Long distance and local telephone company Frontier says it plans to build a $2 billion fiber optic network across the United States in partnership with privately owned Qwest Communications.
Frontier said it would invest almost $500 million in the project. Lucent Technologies will supply the cable for what Frontier says will be the largest single fiber optic network built in the United States as one project.
The network will connect almost 100 cities and provide coast-to-coast connection under the high reliability Synchronous Optical Network, or SONET, standard.
Frontier currently leases parts of its network from others, but expects to be able to provide a broader range of services more reliably by owning its own network.
“Clearly it makes better sense for us to own the network,” Robert Barrett, president of Frontier Network Systems, told a teleconference.
The network, to be completed in 1998, will give a 40-fold increase in capacity over the current system. Frontier said the network would begin to bring benefits in 1997, halving network transport costs, and cutting incremental network costs by 80 percent.
Qwest has already spent $500 million since it began building the network last year, and expects to fill in the remaining $1 billion with other telecommunication companies that want to become partners in the network, Frontier said.
Qwest, a company specializing in network construction, is a subsidiary of Anschutz. Anschutz’s owner and chief executive is Philip Anschutz, the largest shareholder in Union Pacific.
No value was given for Lucent’s work, but a source close to the deal said it was in excess of $100 million.
Frontier will fund $350 million to $400 million of its investment from its own cash flow, and may use short- and medium-term debt for the remaining $100 million to $150 million.