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Crafting an IP migration strategy: KMC telecom carves a niche in tier 3 markets

Telecommunications, Jan, 2002 by Sean Buckley

If anything can be said about the strategy of Bedminster, N.J.-based CLEC KMG Telecom, it would be hit 'em where they ain't. Unlike other CLECs that touted a "build it and they will come" mantra with offerings in the same RBOC markets, KMC is targeting Tier 3 markets, ones that the RBOCs don't want to touch. Through its 30,000-mile fiber network, KMG reaches into more than 37 Tier 3 markets with a small to medium business service.

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KMC's national data wholesale business, known as ClearThrough, serves regional and national IXCs, wireless carriers and ISPs. Through this business, it provides colocation, DS1 and OC-3 to OC-12 access, POP-to-POP connection, POP to hub, hub to hub or POP to end user. ClearThrough consists of three offerings: ClearPipe, ClearThrough and a carrier hotel service. ClearPipe transport provides dedicated optical connections between the POP and a KMC CO, enabling an IXC to avoid the ILEC's local tandem. ClearThrough Access provides domestic origination/termination services and international access services. Since many IXCs may not have a CO in many Tier 3 cities, KMC has carrier hotels located in 39 Tier 3 and Tier 4 cities for direct connections to an ILEC, a KMC local SONET ring or a direct end-user connection. For wireless carriers, it provides backhaul, local number and transport between base stations. ISPs use the wholesale service for ISDN-PRIs and data transport.

For each of KMC's local markets, the provider lays about 25 miles of SONET networking gear from Fujitsu and Lucent designed to reach about 80 percent of all local businesses via direct connections to UNEs (unbundled network elements) leased from the ILEC. Under that plan it provides local and long-distance phone service through a partnership with Qwest, Internet access and bundled service packages, enhanced services, data and private line.

Analysts see this two-pronged approach as the reason for KMC's sustained success. "Whereas a lot of other CLECs had these NFL, me-too strategies with the same business plans and same markets as the RBOC, KMC never went for that game," said Yankee Group telecom analyst Mike Lauricella. "Instead, they focused on a niche, underserved market where they can bring in differentiation."

Multifaceted Solution

Although KMC has an old-fashioned business model, it clearly sees the future of IP with its ability to bring on new services without physical boundaries. With a base of Lucent 5ESS for basic voice traffic, KMC realized it was not economically feasible to ship PRIs through a Class 5 switch. After evaluating solutions by Sonus and Cisco, KMC has begun its packet migration using Lucent and Telica, Since PRI service is a staple of its wholesale ISP business, KMC now carries all of its PRI traffic on both Lucent PSAX and Telica's Plexus 9000. Pending some contracts, KMC will be deploying Telica in 16 supernodes and has already deployed Lucent's PSAX in all of its Tier 3 markets. KMC's migration path reflects the reality and the complexity of the new IP network.

In a perfect world, everything would be VoIP with MPLS (multiprotocol label switching) right away. The reality is that KMC has its own invested base of TDM and ATM. With this in mind, Telica's Plexus 9000 can support VoTDM, VoIP and VoATM (see Figure 1). Telica's customers include a handful of competitive and traditional carriers, including Verizon Communications, which will use the Plexus for dial-up Internet offload.

Plexus integrates call control, circuit and session information, signaling and aggregation with support for more than 60,000 fully protected DS0 ports. With 17 I/O slots for lxN redundancy, service assurance is kept even in times of failure or software upgrade. If there is a failure or change, the system dynamically pulls up a standby I/O module with SS7, ISDN and ATM software, and routes traffic to the newly activated element. Each I/O module supports multiple protocol communications and traditional DS0, DS1, DS3 and STS-1 and OC-3 services dynamically. The node architecture supports more than 1000 calls per second with 1 msec bearer delay. An integrated SS7 signaling engine supports traditional SS7 service layers, required for 800 number lookup and LNP and core Class 4-5 switching. A core ATM switching fabric provides QoS for all I/O interfaces for either TDM or packet voice or data services.

"Most softswitch vendors tend to stop at providing Class 4 trunking functionality," said Larry Salter, KMC Telecom executive vice president of network operations. "Well, that's OK for the IXCs, but it's not OK for me. Although Telica is not the only vendor that has this migration path, Telica seems to have an edge on density and cost."

Emerging Opportunities

So what's next for KMC? Although PRI offload is the obvious starting point in the IP migration, KMC is also looking into offering Ethernet, GigE and VoIP transport to its IXC customers. Ultimately, it comes down to the right technology for the right application. KMC is still examining what applications will benefit from Ethernet, but most likely will use it as a metro access extension for its global IXC customers. Salter's approach to new technologies is really a pragmatic one of revenue generation. "Ethernet is like anything, it's the next buzzword with some advantages in certain application areas, and we have to search for what those are," he said.

Business Services Industry

Crafting an IP migration strategy: KMC telecom carves a niche in tier 3 markets

Telecommunications, Jan, 2002 by Sean Buckley

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