with Kenny Wyatt, president of CenturyLink's business division
Kenny Wyatt, president of CenturyLink's (NYSE: CTL) business division, says that what differentiates the telco from the pack is it can provide a full suite of services and solutions for any size business. Despite the current economic headwinds, Wyatt said the company is hearing customers ask: "How can we use someone like CenturyLink to help us with our cost structure?" Sean Buckley, senior editor of FierceTelecom, recently spoke with Wyatt about his first year on the job and his views on growing opportunities in the business services space.
FierceTelecom: You became the president of CenturyLink Business last year. Let's start with the transition and any lessons you learned so far?
Kenny Wyatt: What we did last year is we brought all the business sales support organizations together into one. They had been distributed across the organization so we brought them under single leadership last year. The very first thing we did is we looked out at the market and said how do customers want to buy? We came up with a number of key segments that have different buying behaviors. Our commercial space consists of those mid-sized businesses that buy a different a set of products and want to consume in a bundle and per seat fashion. We designed a segment around that called commercial. We have an enterprise segment, which are those mid-sized to large enterprise customers who have a different set of business challenges they are trying to solve. You've got our global accounts, which are international global customers that have a different set of needs. You have Government and Education Services (GES), which is tuned towards public safety, higher education and State & Local governments because they buy off of different buying vehicles. You also have federal and focusing on their specific needs. I have assigned leaders and accountability around each of those segments within the organization.
FierceTelecom: The economy continues to have an effect on business spending. Is CenturyLink seeing its business clients cut back?
Wyatt: In pockets we see companies where we are seeing slower decisions around capital cycles. I have to tell you what I am seeing a shift towards "how do we think differently about our cost structure and how do we use someone like CenturyLink to help us with our cost structure?" It's not specific to a segment. Our global customers down to our small business customers are saying, "I need to focus on my core business, IT is an enabler, and you CenturyLink need to help me to manage my cost structure as it relates to my entire IT and how to make me more efficient." If you look at the portfolio of products that we built and bought over the last two to three years, we are well positioned to solve both of those business problems.
FierceTelecom: Cloud is also another key area. You recently announced a cloud service designed for SMBs. What are the challenges of extending cloud services to SMBs?
Wyatt: It differs by segment. If you're a small-to-medium sized business, you want to take full advantage of moving your applications to the cloud because you may not have a disproportionately large IT shop or anybody. This is why we're seeing our managed office product take off because we made it simple to consume the cloud. As you move further up market it really does depend on where the organization is by segment, by vertical or where they are in the migration of the cloud. It's why it is so important to have a full portfolio of hosting products because some of our customers just want to do colocation with us because they have a business continuity or disaster recovery need. Some of them want to do full managed hosting where we are taking over a portion of that OSI stack to manage it for them. Some of them have specific applications they want to move to cloud. This is one of the reasons why we bought Tier 3.
FierceTelecom: Speaking of SMBs, CenturyLink recently rolled out a new MTU fiber-based product for this segment. Can you talk about the take-up of that product?
Wyatt: Our strategy is to push fiber further and further into the network and closer to our customers. We have a ton of opportunities. Take multi-tenant units (MTU) as an example. We have phenomenal opportunities for either SMB customers or even large global customers that happen to be sitting in those MTUs to offer them fiber-based services. Every quarter, you see us continuing to light more buildings on the MTU side.
In Salt Lake City, we launched our fiber-based service with speeds of up to a Gig for those customers inside MTUs. You're going to see us continue to push fiber deeper, but I don't want to lose the point that it's not just about access. Without the assets around applications and without the portfolio around being able to meet the IT demands of an SMB all the way up to a global company, you're not going to take full advantage of what's going on inside of that business marketplace where more applications are moving to the cloud.
FierceTelecom: Ethernet is another big driver for CenturyLink. How do you see the Ethernet market opportunity shaping up for CenturyLink?
Wyatt: Consistent with my previous comments around pushing fiber deeper into the network, it's also about enabling Ethernet speeds. If you're an SMB customer or you're a global customer, the experience from LAN to WAN should be transparent. You're finding us every single quarter--regardless if it's a global WAN network where we're adding Ethernet end points to provide higher speeds or if it's a single SMB customer that needs 100 Meg inside of their LAN--we're offering speeds and Ethernet services that provide that.
FierceTelecom: Given your legacy as a traditional telco with copper assets, CenturyLink is also offering Ethernet over Copper. Can you talk about that program?
Wyatt: With a network our size and serving the amount of geography that we cover at some point you have to rely on that copper network in order to provide Ethernet-type services. We've been very aggressive rolling out Ethernet over Copper where fiber may not makes sense from an economic perspective and a customer perspective. We have helped pioneer bonded copper where it makes sense for those business customers and every quarter we're launching new services on Ethernet over Copper. On top of that, you'll see us get deeper and deeper with GPON. We're taking that fiber network deeper because the economics are changing rapidly and as those economics change, you'll find us getting more aggressive on GPON as well.
FierceTelecom: Let's talk about competition. Cable, in particular, is expanding their fiber reach. Do you see them as a growing threat?
Wyatt: We compete in a hyper competitive environment that could be against cable, against CLECs, other ILECs or a global carrier. The difference is our strategy is different, which is to say is that access speeds are important and being able to provide multi-region and global networks against those access strategies is also important. Even if you're an SMB customer and you have sites in Colorado Springs and Phoenix, being able to provide a consistent customer experience across all of those multi-site networks is important. But where our strategy is different is coming back to that full portfolio. What's important is how do you make those networks even more intelligent by bringing Layer 4 through 7 all the way to the application layer such that a business customer can use the entire business portfolio regardless if you're talking about MPLS, storage, content delivery network, managing servers all the way to how do I get an application to the cloud?