

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