Competition in the U.S. Ethernet services market continues to heat up. While the top two telcos, AT&T (NYSE: T) and Verizon (NYSE: VZ) remain the dominant Ethernet services players, they face growing competition from CLECs and cable MSOs that are aggressively expanding their fiber footprints to serve SMBs and larger businesses.
Taking a cue from Vertical Systems Group's Leaderboard, which ranks the top eight Ethernet providers based on port share, we are addressing how the top Ethernet service players are performing in our new feature, AT&T, Verizon Ethernet dominance challenged by tw telecom, Cox and other competitors.
According to VSG, cable operators now make up 20 percent of the total U.S. Ethernet port base. However, they still trail incumbent telcos and CLECs, which have 47 percent and 33 percent of total U.S. Ethernet ports, respectively.
Leveraging a mix of their HFC and their growing fiber networks, cable MSOs are making waves not only with SMBs, but increasingly with regional medium and large multisite businesses in verticals such as healthcare and hospitality.
For at least the past six years, Cox and Time Warner Cable (NYSE: TWC) have been among the top eight Ethernet providers. Both have continually upgraded their network and service sets to stay competitive.
Time Warner Cable reported that Q2 2013 business services were $565 million. Meanwhile, Cox Business enhanced its fiber diet in its Tulsa market by announcing an agreement to acquire EasyTEL. Upon completion of that deal, its network in Tulsa will cover about 95,000 fiber route miles and connect over 21,000 buildings.
Although more regionally diverse than the cable MSOs, CLECs such as tw telecom (Nasdaq: TWTC) and XO Communications are aggressive with Ethernet service pricing. They can use lower prices and the promise of various higher speed upgrades to entice customers if they are delivering services over fiber.
One of the key differentiators for all Ethernet service providers is getting direct fiber service into buildings where their current and prospective customers reside. Competitive providers have been growing their fiber offerings via building out new facilities and acquiring other providers.
"Over time access with direct fiber is increasing as the prevalent method of connectivity," said Rosemary Cochran, principal of Vertical Systems Group, in an interview with FierceTelecom. "The cable companies and these competitive providers buying up fiber and having more fiber access capabilities is definitely is a leading indicator and the capabilities that customers want."
Take a look at our latest feature here.--Sean