Windstream is seeing its efforts to build out Ethernet services into more of Tier 2 markets it serves pay off. The service provider is gaining momentum with customers as it improves the reach of its network via internal builds and carrier partnerships.
Evidence of this trend was seen in the telco's fourth quarter earnings where it reported that enterprise revenue climbed 4.6 percent year over year to $498 million.
As of the end of the quarter, the service provider had 26,000 enterprise customers nationwide and is working to expand its business services footprint through its partnership with TierPoint to bring fiber into more buildings within its ILEC and CLEC territories.
In mid-February, Windstream announced plans to expand its fiber network in Charlotte, N.C., and is planning additional network builds in Tennessee and Virginia.
The service provider has been expanding its on-net fiber footprint, adding new facilities in areas like Charlotte, N.C., for example.
By adding more on-net buildings the provider will be able to remove $1 billion in additional costs it pays on wholesale access to deliver services to its multisite business customers.
"Charlotte is an emerging area for us and making fiber is key to the whole Ethernet strategy and we plan to roll out additional markets and continue to enrich those markets with a fiber backbone to basically create our product and access strategy," said Mike Kozlowski, VP of product management at Windstream, in an interview with FierceTelecom.
Kozlowski added that these fiber investments allow Windstream to "get our access products standardized and create scale around Ethernet."
But fiber is just one element of its Ethernet growth strategy. The service provider is also extending Ethernet and other IP-based services to businesses via its fixed wireless assets that it gained when it purchased Business Only Broadband in 2014.
Windstream uses the fixed wireless assets to deliver wireless-based Ethernet and MPLS-based services in various markets including Chicago, New York City, northern New Jersey and Milwaukee.
"The way we're looking at our market strategies in terms of the fact that building fiber is pretty expensive, but fixed wireless affords us an opportunity is to create a higher complement for our customers in that we can sell diverse solutions," Kozlowski said. "It allows us a great opportunity to edge out the network and what's exciting is we have EoC, EoTDM, fiber-fed services and also have fixed wireless service."
Besides expanding the fiber network, Windstream has been expanding the reach of its Ethernet network into more markets by establishing more wholesale service agreements with more service providers.
Over the past year, the service provider has expanded its carrier partnerships from 33 to 57, allowing it to address the needs of its larger business customers who have locations outside of its traditional wireline footprint.
"They have increased their Type 2 last mile Ethernet access partners so they increased their out of footprint sites," said Rick Malone, principal of Vertical Systems Group, in an interview with FierceTelecom. "They had 33 partners at the end of 2014 and now they have 57 partners so quite a few last mile partners in those tertiary markets."
Malone added that having a larger amount of last mile partners helps Windstream's Ethernet pricing regime to more effectively battle cable MSOs like Comcast Business and Time Warner Cable Business Class.
"It gives them a price advantage," Malone said. "Even though they are bleeding dedicated Internet access (DIA) customers, but the Ethernet side of that has not suffered so when you look at the pricing they are priced to compete with the MSOs in the territories, particularly Time Warner Cable and Comcast."
As a result of its ongoing build outs and partnership pursuits, Windstream moved up on the Vertical Systems Group's Ethernet Leaderboard from the Challenge Tier due what the research firm said was the strength of their Ethernet private line service and its presence in many smaller markets that larger service providers do not serve.
"Windstream has been just below 4 percent threshold for the past two years," "With this they get above the 4 percent, but in reality they did not show any major leap in their business, and it's more of a migratory thing for them."
Windstream's Project Excel enables higher broadband speeds, but it still lost 15K subs in Q4
Windstream sets business services on growth track as enterprise revenues rise to $498M
Windstream spinoff CS&L makes first REIT strike, acquiring PEG Bandwidth for $409M
Windstream's board grants final approval for REIT spinoff CS&L
Windstream expands Charlotte metro fiber network, plans further builds in Tennessee, Virginia