SureWest sets an evolutionary path to EoC
A SureWest data center.
SureWest (Nasdaq: SURW) has over the past decade has gained a reputation as an aggressive fiber advocate, building out Fiber to the Home for residential customers and fiber-based services for businesses in its ILEC and CLEC territories. That's part of what made it an attractive acquisition target, with Consolidated Communications swooping in this week to buy the provider even as rumors swirled that Google (Nasdaq: GOOG) had its eyes on the prize.
Given its aggressive fiber buildouts, SureWest admits that up to this point it has not seen a great need to drive Ethernet over Copper (EoC) yet. But the evolution of its product suite (voice, video and data) will incorporate copper in areas where it can't initially make a business case for fiber.
"We have not had a great need for EoC historically, but we are seeing as customers evolve into IP-based services where it's too expensive to deploy fiber we're deploying copper," said Jeff Willoughby, senior manager, strategic technologies for SureWest.
Complementing its growing base of fiber-based Ethernet services, the ILEC has traditionally delivered a mix of T1 and bonded T1 circuits in its ILEC and CLEC territories over its own existing copper and facilities it rents from area incumbent AT&T (NYSE: T).
And while the T1 access mechanism for businesses has worked well, Paul Krueger, executive director, business sales at SureWest, said it is looking more carefully at using EoC as the next step in providing higher speed copper-based services to businesses.
"We have not had a need where we're driving 6, 8, 10 Mbps over four copper pairs, but that's going to change," he said. "Because do have a Type II market both here in Sacramento and in Kansas City, and with the cost of T1s and the limitation we are now taking a harder look at going forward and colocating in some of those COs where we have a large abundance of leased lines and changing our model," he said.
As an evolutionary process, the T1 access strategy has helped SureWest establish an initial copper-based service presence.
"Physically colocating in a CO is a big move, so when we could (implement a) go-to-market strategy with a T1 by leasing a DS3 into a wiring center and buying UNEs or a T1 loop from there, it helps you get into the market," Krueger said. "Now, let's say you have hundreds of T1s in one wire center, it might make sense to spend the money, get yourself established, buy the conditioned pairs at a cheaper rate and drive more bandwidth over the same facility."
Given the cost of colocating in a CO, Krueger added that "it's not something you do lightly" and that its well-established fiber network in California allowed SureWest to win several large and mid-sized business opportunities.
Its Type II product suite grew in recent years, making it more economical to purchase conditioned pairs and getting the interconnection agreement to deliver higher speed EoC services.
In addition to lower cost, the other benefit of putting EoC over conditioned copper pairs would enable it to deliver 10 Mbps. Having higher speed copper-based services also enables it to more effectively compete against cable operators like Comcast (Nasdaq: CMCSA) with a symmetrical service.
"There's also a base competitive element in it as well," Willoughby said. "A symmetrical 10 or 20 Mbps product is more compelling to a customer who needs it versus an asymmetric product, which is how we deliver much of our copper-fed Internet products in our ILEC territory, at least today."