Radianz, the global IP network seen as a competitor to the failed Global Crossing, has voiced its keen interest yesterday in taking over Global Crossing’s network management contract with SWIFT and said both parties would benefit from this alliance. Brennan Carley, chief product and technology officer at Radianz, said:
“We would be happy to have SWIFT as a customer, and we believe that this would benefit SWIFT and its members. Radianz has a well-established global IP network (RadianzNet) that over 40 providers of financial services (content, applications, trading venues) use to reach thousands of financial institutions. SWIFT and its members could benefit immediately from this.”
Global Crossing’s decision to file for Chapter 11 protection from its creditors in the fourth largest bankruptcy in US history, has led some observers believe that it was too aggressive on pricing when it pitched for the SWIFT contract. But Carley is inclined to think that such strategy was only to be expected within the given circumstances:
“We don’t have any real visibility of Global Crossing pricing. Global Crossing is “long” on bandwidth, which is a commodity with a high fixed cost and a low marginal cost. Given the glut of long-haul capacity in the market, we would expect to see aggressive pricing by owners of fibre cables.”
But how confident can SWIFT users be that Radianz is financially sound? Carley says they can be very confident indeed. “First, Radianz’s business strategy is very different from Global Crossing. Global Crossing is foremost a provider of commodity bandwidth, which they sell across all industries, including wholesale to other carriers. This required them to carry huge debt to finance the construction of their network. When we established Radianz, we chose to focus solely on financial services. We therefore chose not to own the underlying bandwidth, which is a commodity, and instead chose to differentiate ourselves through customer/industry focus. This provides two key benefits: It allows us to focus on serving financial customers rather than filling up pipes, and it means that we have not had to invest substantial capital to build a fibre network. Secondly, Radianz is EBITDA breakeven, has zero debt, and has substantial cash on our balance sheet. Thirdly, Radianz is owned by Reuters and Equant (which in turn is majority owned by France Telecom). These shareholders are well-capitalized, financially successful leaders in their respective industries. Fourthly, firms such as Reuters and Instinet have outsourced their entire networks to Radianz. They would not do so unless they had confidence that Radianz is financially sound and able to deliver a high quality, secure networking service.”