AT&T, Verizon remain top incumbent Ethernet providers, says VSG

AT&T (NYSE: T) and Verizon (NYSE: VZ) may be facing new challenges from a host of new cable and CLEC competitors, but out of the incumbent telcos the pair continues to be the dominant duo in the Ethernet services market, according to Vertical Systems Group's latest U.S. Incumbent Carrier Ethernet Leaderboard.

Both AT&T and Verizon continued to see uptick in strategic services, including Ethernet, during the fourth quarter.

AT&T reported that strategic business services such as cloud, Ethernet and VPN grew 13.8 percent year-over-year and now account for 30 percent of wireline business revenues. Likewise, Verizon reported that strategic services like Ethernet rose 1.5 percent year-over-year to $2.1 billion over the fourth quarter of 2013.

Following AT&T and Verizon are CenturyLink (NYSE: CTL) and Windstream, two companies that have been enhancing their play in the larger business space.

Although incumbent carriers are still the dominant players, their growth trails aggressive cable MSOs like Comcast Business (NASDAQ: CMCSA) and competitors like Level 3, which have been growing their market share in the Ethernet market and building out fiber to more locations.

"As a group, incumbent carriers had slower Ethernet growth than competitive providers or cable MSOs," said Rick Malone, principal at Vertical Systems Group, in a release. "However, incumbents made considerable service advances in 2014, including investments in fiber builds and stronger integration with other offerings."

At the same time, Malone added that incumbent players have more experience and relationships to deliver more complex solutions for multi-site businesses.  

"Despite the challenges of mature technologies and a cost structure that can be uncompetitive for out-of-region sites, incumbents lead in the delivery of more complex nationwide networks," Malone said.

Besides these top four incumbents, Cincinnati Bell, FairPoint, Frontier, Hawaiian Telecom and TDS Telecom continue to make moves in the Ethernet market in the markets they serve.

For more:
- see the release

Editor's Corner: 5 reasons why AT&T, Verizon should see Level 3 as bigger business services threat

Related articles:
VSG: Level 3's tw telecom acquisition helps it surpass Verizon in Ethernet race
AT&T battles legacy losses with U-verse gains, but sets focus on profitable customers
Verizon's FiOS growth continued to cushion the blow of wireline revenue declines in Q4

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