Windstream's Gardner: IP transition should recognize difference between enterprises and consumers

LAS VEGAS--Jeff Gardner, CEO of Windstream (Nasdaq: WIN), recognizes that while residential consumers have a number of service options, the enterprise market is still evolving.

Jeff Gardner Winstream


Speaking at the COMPTEL Spring 2014 Convention & EXPO trade show, Gardner said that regulators and policy makers in Washington, D.C., need to better understand how the proposed TDM-to-IP transition proposed by AT&T (NYSE: T) will affect business customers.

Like other traditional wireline telcos, Windstream continues to lose voice access lines every quarter. It ended the fourth quarter of 2013 with a total of 1.75 million lines. This is due consumers ditching their landline phones for alternatives, including cable operators, over the top providers like Vonage (NYSE: VG), or using just a wireless phone.

Today, only 25 percent of consumers purchase home telephone service from the local incumbent phone company, down 85 percent from 2005.

"There's tons of competition in the residential market from cable providers and wireless providers so it's a hugely competitive market," Gardner said.

Gardner added that his key concern is that congressional leaders focus too much on how competition has evolved in the residential market.

"Oftentimes the people in D.C. fixate on residential, but as we all know the enterprise business is very different," he said. "What I am proud about at Windstream today is we have deep relationships with telecom partners via our wholesale business where we provide fiber to the tower, Ethernet access up to 100 Gig, and I think that the folks in D.C. need to pay attention to those differences."

Two of the key issues that any IP transition needs to address are access to last mile facilities and the ability to interconnect with other providers. Although Windstream has built out a sizeable copper and fiber network, it still has to purchase last mile access from other ILEC partners like AT&T (NYSE: T) and Verizon (NYSE: VZ) when serving a customer location that's out of their respective region.

"None of us can provide 100 percent services to our customers without partnerships with other carriers and I think this transition needs to be handled carefully," Gardner said. "When you look at some of the markets there's a competitor there, there's an incumbent player there, and the cable company is out there, but the cable companies are still focused on small business customers."

What sets Windstream apart from its ILEC brethren is that it operates as both a traditional ILEC and as a CLEC.

Being a hybrid player, the service provider wants to play a role in the IP transition trials that AT&T announced it would launch in Alabama and Florida.

"Whether you're talking about AT&T, Verizon or CenturyLink (NYSE: CTL), we're a very big partner with all three of those companies, and we bring a lot to the table in terms of bringing up the issues that need to be addressed with this transition," Gardner said. "You worry about one company running this trial, but it has to be all of us because the ecosystem is complicated."

Outside of AT&T, Windstream has been working with other competitive carriers about the potential issues surrounding the IP transition. In February, it joined tw telecom (Nasdaq: TWTC), XO Communications, EarthLink (Nasdaq: ELNK) and others to talk to the FCC about the IP transition, copper retirement and special access reform.

According to an FCC filing, these competitive providers talked to the regulator about what would be the next steps as it reviewed the legal and policy issues "to ensure that consumers continue to have competitive options during and after the technology transitions."

For more:
- see this FCC filing

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