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21st Century lays out its plan

Fri, 10/31/1997 - 7:00pm
Roger Brown
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Not since the days of the notorious Al Capone has Chicago seen the all-out war that's about to be unleashed there.

When the Telecom Act was overhauled in 1996, supporters promised it would lead to a new era of competition. Generally, however, that hasn't yet happened, except in a few markets.

But soon, the city of Chicago will witness a shoot-out so intense, it might match the bloodletting that occurred in that town in the 1930s. If not, what it lacks in blood will certainly be made up for in intensity.

Telecom newcomer 21st Century Communications — which is singlehandedly trying to create a new three-letter acronym by referring to itself as a "competitive communications provider" or CCP — is rapidly gearing up to serve the city's downtown residents and businesses with a package of voice, video and data services. The bundled offering will be delivered over a unique, costly and state-of-the-art network that utilizes Sonet and wave-division multiplexing. Feeding it will be an expansive, bulletproof headend/network operations center (NOC) that would make even NASA engineers proud.

"We're building a world-class telephone system that also offers cable TV and data," says a haughty Glenn Milligan, the personable CEO and founder of 21st Century. "I believe it will serve as a model for other systems to replicate."

Those are big words, especially coming from a company that only signed on its first real customers about a month ago. But in order to make that boast a reality, Milligan has surrounded himself with some of the best engineering, marketing and customer service talent available, and garnered funding from the city's best known — and most elite — investors (see sidebar stories).

And he'll need them. Estimates are that 21st Century will spend roughly $200 million over the next four years to build its two-way interactive network in the famed "Gold Coast" area of Chicago, a two-mile wide strip of land that stretches from Evanston to Hyde Park and includes the urban canyons of downtown Chicago known as "The Loop."

It's this 28.5-square-mile parcel, known as Area 1 of the Chicago franchise, that will either make believers out of 21st's competitors, or send the upstart into financial oblivion.

No expense spared

The company has already plunked down $6.5 million to build out its Apparel Mart headquarters, which houses the NOC, a data operations center, and a video headend, as well as a complete network telemetry and control system. There are more than 160 racks of equipment, which includes gear for 110 channels of video, servers and controllers for a high-speed data service and a full network monitoring and surveillance system. According to Scott Phillips, a supervising engineer for Audio-Video Corp. and the guy who spent weeks overseeing the headend wiring project, the headend has about 160,000 feet of cable running through it, and some 15,000 connections.

Of course, a dazzling headend doesn't make the system — and Milligan is keenly aware that the most daunting challenges are still in front of him. Yet he firmly believes he can make the incredibly expensive network pay off in the long run.

What's his biggest challenge? "Executing," says Milligan bluntly. "This opportunity is ours to screw up because we don't have a thousand other systems to subsidize the screw-up."

His reference to chief competitor TCI shows where Milligan expects perhaps the most intense battles to take place. However, he also believes TCI has largely ignored the inner Chicago market during its tenure there, and suffers from a seriously bad reputation. In fact, Milligan says, TCI in Chicago only enjoys about a 30 percent penetration rate and was recently voted the third-worst cable service in the country. Perhaps the company's 318 documented "outages" over the past year had something to do with it, Milligan muses.

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To make sure 21st Century doesn't suffer from the same problems, the system is failsafe: it's self-healing, fully monitored and the headend/NOC will be staffed and monitored on a 7×24 basis.

TCI representatives say the company is prepared to repel any attacks on its subscriber base. LaRae Marsik, a corporate TCI spokeswoman, dismissed any fear of 21st Century in Chicago, saying that "we face competition in just about every market." She said 21st Century's aggressive moves will not alter TCI's plans to take a measured approach to adding advanced services in its metro markets. "Our response is the same: No, we're not necessarily speeding deployment," Marsik said. "We expect competition in this area, and our goal is to provide a superior product with superior service — not necessarily more quickly, but correctly."

Why Chicago?

While some, including TCI, have balked at building an underground network in the urban canyons of Chicago, Milligan and his crew have identified it as their life blood. "I wouldn't trade this franchise for any other franchise in the world," he says. Why? The reasons are many:

  • Chicago generates two percent of the country's total telephony revenue;
  • it boasts the nation's second-largest financial district;
  • the downtown area has 800 homes per mile, and counts 300,000 residences, 500,000 businesses and 50,000 hotel rooms within its borders.

