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That's when Yipes Communications came calling. If Kesner would let Yipes put in a half-dozen pizza-box-size computers, the company could deliver faster Net access for $6,000 a month -- and could have it up and running in less than a week. "It sounded way too good to be true," says Kesner. Well, it was true. Fenwick & West's Palo Alto lawyers have been using the service for nearly two months, glitch-free. What's the magic? Yipes is leading the pack of companies with a new technology called gigabit Ethernet. The system bypasses the major bottleneck for Net traffic: the local phone switch. To understand it, consider what happens every time an office-worker clicks on a Web-site link. First, the request passes through the PC to the corporate network, which usually runs on a standard called Ethernet. From there, it's sent off to a phone company switch and converted into a different language the phone network can understand. When it gets to the Web site, it's converted back to the Ethernet-based Web-speak -- and the process is repeated to send the page back. BIG DEALS. With gigabit Ethernet, the page request never leaves the Ethernet format. Instead, it travels directly onto the fiber-optic network of a company like Yipes. From there it can be delivered to a crosstown office of the same corporation or to a Net hosting center where thousands of Web sites are run. That way, any sites or applications that are hosted in those centers can be delivered without messing with all those conversions. "Gigabit Ethernet is an excellent bet" as the dominant networking standard of the near future, says Peter J. Sevcik, president of networking market research firm NetForecast. Speed isn't the only advantage. In the near future, Yipes says customers will be able to easily pump up their bandwidth on a day's notice to meet some upcoming data-intensive need, say, to send videotaped testimony for an important trial. Later, they can trim their bandwidth back to their normal usage level, paying only for what they need on any given day. There's a catch. Because gigabit Ethernet is just reaching the market, Yipes's coverage is scant. So far, it can guarantee top-level performance only within a company's network in cities it currently serves or with sites based in a hosting center that's linked to Yipes's network. But that may soon change. Yipes has deals with big hosting companies including Intel, Equinix, and Colo.com. And Yipes is setting up "metropolitan area networks" in various cities so companies with offices in any of them can get speeds that make it feel like everyone is on the same floor. HIGH-TECH LURE. As the standard grows and more sites are hosted by companies using gigabit Ethernet -- provided by either Yipes or a competitor -- the service will offer ever-speedier connections to more and more of the Web. "We're extending the corporate computing environment to the network," says Yipes CEO Jerry Parrick. Customers like that. Companies like Fenwick & West -- big Net users that are running out of bandwidth -- can slash networking costs. Others, such as the St. Vrain Valley School District northwest of Denver are using Yipes to boost Net speeds and to add bandwidth-hogging services like online tutorials. And cities such as Worcester, Mass., and Riverside, Calif., believe Yipes will help them quickly add cutting-edge networking -- and thereby woo high-tech companies and their high-paying jobs. Worcester has strung fiber optic cables to 200 downtown buildings and has hired Yipes to deliver digital service over those lines. "We won't have to shy away from advanced applications like distance learning," says Thomas W. Wharton, director of the Worcester InfoTech Project. Clearly, obstacles lie ahead. First among them: How to enable customers to move data not just in top markets, but across the country. To do that, Parrick has plans to invest more than $1 billion to set up networks in 50 U.S. cities over the next five years. By yearend, Yipes plans to be ready for business in eighteen markets. And sooner or later, it will have to set up its own long-distance network to connect the dots. "FARTHEST ALONG." To succeed, Yipes will have to contend with raging competition. Other hot startups such as Telseon and Cogent Light Technologies Inc. are also chasing the gigabit Ethernet market. Yipes is up against traditional telecom giants who are intent on fighting off any challenge to their current dominance. And it may have to face newer telecommunications carriers such as Qwest Communications and Level 3, which began taking on the old guard in the mid-1990s with all-fiber networks that can provide newfangled services of their own. But Yipes is off to a promising start. Since its founding a year ago, it has raised $90 million from the likes of venture capitalist Norwest Venture Partners, chip king Intel, and networking upstart Juniper Networks. Although it's privately held and releases no financial data, analysts say Yipes is poised for rapid growth. Of the contenders in the space, "Yipes is the farthest along," says NetForecast analyst Sevcik. And it's not sitting still. CEO Parrick plans a service that will allow voice phone calls to travel over the Internet -- letting customers dodge their bill to the local phone company. Soon, he wants to introduce network management software to allow companies to better administer their bandwidth. That way, the e-mail system could be slowed down to make more space available, say, during the CEO's quarterly recap speech to employees. BLINDSIDED? The upshot: Incumbent networking leaders should keep an eye on the rearview mirror. Phone companies "don't even see Yipes as competition yet. They can't believe any big company would trust its systems to some startup," marvels Fenwick & West's Kesner. "But [Yipes's] service is better, their product is better, and they're meeting their promises in a time frame you'd never get" from a phone company. In a world where almost everything digital is created for the Net and transmitted using the Ethernet networking standard, few customers will resist a shift away from other standards that require expensive and time-consuming data conversions. Yikes! Look out for Yipes. Burrows reports on technology for Business Week |
