Moving to compete with conventional cables and satellites in the burgeoning telecommunications market, the CSX Corp. and Southern New England Telephone Co. announced yesterday they plan to build a high-speed fiber optics network along the Eastern Seaboard.
The proposed system, called LightNet, would be built mainly along CSX's railroad tracks, linking cities in 20 states with 5,000 miles of optical fiber. The network would transmit voice and data for businesses, government agencies and other telephone companies.
Unlike copper wire, which transmits data in the form of electricity, optical fibers convey information in the form of light impulses. Tiny lasers are used to "pump" the light pulses through the hair-thin glass strands. The optical fiber technology to be employed by LightNet would be capable of carrying 90 million bits of information per second--a speed and volume far greater than existing wire networks.
"We believe that LightNet, with its capacity to move vast amounts of information in digital form very rapidly and its strategic geographical location, linking the major cities in the East, represents one of the most exciting new ventures of the emerging telecommunications industries," said Alfred W. Van Sinderen, chairman of Southern New England Telephone.
Southern New England Telephone provides telephone service for most of Connecticut. In anticipation of the breakup of American Telephone & Telegraph Co., analysts say, SNET wants to move into new telecommunications technologies and markets.
CSX, the multibillion dollar Richmond-based railroad and natural resources company, also saw the venture as a way to diversify. "We wanted to take advantage of our 27,000 miles in railroad right of way in 22 states," said CSX President A. Paul Funkhauser.
Last year, CSX leased MCI Communications Corp. some railroad right of way on a non-exclusive basis for MCI's own fiber optic link along the East Coast.
However, said CSX's Funkhauser, the LightNet partnership "we would anticipate, is the last such arrangement."
The two companies estimated the cost of building LightNet somewhere between $300 million and $600 million over the next three years. That range, explains SNET's Van Sinderen, is due to the fact that the two partners will pre-sell access to LightNet.
"We're selling this to build it, not building it to sell it," said SNET President Walter Monteith Jr. He indicated that the partners were negotiating with at least 20 potential customers, including banks and insurance companies.
Though declining to cite specific costs of the LightNet service, SNET's Van Sindern asserted, "We will be underpricing satellite companies by a significant margin."
Currently, satellite communication companies such as Satellite Business Systems, the McLean-based venture of IBM, Comsat and Aetna Life and Casualty Co., provide high-speed voice and data services to large business customers. Estimates are that the high speed data market will grow from the existing $3 billion annual level to $30 billion by 1993.
Pending Federal Communications Commission approval, the companies expect to begin building the Florida leg of LightNet by fall, with the network completed by the end of 1985.