Getting a cable franchise was a long, frustrating exercise for Milligan, who says the four-year fight over the franchise application was the longest-running issue the Chicago City Council ever dealt with. But now that the battle is over, 21st Century is finally building its network. The previously-mentioned headend/NOC was designed to be functional and reliable, but even more importantly, it was designed to show potential customers and competitors alike that Milligan and his cast must be taken seriously. "This is really our retail outlet," notes Milligan, pointing to the glass-enclosed technical spectacle. "It reflects solidarity and gives us a stable appearance — and perception is important."

To date, 21st Century has few live customers, but already has a backlog. In fact, Milligan says he had 112,000 requests for service before he spent a nickel on marketing. And apartment buildings representing 44,000 individual living units have already been signed to five-year service contracts.

Despite all that, 21st Century is fighting any perception that it's just another cable company. With the business customer counted as "absolutely integral" to the success of the venture, the company's real success and profit margins will come from its role as a competitive local exchange carrier (CLEC).

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Technology and topology

Chief Technology Officer Jay Carlson and VP of Network Operations John Brouse have worked — and reworked — the network's architecture to provide both capacity and reliability that today's customers are demanding. Carlson and Brouse chose Scientific-Atlanta for headend gear; Harmonic Lightwave for optoelectronics; Pirelli Cables for fiber optic cable; Belden Wire and Cable and CommScope for coaxial cable; Nortel for the voice network; and, in somewhat of a surprise, Zenith Electronics for high-speed data modems.

All that hardware is being integrated into a unique network topology that is, essentially, a beefed-up version of the Alexandria, Va. system that Brouse and Carlson built while they were employed by Jones Intercable.

Carlson and Brouse have dubbed it a "distributed ring/star" network that utilizes both 1310 nm and 1550 nm technologies in a Sonet-based system. Data and voice signals are sent out of the NOC on different fibers over a 96-count OC-48 fiber cable to each of eight "transport hubs," where each stream is split into four OC-12 tributaries and sent out to 36 different "campus hubs." Each campus hub is served via a 192-fiber cable.

At that point, the telephony and datacom signals are mixed on the same fiber as the video. From the campus hub, a cable packed with between 16 and 24 fibers extends out to the system's "nodes," each of which is located no more than three-quarters of a mile from the campus hub. Each hub serves between 24 and 36 nodes, which means the system will have up to 3,700 nodes when it's completed.

When the voice signals emerge from the campus hub, a variety of services are made available, typically to about 12 multiple dwelling units. Services include DS-1, DS-3, OC-3, STS-1 and basic DS-0s.

The video signals, meanwhile, emerge from the NOC at 1550 nm and are sent out over two different paths for redundancy. Those paths are each split four times in the transport hub and again sent out over route-diverse paths to the four campus hubs that each transport hub serves. At the campus hub, they come together at an optical switch, are amplified with an erbium-doped fiber amp, then split again 32 times.

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John Brouse and Dave Divine make some last-minute calibrations with headend staffers.

Those outputs are then wave division multiplexed with the data signals, which are sent to each node using 1310 nm fiber technology. Using DFB transmitters, the 18 MHz digital data stream (which occupies the 760 MHz to 780 MHz region) is split three times, multiplexed with the video, and sent down the coax to the home.

Services and lineups

While other MSOs are faced with having to rebuild their networks to make them interactive and then add more services on top of the video-optimized network, 21st Century has the unique ability to build a network from the ground up with bundled services in mind from the get-go. So, while other operators talk about all the neat services they could package together, 21st Century will come out of the gate with the following services:

