As Windstream looks to grow its market share in the enterprise services space, the service provider has set a goal to reduce spending on special access fees to the ILECs like AT&T (NYSE: T) and Verizon (NYSE: VZ) where it does not have its own last mile network facilities.
Speaking to investors at Goldman Sach's 24th Annual Communicopia conference, Tony Thomas, CEO of Windstream, said that by adding more on-net buildings it will be able to take out $1 billion in additional costs it pays on wholesale access to deliver services to its multisite business customers.
"We think we have a large opportunity to optimize our existing $1 billion of interconnection spend through the elimination of duplicate circuits, including rightsizing those circuits," Thomas said. "I think that will be a sizeable opportunity for Windstream."
Under its plan, Windstream is focused on increasing its on-net fiber building footprint in five markets by the end of the year. It will initially spend $25 million on this program.
One of the first markets that will benefit from this program is Charlotte, N.C. By spending less than $200,000 the service provider can create a meshed network around the five existing network rings it has in place and build laterals off those rings to build last mile access.
"We'll replicate this several ways in five markets," Thomas said. "We have five markets slated to get going in 2015 and we'll be accelerating that effort in 2016."
Besides lowering its costs, the other benefit for Windstream in serving building out on-net fiber to more buildings, it will gain more opportunities to win more Ethernet access to IP VPNs service deals for large multisite customers.
"We're getting a program started and launched around the optimization because improving the enterprise margin is important to us and fiber is one of the tools that will enable you to get that accomplished," Thomas said.
Supporting its last mile building reach, Windstream is also enhancing its 100G long-haul network prospects for both enterprise and carrier customers, so much so that it has set forth a plan to add more fiber routes and entrance points to the network by the end of the year.
The 100G network will support not only its enterprise customer base, but also its growing wireless backhaul customer base that's adopting a mix IP and Ethernet-based services.
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