Chase Signs Multimillion-Dollar Fiber-Optic Deal with Metromedia

Seeking to beef up its regional network backbone, Chase Manhattan Corp. signed an agreement in May to lease fiber from Metromedia Fiber Network, Inc. (MFN) to support bandwidth intensive applications and an e-commerce infrastructure. MFN's fiber-optic circuits will connect Chase offices in New York, New Jersey, Delaware and Texas, increasing capacity in those markets more than a hundredfold. Under the ten-year agreement, MFN will also provide managed optical network services to Chase.

The first two systems Chase will deploy in October will be disaster-recovery applications for archiving trading floor and funds transfer data. However, Mike Sztejnberg (pronounced "Steinberg"), Chase's head of technical planning and architecture, says Chase ultimately plans to leverage the added capacity to support bandwidth-intensive applications like electronic banking and streaming video. "E-commerce is clearly our corporate strategy, and the infrastructure we're putting in place will support the underlying technologies that feed e-commerce, data replication, data integrity and the ability to give our customer 24-by-7 support," he said.

"This is one of the building blocks we need to form the baseline of high-speed connectivity between our locations and customers, to enable new technologies like e-commerce," he adds.

Chase's new fiber cables will replace a majority of the existing leased lines from various telecommunications carriers. Financial terms of the deal were not disclosed, but Stratecast Partners senior analyst Tim McElgunn said such contracts typically run in the millions of dollars over 10 to 20 years.

MFN director of product development Scott Berry said the new accord gives Chase a more manageable, non-shared and, therefore, highly secure network for the regions it covers. "This allows them a great deal of flexibility to deploy the latest technologies of their choice, to add new revenue-generating applications, and to extend the concept of the private network from just a data center in a building to an entire metro area."

White Plains, N.Y.-based Metromedia is well positioned in the New York area, catering to Wall Street firms that, like Chase, have chosen to deploy their own dark fiber, including AIG and Freddie Mac. However, Sztejnberg says Chase will consider other options outside of New York. "MFN is aggressively extending their fiber network overseas to major financial centers like London and Frankfurt. So, we're keeping our options open, but what makes Metromedia attractive is their vision of where they want to be."