tw telecom's (Nasdaq: TWTC) bullish movement in the Ethernet service arena has enabled it to secure the third ranking in Frost and Sullivan's market share analysis and was named a winner of 2011 North American Frost & Sullivan Award for Growth Leadership.
Trailing only now AT&T (NYSE: T) and Verizon (NYSE: VZ) in terms of Ethernet service market share, tw telecom's Ethernet services revenue grew at a CAGR of 28 percent from 2008 to 2010. All of this was, of course, achieved during a time when most businesses were cutting back on their telecom service spending.
"While all communication service providers (CSPs) are ramping up their network footprint, service portfolios and SLAs to take advantage of the growing market demand, tw telecom has long been the key challenger to the top two CSPs in the market with its fiber-based services strategy," said Roopa Shree, Frost & Sullivan research analyst.
With fiber-based Ethernet as its key building block, tw telecom has built out fiber to 14,000 buildings targeting mid-sized vertical businesses that serve health care, government and education.
Despite its aggressive fiber-centric drive, the reality is that no one service provider can reach every business alone. tw telecom has complemented its fiber footprint with External Network to Network Interconnection (E-NNI) agreements with other carrier partners. On top of its E-NNI connections and its own fiber network, tw telecom has continued to roll out national E-Line networks to address the long haul Ethernet service market.
As tw telecom has scaled its Ethernet reach it has also aligned its MPLS and Ethernet service offerings to enable customers to create hybrid network services.
All of these new service enhancements are complemented by tw telecom's two-pronged sales strategy of direct and indirect channels. On the direct sales side, account executives and sales engineers make decisions on the local level to decentralize decision making and providing enterprise customers with local planning and engineering expertise to build out metro and WANs. By leveraging indirect channels, tw telecom has been able to boost the sales of its data and IP services throughout its U.S. network footprint.
These efforts were on display in tw telecom's Q2 2011 earnings report. During the quarter, data and Internet revenue grew 3.9 percent sequentially and 17.9 percent year-over-year, a factor that was driven by a 29 percent year-over-year increase in Ethernet and VPN-based products.
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