From AT&T to Cogent: Tracking the top 14 business service providers

Business services and the way they are delivered by service providers continues to evolve. The advent of service provider consolidation has also changed the landscape of Tier 1 and competitive players in recent years.

In this new report, FierceTelecom looks at the quarterly business service performance of the top telcos, cable operators and competitive providers.

Each of these providers are ranked by total business revenues.

We will look at three main metrics in this new report:

Business service revenues: Here we are tracking how these service providers performed during the current quarter in terms of total business revenues. Business revenues continue to fluctuate and evolve for service providers. Traditional wireline operators like AT&T, Verizon and CenturyLink are faced with a  challenge and opportunity: expanding Ethernet and IP-based service revenue, while facing ongoing declines of legacy services like ATM and Frame Relay.

AT&T reported that in the fourth quarter business wireline, declines in legacy products were partially offset by continued growth in strategic business services. Total business wireline revenues were $7.4 billion, down 3.5% year over year but up sequentially.

Verizon and CenturyLink also saw similar trends. Verizon reported fourth-quarter Enterprise Solutions revenues were up slightly sequentially to $2.26 billion, but down year over year. At CenturyLink, the results were mixed as Medium and Small Business revenues declined to $874 million from $918 million, but the company reported gains in Enterprise and International & Global Accounts which rose to $1.3 billion and $941 million due to its acquisition of Level 3.

Cable and competitive providers continue to be a bigger threat to the ILECs without the worry of cannibalizing legacy TDM revenues. Comcast Business reported fourth-quarter revenue rose 12.2% in the $1.68 billion, while Charter’s Spectrum Enterprise division saw decent gains with not only small to medium businesses (SMBs) but also larger businesses, reporting $1.5 billion in revenue.

Finally, competitive providers Cogent, GTT and Zayo continued to make progress in the fourth quarter with varying gains. With Level 3 leaving the market after being acquired by CenturyLink, Cogent took its place as the largest competitive Ethernet provider, according to Vertical Systems Group’s 2017 competitive Leaderboard.

Fiber route miles: Fiber Route Miles are measured by the conduit length. Route miles are different from fiber miles, which is the number of route miles in a network multiplied by the number of fiber strands within each cable on the network. Through a mix of acquisitions and their own internal organic builds, service providers continue to expand the amount of route fiber miles they have in their networks to serve business customers.

On-net fiber: This means that each fiber that goes into a building is connected directly to a service provider’s facilities and traffic passes directly onto its own network. Like route miles, service providers are expanding fiber into more buildings by either conducting organic builds or acquiring fiber via purchasing other providers.

AT&T reported at the end of the fourth quarter that it reached 400,000 business building locations with fiber, enabling the telco to cover over 1.8 million U.S. business customer locations. But for other providers like Verizon and CenturyLink mergers and acquisitions M&A was a factor in expanding on-net fiber availability. By completing their acquisitions of Level 3 and XO Communications, these providers gained an additional on-net fiber enabled buildings. Verizon gained metro networks in 40 major U.S. markets with over 4,000 on-net buildings and 1.2 million fiber miles.

But it wasn’t just the largest telcos that used M&A to advance their on-net and overall fiber holdings. By purchasing FairPoint, Consolidated became the ninth largest fiber provider in the U.S. with a total of 9,100 on-net building fiber-connected towers.

Meanwhile, GTT and Zayo’s deals to acquire Interoute and Spread Networks will expands their on-net fiber footprints.

Take a look at the chart below to get a snapshot of how these service providers performed in the business services space.

* enhanced fiber route, on-net facilities with FairPoint acquisition
** will expand to 14K miles when Hawaiian Telcom acquisition is done

There are three main types of service providers that deliver business services we are tracking in this report: 

Telco: Being the biggest operators for over a century, AT&T, Verizon, CenturyLink and other independent ILECs have continued to invest in their long-haul, metro and last-mile fiber networks to businesses. What ILECs bring to the business services table are scale, brand recognition and deep relationships. 

Cable: Led initially by pioneering provider Cox Business, a growing number of cable operators including Charter, Comcast, and now Altice USA have been shaking up the business market by installing fiber in their core network and into business locations. After penetrating small to medium businesses (SMBs) with HFC-based services, this group has been trying to move into larger business accounts with a mix of fiber and IP-based services like SD-WAN and cloud. 

Competitors: Competitive service providers are a very diverse set that include Cogent, GTT and Zayo, which have reach across the United States and Europe. Now that Level 3 has been purchased by CenturyLink, Cogent and others enhance their profile in the business market segment. This segment has been challenging cable and ILECs with a host of lit services like Ethernet and even dark fiber for those customers that desire it.