Call-Net Enterprises Inc. announced an agreement last month with Metromedia Fiber Network Canada Inc. to gain local access in the Greater Toronto Area, providing Call-Net with inner-city fibre coverage.
According to Call-Net, this transaction will enable it to deliver end-to-end services to its customers with more ease, and will allow the company to broaden its portfolio of Internet and broadband services.
Janet Thompson, senior vice-president of corporate development for Call-Net in Toronto, said “It gives us extensive coverage in Toronto…dense coverage in the downtown core.”
Metromedia Fiber Network Inc., based in Whiteplains, N.Y., is an end-to-end optical networking solution provider that utilizes dark fibre. Its Canadian company is headquartered in Toronto, and is a reseller of dark fibre, according to Jerry Marcus, the vice-president of business development services for Metromedia.
“We’re leasing it to them as dark fibre, so they can build networks that are appropriate to their operation,” he said, adding that the lease is long-term.
Call-Net’s Thompson indicated that this was not a financial transaction, but “a swap of some of our access U.S. long haul fibre for intra-city in the Toronto area, so we did not use cash for this transaction.”
But Marcus indicated the opposite.
“This is a financial transaction,” he said, “and will be reflected as such on our books and I would expect that they’re going to be doing the same since there’s actual cash and money flowing back and forth between the two parties.”
The fibre build is expected to be completed by February of this year, Thompson said, and Call-Net anticipates the transaction will pay for itself in less than a year just with the reduction in carrier costs.
Call-Net’s focus is to do more in the data services market, Thompson pointed out. “We’re focusing on expanding our IP services, and certainly having a strong access strategy is critical in the data marketplace. So what you’re going to see as we roll out more data services using our own access as opposed to access from other providers…when you use access, when you can control the level of service you are providing customers, it (also) obviously allows you to provide the service at a much lower cost.”
The agreement with Metromedia also complements the recently announced joint venture between Call-Net and San Francisco-based NorthPoint Communications Group Inc. The agreement between the two companies will lead to the formation of a Canadian company called NorthPoint Canada, which will deliver wholesale DSL-based broadband services.
“We’ll use DSL where we can’t reach the customers through fibre,” Thompson explained.
Iain Grant, the managing director at Brockville, Ont.-based The Yankee Group in Canada, noted that this agreement will fill a hole that existed in Call-Net’s deployment.
“Certainly for those corporate customers that Call-Net is increasingly focused on, the Metromedia fibre build is a big answer for them, and it should help them [Call-Net] shave their costs.”
Grant said that Metromedia is focused on metropolitan areas, and there is the possibility that it could make more appearances in cities across the country, even though for now its only Canadian presence is in Toronto.
“We already have a lot of fibre going between our cities, and I think there would be some who would argue — like Group Telecom and AT&T and Bell — that we probably have enough going in the cities. But Metromedia thinks ‘the more the merrier!’, at least until they have their stuff in,” Grant said.
While Metromedia’s Marcus noted that the two companies have done business with each other before, this is their first intra-city leasing agreement.
Call-Net, a subsidiary of Sprint Canada Inc., can be reached at www.callnet.ca and www.sprintcanada.ca. Metromedia is at www.mmfn.com.