Windstream tightens up third-party interconnects in bid to streamline costs, expand on-net footprint

Windstream is tightening up its interconnection points, weeding out unnecessary third-party circuits with other carriers to streamline costs and focus on expanding its on-net footprint, a senior executive said.

"The DS-3 displacement opportunity for us is really going into markets where we have redundant networks from legacy acquisitions and re-architecting how we're serving customers within those locations and driving out excess capacity of DS-3s and above," said Bob Gunderman, CFO of Windstream, in a presentation at the Barclays 2016 High Yield Bond Conference. "If you have lots of capacity in one point of presence versus other places there's a lot of opportunity to reduce costs."

Windstream grew its connectivity to business customers through acquisitions of other providers like NuVox, but those deals came with a number of interconnection circuits the service provider no longer needs.

Another cost-cutting opportunity for Windstream, Gunderman said, is to look at ways to reduce backhaul costs from the customer premises onto its own network.

"The next category is capping locations within the network and driving out costs, including utilities costs and any other costs that are in the backhaul of the network to, really, where we are optimizing market by market," Gunderman said. "We spend several hundred millions on network access costs so we're really starting to gain some momentum."

At the same time, the service provider continues to expand its own fiber network to more buildings in its territory. Earlier this week, Windstream announced that it expanded its metro fiber network in the Nashville area to address local businesses on its own infrastructure.

Nashville is just one of several markets where Windstream is expanding its metro fiber network directly to serve more businesses over its own network. This year alone the service provider expanded its metro fiber network in the Richmond, Virginia area as well as Charlotte, North Carolina. Additional fiber network expansions are also planned for Atlanta, Minneapolis, Chicago, Cleveland and Philadelphia for 2016.

Windstream's moves to streamline its third-party access costs and expand its on-net fiber footprint come at a time when the FCC is continuing with its review of the special access market.

Gunderman said that while Windstream is encouraged by the FCC's actions, it will take time to determine what the actual outcome will be.

"We're pleased with the progress that's being made, but it's hard to know where things will play out," Gunderman said. "We're optimistic that it will gain some momentum and we're very supportive of reform."

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Windstream says consolidating network interconnection agreements will lower third-party access costs

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