Virtual network operator promises real benefits


It owns no telecom assets, but Vanco plc has unveiled what it calls “the world’s largest network, delivering the most competitive prices.”

The U.K.-based virtual network operator (VNO) says the Vanco NetDirect network – launched at New York’s Rockefeller Centre last Friday – heralds a new way of doing business, a new way of purchasing within the telecom industry. (VNOs essentially own no network assets, but rely on wholesale agreements with service providers worldwide).

The Vanco NetDirect Web portal allows Vanco customers – including asset-based carriers, systems integrators, and large global enterprises – to identify, select and purchase the “most appropriate” network services for their sites around the world.

By specifying a site location and circuit requirements, customers are able to access prices for those sites, and place orders for circuits.

New purchasing paradigm

A simple, speedy and cost-effective way of purchasing telecom infrastructure services around the world is how Vanco founder and CEO, Allen Timpany, describes it. He says the prevailing industry purchasing model is distorted as a result of government licensing, intervention, and regulation. “We’ve got used to the concept of buying telecom services from the company that owns the assets. That’s like buying your TV set or your electric kettle from the generating firm. It’s just not the way things are going to be 20 years from now.”

Timpany contrasted the conventional model with Vanco’s VNO paradigm.

Vanco sources and offers its customers connectivity from 650 different sub-suppliers of infrastructure around the globe. Collectively, he said, these suppliers networks extend over 161 countries and some 7,000 MPLS (multiprotocol label switching) points of presence. “We have taken the time to negotiate agreements with them and certify their technology.”

Vanco has 803 approved products covering 21 core telecommunications technologies. These include a range of access technologies, including various flavours of DSL, ISDN, leased line, wireless, PSTN and core backbone technologies such as Internet, MPLS, frame relay, ATM and satellite.

Timpany said large asset-based carriers would be able to use these offerings to extend the footprint of their global networks, and better respond to the needs of new or existing customers. Opting for this model also helps them “protect their customer base from competitors.”

‘Footprint expansion’ and ‘increased competitiveness’ were in fact key drivers behind Bell Canada’s alliance with Vanco, according to Eric Legault, director, product management data, enterprise marketing at Bell Canada.

He said the alliance would help Bell Canada expand its IP-VPN services to 160 countries. “More than 75 per cent of large Canadian enterprises do business globally,” Legault said. Through its association with Vanco, he said, Bell Canada would be able to offer these businesses a wider range of competitive services, and extend its own network to 240 MPLS clouds and 7,000 points of presence (PoPs).

Vanco’s VNO model of doing business aligns well with the business objectives of all big carriers, according to one industry insider. All carriers (and large global enterprises) share at least four key objectives, according to Terry Barnich, president of New Paradigm Resources Group Inc., a telecom research and consulting firm based in Chicago. They are:

• I want my communications connection when I want it,

• I want it where I want it

• I want it how I want it

• I want to control my connection

Vanco goes Dutch

As the VNO business model helps carriers meet all these objectives, Vanco has positioned itself effectively as an “augmenter of services” as someone that “adds value.”

He said it’s lucrative for Vanco too, as instead of being competitors, the carriers are now Vanco’s collaborators.

Barnich likened Vanco’s strategy to the one adopted by the Dutch in the 17th Century. “The Dutch sold hulls of ships to several warring countries – Portugal, Spain France and England – and collected money from everyone; [likewise] Vanco sells to competing carriers. It’s a clever model.”

Alex Liu, a partner at Chicago-based global management consulting firm A.T. Kearny Inc. echoed this view. He noted that large telecom companies such as Verizon and Bell Canada are immensely profitable, but also have several inefficiencies that could be resolved by partnering with a VNO.

Currently the provisioning process for a large carrier is very complex, even archaic, Liu noted. He said enterprise customers are clamouring for certain features including a simpler inventory, and the ability to audit their invoices. “An online self-serve approach, such as that offered by Vanco NetDirect, makes it possible for a carrier or an enterprise customer to do that very efficiently.”

The Vanco event included a demo of key features of the VancoNet Direct portal, including the capability it offers customers – large enterprises and carriers – to customize their infrastructure combinations.

The portal allows clients to get quotes based on their selection of products provided by around 600 network suppliers and millions of offerings, said Vanco technical specialist Ciaran Roche, who did the demo. In Europe alone, he said, there are 11 million combinations of products and suppliers. “All previous quotes generated by the customer are stored and kept segregated from subsequent quotes by different user logins,” Roche said.

According to Timpany, a key value proposition of the VNO model – and the Vanco NetDirect channel – is that it eradicates the complexity of purchasing these services around the world.

For an enterprise or a carrier to get separate quotes and negotiate separate agreements with all of these providers would be a huge logistical problem, the Vanco CEO said.

Battling babel

Timpany said it is economically impossible for any single asset-based carrier to own enough infrastructure to meet all the international and domestic communication needs of its enterprise customers. “As a result some large enterprises have had to enter into agreements with multiple providers and this leads to incredible fragmentation,” he said, citing the example of Shell Petroleum.

“Shell has approximately 2,000 telecom agreements around the world. It does not do this because it wants to, but because it’s forced to do. To get the level of service and competitive prices it requires [Shell] has to have that many separate agreements. It cannot rely on a handful of providers. As an industry we have failed Shell.”

He said the same sorry situation prevails with many of the other 2,000 largest global enterprises. “All this represents a massive gap in the telecom industry, but also a massive opportunity for those who want to fill it.”

He contrasted Shell’s predicament with British Airways plc which, through an agreement with a single virtual network operator (Vanco), has been able to combine the local infrastructure from 90 different carriers. Vanco is essentially doing for British Airways what Shell has had to do for itself inhouse, Timpany said.

Likewise, he said, Siemens AG, one of the world’s largest electrical engineering and electronics companies, is taking advantage of Vanco’s MPLS Matrix – a global platform linking multiple MPLS providers, classes of service and associated service level agreements. “Deployed two years ago, the

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