EarthLink's Eazor: Wholesale transport revenue turnaround is driven by refocusing business

EarthLink may have revenue challenges with its carrier transport business, but its large set of fiber-based assets has given it the tools to sell lit and dark fiber services to not only carriers, but also content companies and large enterprises.

Speaking to investors during the Bank of America Merrill Lynch 2015 Leveraged Finance Conference, Joe Eazor, CEO of EarthLink, said that what's been helping it book more wholesale transport deals is that it has focused its attention on selling services off its existing fiber assets.

"As we were considering spinning off the wholesale fiber assets, the team that runs that business unit refined our focus on the footprint of what we were trying to sell in the market," Eazor said. "Instead of selling a long laundry list of wholesale services that had reasonable margin and had somewhat complex delivery behind it, we started focusing on selling transport services on our existing fiber."

Some of the products it began selling over its fiber assets are dark fiber and a 500G service that can scale up to multiple Terabits as demand dictates.

On a route-by-route basis, EarthLink is seeing equal demand for both dark and lit fiber solutions from a mix of carriers. However, the service provider emphasized in its third-quarter 2015 call it does not not want to enable one of its service provider competitors either with dark fiber.

Driven by the needs of its service provider, larger enterprise and content owner segments, customers can also purchase bandwidth in 500G increments and EarthLink can either provision and manage all sub-rate circuits (100G, 10G, 2.5G, 1G, below 1G) for the customer or design it to be managed by the customer.

Eazor said that while it has still has work to do until it feels satisfied that the wholesale business is a completely profitable business, it is on the right track.

"We have not given guidance on when the revenue lines cross, but that progress in that business unit on the booking side will materialize in the revenue line," Eazor said.

However, EarthLink continues to see the legacy usage-based wholesale products it sells to carriers continue to drop every quarter.

In the third quarter, the service provider suffered a major churn event in the carrier transport segment related to a previous acquisition.

"There was one acquisition-related churn event that happened last year that that has just taken time to fully wean off the network," Eazor said. "We're not sitting on anything else now that looks like that but churn events are a fact of life in any business so you have to have the sales engine on the other side to overcompensate for any churn and I feel like we're finally getting there."

Regardless of the churn event it faced, it was clear that the wholesale business revenue fortunes began to turn during the third quarter.

EarthLink's Carrier/Transport revenues, which include mature telecom services sold to carriers as well as transport services sold to both enterprises and carriers, rose slightly to $34.2 million. EarthLink said its transport services include higher margins and are growing as looks to fulfill customer demands.

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Related articles:
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EarthLink to aggressively sell dark fiber to carriers, content companies
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