FierceTelecom: Are you seeing growing interest from rural providers to offer middle mile services along your network path?
Merchant: Yes, we have seen a strong interest from rural providers. We initially saw a lot of strong interest from independent cable operators. The biggest hurdle today is there is a capital requirement. That hurdle is a bandwidth requirement because it was difficult to justify adding equipment for anything below 1 Gbps. A lot of these rural providers, whether they are wireless, cable or ILEC, can't justify a single Gigabit of backhaul. They really need to start at the 100-150 Mbps and up level.
We see many of these last mile providers that are excited about the offer because with the investment from the federal government Level 3 will be able to offer as low as 50 Mbps connectivity at these sites. Now, these rural carriers will have a lower bandwidth hurdle to enter. But as we all know, as soon as the end users get a taste of what's available from a high speed broadband connection, these rural carriers will grow within a short time and will demand higher amounts of bandwidth.
FierceTelecom: What will Level 3 need to do to extend fiber to these providers at the amplification sites?
Merchant: We are leveraging Level 3's existing in-line amplifier hut assets. The space is there, and we'll add equipment to allow traffic to be added or dropped at that site. Last mile providers would extend their network to our access point. If fiber connectivity is cost prohibitive because of Rights of Way (ROWs) that are there, we can support microwave backhaul.
FierceTelecom: What's your take on the broadband stimulus funding program? Do you think it will help rural carriers extend broadband?
Merchant: It's a really good start. What the program does is it recognizes what these initial capital hurdles are for the desire to provide 100 percent connectivity for all. As we all know in this industry, there's a lot of cost associated with building out networks. That's why when Level 3 started looking at this earlier this year. We really saw the sweet spot and the way for Level 3 to make an impactful contribution in the middle mile by being able to open up the access points.
If you think about today what the rural carriers options are they can get a DS3. Let's say they are in the middle of Kansas, they can get a DS3 connection for $18,000 a month. In order for them to be able to start providing the 100-150 Mbps connectivity, they are bundling electric signals and the cost just skyrockets. By being able to brand and open up these access points and provide the optical connectivity, these carriers have much lower backhaul costs, and they can invest more in expanding their own network to connect more end users and justify an increased requirement out of those access points.
FierceTelecom: Will you also extend the middle mile facilities to provide network redundancy and related services to businesses, government and schools?
Merchant: Yes. It comes back down to today we offer in a lot of our metro networks that type of redundancy in our major cities. Again, as the requirements increase at these sites, we can support it just like Level 3 supports it for other enterprises across the country.