Sizing up the competitive shifts at COMPTEL Fall 2011

Sean Buckley, FierceTelecomNow that this year's fall COMPTEL Plus show in Orlando, Fla. is behind us, I thought we'd take the time to take a look at some the trends we saw during the show.

As has been the case in previous COMPTEL shows, the competitive telecom industry has been in a constant state of change.

In the past year, the competitive telecom market has been driven by the continual entrance of more players, including aggressive moves by cable operators and independent ILECs such as Comcast (Nasdaq: CMCSA) and Windstream (Nasdaq: WIN) to take a bigger chunk of the business market via targeted acquisitions.  

With a focus on business and wholesale services, the event, which organizers said bought in 2,000 attendees, had four trends that were dominant throughout the three days: 

  • Cable upped its presence: Seeing an opportunity to stretch beyond their consumer roots, cable operators continue to become a greater competitive threat in the competitive business service market. While they did not make any formal announcements at the show, Charter Business (Nasdaq: CHTR) and Time Warner Cable Business Class (NYSE: TWC), in particular, both had a greater presence at the show serving as sponsor and exhibitor, respectively. Driven by strong gains in high speed data, wireless backhaul and voice, Time Warner Cable reported $361 million in commercial revenues in Q2 2011. Likewise, Charter reported that its commercial revenues grew 17.5 percent in the quarter to $141 million. 
  • Indie ILECs play up Ethernet: While the large U.S. and international incumbent telcos are the dominant Ethernet providers, Tier 2 ILECs, notably FairPoint (Nasdaq: FRP) and Frontier (NYSE: FTR) were making new noise in the Ethernet market. FairPoint launched its wholesale E-Line service to serve its New England-based wireless operators and CLECs, while Frontier expanded its Ethernet service suite to 55 markets. With a focus on smaller markets--like Gardnerville, Nev. in Frontier's case--these Ethernet launches illustrate that there's a potential opportunity to target secondary markets that larger carriers aren't aggressively focusing on today.
  • Wireless backhaul, low latency momentum continues: As AT&T (NYSE: T), Sprint (NYSE: S) and Verizon (NYSE: VZ) look for alternative competitive and incumbent wireline carriers, incumbent operators like CenturyLink (NYSE: CTL), Windstream and Frontier in addition to new wireless backhaul specialists like Tower Cloud vying for a piece of their business. Tower Cloud, for one, raked in $49 million of funding and expanded its Atlanta network to serve three large wireless operators. Of course, one of the highly anticipated contracts that will likely have an immediate impact on the wireless backhaul industry segment will be what wholesale service providers Sprint chooses for its latest wireless backhaul drive. In addition to wireless backhaul, the low latency land rush was in full force as Sidera, Spread Networks and First Communications all launched expansions of their network offerings for financial firms and other high end enterprise and carrier customers.
  • M&A chorus continues: Consolidation continues to be an ongoing theme in the competitive telecom industry, and this year's fall show confirmed that trend is very much in play. Three deals of note during the show came from Windstream, Level 3 (Nasdaq: LVLT) and Zayo. While Windstream patiently awaits the closing of their deal with PAETEC (Nasdaq: PAET) by the end of this year, Level 3 completed its acquisition of Global Crossing. What's more, rumors have emerged that Level 3 could make a higher bid to acquire PAETEC. Only two days after the show ended, competitive wholesaler Zayo crafted a deal to purchase 360networks, a deal that will give it greater intercity fiber network spanning the central and western United States.

And while the players in the competitive telecom industry continue to evolve, the drive for choice amid the competitive telecom landscape, especially in the wholesale and business markets, will remain constant.--Sean