McLeodUSA To Roll Out Next-Generation Network

Competitive local exchange carrier McLeodUSA is making an investment in the
future with its Wednesday’s announcement to deploy a 31,000-mile,
next-generation fiber optics network throughout the U.S.

The two-year plan calls for the installation of a mesh-switching platform
on the proposed 25-state backbone, considered the successor to the
SONET-style ring architecture used by most of the carriers today.

Roy Wilkens, McLeodUSA data network group president, was enticed out of
retirement early this year to round up a team of experts to get the new
network deployed. Following months of preparation, he said the company
will announce the vendors supplying the mesh switching equipment at the end
of November.

Wilkens said the time has come for technology to work for the customer, not
the other way around.

“Today’s sophisticated customers are tired of waiting for providers who are
so preoccupied with exotic technologies that they’ve forgotten the basics
of customer service,” Wilkens said. “In a market so easily distracted by
hyperbole, customers are the first to understand that providers with
exceptional focus on the fundamentals of their business needs are the true

Parts of the upcoming fiber optic network have been in place for years, and
will be incorporated into the whole. That, and the network it will acquire
from its forthcoming acquisition of Caprock Communications, account for
about 16,000 route miles of fiber. Level 3 Communications has been tapped
to provide the other 15,000 miles, and should complete its installation by
the end of the first quarter of 2001.

Wilkens explained the benefits of a mesh-switching network over its
ring-based counterpart, called synchronous optical network. Using a mesh
switch, he said, would reduce the 307 SONET rings in Chicago, for example,
down to 15.

“It makes packetizing data much cleaner, much simpler than with SONET,”
Wilkens said. “Where a SONET switch needs a ring to reroute a data packet,
the mesh switch learns where the other switches are and reroutes the
closest one.”

The goal, he continued, is getting bandwidth to the customer. He said
McLeodUSA will focus its attention selling its bandwidth and services
wholesale to large businesses. There is a movement, Wilkens said, away
from the Internet service provider and to the large business. They are
building their own teams and deploying a bandwidth solution on their own
now, where before they relied on an ISP to set everything up.

Steve Gray, McLeodUSA president and chief operating officer, said that
strategy works well with its existing base of customers.

“In terms of our core business, our fundamentals have never been stronger,”
Gray said. “This includes lines sold, net lines installed and our
continued ability to implement the systems to support our customers,
resulting in one of the lowest customer churn rates in the industry. We
have a funded business plan and one of the most experienced management
teams in the industry. We know what to focus on — and that is developing
advanced but functional products to meet the real needs of our customers.”

Funding for the project comes from a $1 billion loan secured earlier this
year, underwritten by Chase Manhattan Bank, Citibank, Bank of America and
Goldman Sachs.

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