Interview: Virtual carrier aims to cut costs

IT managers try to find the best deals for wide area network (WAN) bandwidth and services, but are often tied to contracts with carriers lasting up to five years, which may be difficult or expensive to exit.

While the majority of financially weak telecoms carriers have now closed or scaled down their operations to survive, corporates still fear they might lose mission-critical WAN links if their carriers go bankrupt.

The shifting sands of the European telecoms industry may have buried some market opportunities, but they have revealed others. Virtual network operator (VNO) Vanco believes it has identified a business model that IT managers can trust to provide value, security and flexibility.

Vanco does not own any network infrastructure, but aims to find the best deals on behalf of its multinational customers for WAN links to multiple offices around Europe. It scours regional and national carrier services and mixes and matches technologies, including leased lines, DSL, ISDN and dial-up, from different providers to fit each customer's needs. It often uses two different telecoms carriers to provide the same link to increase resilience and help with load balancing. Its recent customers include Ford and Avis.

Vanco claims its strategy can save companies between 20 percent and 30 percent compared with leasing bandwidth direct from carriers. Vanco says 80 percent of those savings are passed to customers; it retains the remaining 20 percent.

"Every carrier is installing the same type of equipment so there is nothing to differentiate their products other than price. The customer doesn't care whose IP or frame relay services come into the business," says Vanco chief executive Allen Timpany.

Timpany highlights improved support as another major benefit. Vanco is responsible for maintaining customer routers and their entire end-to-end connections across carrier networks.

"Vanco has senior-level relationships with all these carriers. They often allow us to bypass the first three or four levels of diagnostics to pinpoint faults more quickly and accurately," says Timpany.

Timpany adds that 98 percent of faults can be rectified without sending out one of Vanco's 200 support staff.

The VNO model means customers are not committed to long-term contracts with any provider other than Vanco. While firms sign up for three or five years with Vanco, Vanco never ties itself to any one carrier's services for more than a year, allowing it to quickly drop a provider whose links fail to meet customer expectations.

"We review each link at the end of the year, then come back with ideas that may save more money. If the carriers drop their prices, we pass on 100 percent of those savings to the customer," says Timpany.

He admits the biggest challenge is to persuade corporates to abandon their long-standing relationships with carriers."The process of going out to tender is sometimes just to put the wind up their existing supplier," says Timpany.

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