Defense profits from tech advances, falling telecom prices

A steep drop in the cost of bandwidth, more undersea cables and stiff competition among telecommunications carriers drove down the cost of a network to serve military commands in the Pacific by more than 37 percent.

Verizon Business Network Services won the 10-year Defense Information Systems Network Transmission Services-Pacific II contract on Monday. The company's winning bid -- $2.5 billion -- was $1.5 billion less than the value of the current DISA Pacific network contract, which MCI won in 1999 with a $4 billion bid.

Eric Jackson, servicer manager for terrestrial transport at the Defense Information Systems Agency, said the structure of the contract and the advanced technology will boost the capacity of the Pacific network when the new contract begins in October. Under the old agreement, DISA bought circuits at varying data rates, but under the follow-on pact, the agency will buy services that have throughputs ranging from below 1.5 megabits a second to 10 gigabits a second.

Verizon will provide DISA with wavlengths on a fiber-optic cable, which it can adjust to meet its needs, said Marlin Forbes, regional vice president for Verizon's federal defense and international services division. DISA will use optical multiplexers in the Pacific network to scale circuit bandwidth.

Fiber-optic technology has advanced to the point where carriers can transmit 40 wavelengths of laser through one piece of cable instead of just one wavelength when fiber-optic cables were first used.

The new contract will serve the Pacific region, but Forbes said he anticipates it also will be used extensively to carry traffic to and from the Mideast, serving U.S. forces in Iraq and Afghanistan.

Jackson said primary service points for the contract include Alaska, Australia, Guam, Hawaii, Japan, Korea and Okinawa. The agreement will put Verizon in position to bid on a network contract for Guam that the Navy plans to install to support a massive build up of forces there by 2015.

Verizon's key partners on DTS-P II include Alaska Communications Systems, General Communications System Inc. in Alaska, KDDI Corp. in Japan and Daewoo Group in Korea.

Qwest Communications also bid on DTS-P II.