Frontier Communications is seeing more retail small and medium business (SMB) customers starting to migrate to 1 Gbps Ethernet connections, with requests increasing by 60 percent over 2014.
Lisa Partridge, senior manager of data market management for Frontier, told FierceTelecom in an interview that customers that were traditionally satisfied with 20-50 Mbps now want 1 Gbps Ethernet connections.
"Where we're really starting to see the uptake is on the small medium business and enterprise side," Partridge said. "For a while, 20-50 Mbps was their comfort zone or sweet spot; however, in the last six months it has really taken a swing for the Gig."
A large swath of vertical segments are looking for Gigabit-based Ethernet services from Frontier, including everything financial and healthcare segments. Given the amount of compliance healthcare companies have to abide by like HIPAA, they are actually asking for 10G and above.
Partridge said that Frontier has been pricing its Gigabit Ethernet solutions more competitively, a move that has helped drive new Ethernet growth for the telco.
"About six to eight months ago, we took a course correction at being a little bit more competitive in our rates at the higher speeds for our retail customers," Partridge said. "We began to see a lot more traction--not that we weren't fluent prior--but it was considerably noticeable so instead of the 1-2 percent increase that you saw, we're now in the double digits."
Unlike some of its fellow telcos like CenturyLink (NYSE: CTL) that are using GPON to target SMB opportunities, Frontier is sticking to an IP-based switched Ethernet architecture. Today, it uses GPON to deliver its 1 Gbps services to residential customers over a fiber-to-the-premises (FTTP) network architecture.
"We have become inclusive of GPON when we're looking more at the residential space and expanding that infrastructure, but within our commercial space, which encompasses our retail and wholesale customers, we stick with traditional packet Ethernet into our IP backbone via MPLS," Partridge said. "We try to keep it as simple as possible because as folks are migrating from TDM, the next logical step is Ethernet and we're making that easier for them."
Partridge added that moving to Gigabit Ethernet also creates operational benefits for Frontier itself.
"If you look at the cost of small form-factor pluggables (SFPs) to go from a 10/100 interface to a Gig, it makes sense to go to automatically start with a Gig because you can lessen your truck rolls," Partridge said. "You become a bit more automated and it becomes a couple of keystrokes versus a large forklift effort from a physical perspective."
So what's next for Frontier's Ethernet goals?
Today Frontier has 2,788 wire centers in 28 states, and approximately 96 percent of those wire centers are Ethernet-enabled. It currently has 78,838 fiber route miles and serves businesses out of 6,300 on net fiber-fed buildings.
While fiber is the preferred method, Frontier continues to leverage its copper plant for customers that request 40 Mbps and below within a two-mile radius of an Ethernet-enabled wire center, while 50 Mbps and above are delivered over a fiber connection.
In the near term, a key focus will be on working with other carrier partners to enhance its out-of-franchise E-Reach solution. Having an out-of-franchise solution is important for Frontier and other Ethernet players as it looks to satisfy more multi-site businesses that want a single provider to work with for Ethernet services.
"We are traditionally a success-based corporation, however, we recently launched our out-of-franchise offer called E-Reach, and that's where we on-boarded preferred partners for regional external network-to-network interconnections (E-NNIs)," Partridge said. "Within the last three or four months, being able to have those preferred partners and reaching outside of our footprint, we have had to think about it differently."
As it works with its E-NNI partners, Frontier has been trying to be proactive about forecasting what areas where it may need to increase capacity to satisfy future retail Ethernet needs from large customers, particularly in the healthcare space. Partridge says that it will use this model as a way to facilitate new out-of-franchise Ethernet service growth in the east and further south into Florida.
"With the out-of-franchise partners, we're becoming a little more insightful from the carrier customers and the big retail guys as to where they have pockets with us," Partridge said. "That's where we're looking to penetrate ahead of time versus we get an order, we look through for funding, and we'll see how many we'll bring on board."
At the heart of Frontier's internal and out-of-franchise Ethernet expansion is its ROADM network, which it installed after acquiring Verizon's lines in 14 rural states in 2010.
Leveraging the Ethernet network it built in 55 markets stretched across 10 states in October 2011, the telco introduced a new Ethernet Virtual Private Line (EVPL) Silver service in February 2013.
"The ROADM network was something we have taken advantage of after the initial Verizon (NYSE: VZ) acquisition and I think that's part of the good news story with our Ethernet expansion as well," Partridge said. "We have tied a lot of our end locations back to the ROADM core and it's allowed us to be more efficient in our deployment and cost effective in our delivery."
While 1G and 10G are a key focus for its Ethernet play, Frontier is also looking at micro-type advancements in the ROADM network to also offer a series of 3, 4 and 5 Gbps speed services to retail and wholesale customers.
Ethernet services were a big factor of growth in Frontier's first-quarter business sector results, which grew 20 percent year-over-year.
But like other telcos such as CenturyLink, Frontier continues to face challenges in wholesale data service revenues, particularly as more of its wireless operator customers migrate off of legacy copper-based T-1 circuits to Ethernet.
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