  • Analog video. When 21st Century kicks off service, it will offer 110 channels of analog video, including 84 "basic deluxe" offerings, 10 premium channels and 16 pay-per-view channels (including a 10-channel "movie gallery"). In addition, more than 100 "virtual channels," consisting of both information and entertainment fare, will be made available. These include a preview guide with one-button VCR recording, airline schedule info, traffic advisories, a stock ticker, lottery results, local restaurant menus and more. Also included will be 25 channels of CD-quality audio.
  • High-speed data. With a fiber pipe often stretching all the way to each building, the network can uniquely take advantage of Internet and Intranet services, according to Stephen Lee, senior VP of Internet and Data Services. The company has already committed to purchase at least 40,000 Zenith modems, which will provide Internet access at speeds up to 4 megabits-per-second. Free e-mail and mini-Web pages will be offered. To speed downloading time, local servers will regularly cache the top 250 Web sites and make them available to local users.
    The agreement with Zenith may have stunned some, but Lee said it was a proper choice for two key reasons: immediate product availability and the scalability of the system. Scalability was especially important in that the modems will be served by the equivalent of 36 "headends," which would have made systems from other vendors cost prohibitive.
    Is Lee worried that other MSOs may end up with interoperable modems through the MCNS standard? Not at all. "Zenith has committed to us that it will build a second-generation modem," he says.
  • Telephony. As a provider of competitive local and long distance telephony to both businesses and residential customers, 21st Century chose to construct a traditional telephony network instead of pursuing the telephony-over-cable approach. One major reason was the powering problems posed by the HFC architecture. Instead, by using a traditional twisted-pair drop to the home, traditional powering solutions can be used.
    "This is definitely a world-class network that's as reliable — or more so — than a traditional telephone network," says Tony Daniels, a senior network sales engineer at Nortel. "No corners have been cut in the design of this network."
  • Security. 21st Century will partner with a third party to provide central security services for individual homes, apartments and businesses. On-site-camera-monitored security channels will also be offered to MDU residents so they can identify visitors prior to entry.
Construction issues and progress
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With so many people packed so closely together, and faced with an all-underground construction mandate in a city as old as Chicago, the network build will be difficult, time-consuming and expensive. It will also call for creative decisions to be made on the fly as the construction crews encounter myriad obstacles.

The first stroke of brilliance was forging a deal with the Chicago Transit Authority to use the north-south rail supports and private right-of-way to construct the fiber transport ring.

But the rest will take incredible patience to get through the lengthy underground permitting and mapping process. Working within the bounds of Chicago's political structure has been "nothing like any city I've ever worked with," notes Dave Divine, technical operations director. "Part of the challenge is simply finding out who we have to talk to, whether it's Ameritech, ConEd, the CTA or someone else."

Although 21st Century is using an outside contractor (Walsh Construction) to actually perform the build, it's using its own resources to design the network on the fly. "We're going to have to be creative," says Divine. For example, the company is already looking at using existing coal and freight tunnels to pull fiber through.

But that's only half the fun. The rest comes after the fiber has been pulled into the building, and they're faced with how to run coax cable 50 floors straight up. "It's a real design nightmare," understates Divine. "You don't really have system specs, you have building specs."

Knowing that most network problems, including ingress and other noise impairments, come from the drop, the company is going to great lengths to treat the drop as its own, closed system. Therefore, nothing but quad-shield cable will be used, along with more costly snap-in style F fittings.

Installations and service calls

Like so many other aspects of this Chicago network, technical operations had to be approached differently than most other systems, including nomenclature. For example, there are no "installers" or "service techs;" instead, there are "customer service technicians." "They'll do it all," says Divine, whether it's video, voice or data service installation. A crew of four will ride around town in a "war wagon," which consists of a van chassis with an ambulance body placed on it. But instead of carrying injured people, these wagons will sport a curb-side door, four jumpseats, cages for the two-wheelers and a workbench, in addition to several bins of equipment.

"With one guy driving and dropping the other guys off, he doesn't have to find a place to park — and the techs don't have to keep going back down to the truck to get more equipment, because they'll have everything they need with them," including about $20,000 in test gear to make sure the job was done correctly the first time, says Divine.

In addition to having extensive technical knowledge, 21st Century intends to hire intelligent and experienced front-line personnel and train them with more customer-contact skills, sales skills and technical expertise.

"We're going to need intelligent technicians because, with this system, you don't just go out there and, for example, cut in a directional coupler, because you'll affect service to a whole building," says Divine "I think the day of the entry-level technician serving as an installer is over."

Brouse concurs: "I've been mentally searching for an answer to the question of what an entry-level technician is."

Moving forward from here

For all his concentration on Chicago, Milligan plans to spring-board into other areas, as well. In fact, he's already applied for franchises in several Michigan cities, and wants to pass 3 million homes within eight years. All told, he plans to spend about $1 billion to construct those networks.

