Armed with approval from the state, a unit of Consolidated Edison Inc. is moving ahead with an ambitious plan to build a state-of-the-art, $115 million telecommunications network that will stretch from the financial district in lower Manhattan to Westchester County.
Con Edison Communications has started work in White Plains on the northern section of a broadband backbone, laying high-speed fiber-optic cables along rights-of-way that were secured initially to accommodate the expansion of the utility’s electric grid.
Once the city approves the plan, the backbone will weave some 40 miles south through other empty Con Ed pipes, pitting the electric utility’s subsidiary against the likes of Verizon Communications and Metromedia Fiber Network in the battle to carry telephone and high-speed Internet traffic around New York.
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“We’re preparing conduits for installation as we speak,” says Peter Rust, a former Bell Atlantic executive who is president of the unit. “We’re just waiting for the mayor’s signature.”
Once the plan is realized, the Con Ed subsidiary expects to become one of the city’s largest telecom companies, wholesaling high-speed capacity to a burgeoning, bandwidth-hungry industry. In a partnership with two other electric utilities, Con Ed Communications intends to eventually expand and sell telecom services directly to business customers in New York and throughout the Northeast.
In plans submitted to New York state regulators, Con Edison Communications says that it will install more than 4,000 miles of fiber-optic strands through 65 miles of the utility’s conduits by 2004-connecting to nearly 1,000 commercial properties, primarily in Manhattan.
That large a system will offer a significant alternative to the already crowded city network managed by Empire City Subway, which is owned by Verizon Communi-cations.
State regulators are insisting that every mile of this network that’s converted to telecom use by the electric utility be opened not only to Con Edison Communications but also to any other company laying wires.
Widespread benefits
“We can only benefit from the diversity they bring into the city,” says David Salustri, general manager of the New York-New Jersey region for Nextlink Communications, which also has been building a high-speed network in Manhattan.
The main reason that Con Edison Communications is not already up and running is that state regulators took almost a year to review the arrangement between the unit and its parent company in order to ensure that the subsidiary does not benefit unfairly from access to Con Ed conduits. At issue was the price the telecom unit must pay Con Ed for access to pipes or to any new conduits installed to carry fiber-optic wires.
The New York state Public Service Commission approved the arrangement at the end of July.
To date, only one other company has negotiated to use Con Ed pipes. Syracuse-based Telergy Inc. obtained access two years ago, and according to recent filings with the Securities and Exchange Commission, the broadband company has already used the rights-of-way to lay 40 miles of fiber-optic cables in Manhattan.
Dependent on Empire
Other carriers in the city still depend solely on the conduits managed by Empire City. That system has become crowded as long-distance carriers have extended their networks to their commercial customers and as new wholesale carriers like Metromedia Fiber have cropped up in response to the surge in Internet traffic.
Con Ed’s telecom subsidiary, which plans to begin laying cable in Manhattan this fall, is already busy trying to line up customers. Officials have been targeting dozens of small telecom companies that sell service to businesses by wiring commercial properties, but need broadband capacity to carry the traffic around the city and onto long-distance networks.
Industry sources say that at least two telecom companies have signed deals to buy service from Con Edison Communications and other contracts are pending. The subsidiary is about to open a hub at 111 Eighth Ave. where it can connect its telecom equipment to that of other carriers.
In addition, Mr. Rust says that the company has recently leased space in Long Island City, Queens, where it will house most of its engineering and operations staff. Currently, there are 23 employees at the subsidiary.
Going the distance
The company’s ambitions are not limited to New York, however. In December, its parent took a 10 percent stake in NorthEast Optic Network, which was started by Northeast Utilities and Central Maine Power and has already begun installing a long-distance network between Portland, Maine, and Washington, D.C. As part of the deal, NorthEast Optic, which is known as NEON, will own all of the networks, while Con Ed Communications will build and manage the city systems.
According to Mr. Rust, the company has filed with regulators in Connecticut, Massachusetts, New Jersey, Pennsylvania and Rhode Island for approval to begin constructing networks in major cities in those states.
“It doesn’t surprise me that they are focusing on the metro level,” says Seth Libby, an analyst at the Yankee Group, an industry consulting firm in Boston. “Most fiber-optic expansion has been on the long haul. One of the less developed areas is in the metro markets.”
Michael McDonald is a reporter with RCR Wireless News sister publication Crain’s New York Business.
