Jim Fallon asked me to forward this article on Ken Rice's new venture.


New startup proposes global virtual services
Marlene Tissot
12 November 2001 
A project to build a global network for multimedia services, based entirely on switched virtual circuits (SVCs), has been revealed to CWI. And it intends to prove the value of connectionless network services for customers by carrying output from the Olympic Games in Beijing around the world. While new carriers are counting their cash and hoping to hold the fort until the market turns around, SynerG Communications Ltd., believes it can prove to everybody that it is still possible to launch an ambitious telecoms business, even in these harsh times. Backed by an Asian media mogul that prefers to keep a low profile, as well as an equipment vendor and a network operator in the United States, its founders claim SynerG already has verbal commitments from customers amounting to $100 million in revenues. And they say they are negotiating to gain rights to carry multimedia content from the Beijing Olympics in 2008. SynerG's business plan is based on a relatively uncommon way to deliver bandwidth. Ken Rice, the chairman and founder of California-based International SynerG Communications Holdings Ltd., says that potential cost savings for end-users will be compelling because they will be able to provision bandwidth on an ad hoc basis, giving them so-called bandwidth on demand. A 41-node global ATM-based switched virtual circuit network will focus on delivering content across Asia, Europe and North America. Under most existing contracts, customers pay for leased-line capacity they do not actually use, according to Rice, who claims his project is significantly different. "It's a utility-based network," says Rice. "(It) generates billing for what is used, not what is contracted for as in fixed line configurations." But while end users are increasingly scrutinizing their spend, they have also grown accustomed to always-on fat pipes and will need reassurance of the constant availability of the circuits. "If you are a customer, you need to be sure that the capacity is there at all time," says Maureen Coulter, a senior analyst at Gartner Group in Egham, England. "SVCs are appropriate for content as long as the service provider manages the quality of transport for the end-user." SynerG claims that this quality of service will be ensured by employing Pathfinder, its proprietary network management software. And the business plan for SynerG shows Lucent Technologies and AT&T among its suppliers and shareholders. Lucent has taken a 2.11% equity stake, and a network provisioning deal gives AT&T a possible equity option. AT&T has experience marketing SVCs in the U.S., although in the case of SynerG it is thought only to be providing bandwidth from its global network. There might also be something in the new network business model for SynerG's circuit supplier. Even if revenues from providing the circuits to SynerG are not immense, neither is the risk the carrier takes by doing it, since it gets a revenue share each time bandwidth is used by a customer. While the cost of offering such a service is moderate, it may provide a new stream of revenue for carriers. "It's something I expect we'll see more and more," said Gartner's Coulter. "In the content distribution market ... carriers want to squeeze every penny out of their capacity." To make sure it can guarantee delivery to consumers, SynerG says it will operate a 41-node ATM-based switched virtual circuit network in nine European countries and 23 city networks in the U.S., according to its business plan. Operations will be headed up by chief executive Fred Metzgen, a former business development director for BT Syncordia Global Solutions, who will be based in Newport Beach, California. Metzgen has been touring Europe and the U.S. to get the $10-million startup funds he estimates SynerG needs. Metzgen has acquired a portfolio of potential partners and content distributors, including education and training technology developer China Education Network, digital video developer Electric Image and e-commerce platform developer Evolutionary Networks, Inc. SynerG has taken shareholdings in some of these.