Clearly, Milligan and his crew are at risk. However, he's convinced that building the right network, and treating his customers the way he'd want to be treated, will cause him to succeed.

"We have no margin for error, because we're going up against Ameritech, MFS and TCI, among others. But I'll take our position any day, because we control the services we're going to be providing. This project has no legacy . . .The best technology money can buy is being brought to bear on the very first customer."

 

Show me the money!

21st Century President Glenn Milligan might be chastised for spending so much money to build a competitive network, but he certainly hasn't had a problem getting the financial wherewithal to build it.

After a lengthy odyssey through Chicago's City Council in pursuit of a franchise, Milligan has several equity investors who, collectively, have shelled out tens of millions of dollars.

Current equity investors include an investment group led by The Chatterjee Group, an affiliate of Soros Management Fund; William Farley, chairman of Fruit of the Loom; Chicago telecommunications investment specialists JK&B Capital, Boston Capital Ventures; Thomas Burrell, chairman and CEO of Burrell Communications Group; Donald Jackson, founder and president of Central City Productions; George Johnson, founder of Johnson Products; Edward Joyce, president of Edward T. Joyce & Associates; Ralph Moore, president of Ralph G. Moore & Associates; and Mark Tauber, chairman and founder of the Communications Department of Piper & Marbury.

21st Century CTO Jay Carlson says designing and building this network has been a breath of fresh air compared to most of the cable systems he's built. "Our investors have told me to spare no expense when it comes to constructing this network the right way," he says. "That doesn't mean I can spend without regard for cost, but it does mean they have no tolerance for not doing it right the first time."

Who ARE these guys, anyway?

You might not know them now, but if 21st Century manages to carve its niche in Chicago and the other cities it intends to compete in, you'll be hearing from Milligan and crew often.

Leading the charge, literally and figuratively, is founder, president and CEO Milligan, who cut his teeth in the cable industry with The Walt Disney Company. At one point, Milligan headed Disney's regional operations over eight states, with responsibility for sales, marketing, legal and financial activities, as well as personnel management. Milligan also managed the Kansas City corporate offices of Showtime and The Movie Channel.

Milligan's right-hand man is Richard Wiegand-Moss, 21st Century's chief operating officer. Moss came to Chicago from Cincinnati, where he was VP of customer operations for Time Warner Cable's 200,000-subscriber system. His responsibilities included the call center, management information systems, human resources, installation and service in that 3,500-mile, dual-cable system. While in the Queen City, Moss managed the planning and construction of a 750-MHz hybrid fiber/coax rebuild.

Moss also has experience with two other major MSOs, serving as general manage r and COO of Tele-Communications Inc.'s Chicago system and as a district VP of C ontinental Cablevision.

21st Century's Chief Technical Officer and VP of Engineering is Jay Carlson, who spent the last several years as a senior member of the corporate engineering staff at Jones Intercable in Denver. While with Jones, Carlson had overall responsibility for engineering and technical operations for more than 350,000 subscribers in the eastern region of the country.

Carlson helped deploy the first fully two-way interactive pay-per-view systemin the Chicago area and helped engineer and deploy the first interdiction system in the country. In addition, he helped design and review the innovative fibertopology used by Jones in Alexandria, Va.

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Pictured in 21st Century's new headend are, from left, Steve Lee, Jay Carl son, Richard Wiegand-Moss, Glenn Milligan, John Brouse and CFO Ron Webster.

Carlson helped recruit long-time Jones associate John Brouse to 21st Century, where he now serves as VP of network operations. The 1996 winner of the Polaris Award (given annually by CED, Corning and the SCTE to recognize innovative use of fiber optic technology), also helped develop unique fiber systems in both Broward County, Fla. and Alexandria, Va. Over his career, Brouse has deployed more than 30,000 miles of fiber.

Rounding out the team is Stephen Lee, president of Broadband Internet and Data Services for the company. He comes to 21st Century from HyperSpace Networks, an Internet service provider, where he was national sales manager. He has also served as director of sales for Metropolitan Fiber Systems' Datanet division and had key leadership roles with various divisions of Graphnet Inc., a provider of value-added networking services.

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