At Hawaiian Telcom, EoC creates sticky business customers
Hawaiian Telcom (Nasdaq: HCOM) may have only started seriously ramping up its Ethernet offerings in 2007, but the service provider is being no less aggressive than other telcos.
For the incumbent carrier, Ethernet is not just a standalone product, but also a delivery mechanism for number of its SMB and WAN-based services, including Layer 2-3 services such as Dedicated Internet Access (DIA), and Layer 2-3 and VPNs, for example.
Given the dispersed nature of its footprint, Ethernet over Copper (EoC) has enabled Hawaiian Telcom to help business customers migrate from traditional bandwidth-limited T1s to Ethernet. Besides the geographic diversity, Hawaii has a very large SMB and SOHO market.
"The majority of our customers are using Ethernet over Copper services, which we use in many cases just because of our ability to reach our customer base across the different islands," said Ryan Miyamoto, senior product manager, Advanced IP Networks for Hawaiian Telcom. "Of course, it complements our fiber infrastructure and where we have presence or it makes sense to run fiber to a particular business we'll use the fiber infrastructure and take advantage of scaling higher than our EoC services, but in general Ethernet over Copper has been a strategic item for us to deploy Ethernet statewide."
In terms of speeds, the ILEC is delivering standard speeds that range from as low as 1.5 Mbps to 10 Mbps, but it can deliver higher speeds of 20-25 Mbps if a customer wants it and it has available copper to support those speeds at a particular business location.
Since its markets are comprised of customers making the jump from T1 to 5 Mbps--which can be a bit daunting--Hawaiian Telcom expanded the EoC and EoTDM portfolio to go as low as 1.5 Mbps up to 10 Mbps to capture a larger piece of the SMB market.
"This has worked well in the sense that making the transition from a T1 at 1.5 Mbps to 3 Mbps doubled the bandwidth at roughly comparable prices... (this) was a very powerful message to a lot of these small to medium sized companies in getting them to adapt Ethernet," Miyamoto said.
EoC has become a sticky service that in some cases has driven some customers to up their bandwidth capacity beyond the boundaries of copper and into fiber. Once they adopt the technology, the ILEC has found that some customers who thought they did not need more than a T1 start finding other applications they can use the bandwidth for.
"We do have customers that come in at that starting point and grow and evolve as their business requirements expand," Miyamoto said. "We deliver that with the EoC product because it scales real nicely, and if the requirements scale beyond that we'll look at delivering it over fiber."
Throughout 2012, the service provider does not see a slowdown in providing WAN Ethernet access to Layer 2 and Layer 3 IP/VPNs to larger businesses or Ethernet-based DIA access services to SMBs.
"Whether it's from a WAN perspective delivering VPNs and on the SMB end delivering single site Internet access over Ethernet, we're seeing demand on both ends of the spectrum," Miyamoto said.