XO Communications may have set an ambitious strategy to extend fiber into more buildings in its growing territory, but the CLEC is taking a success-based approach on the building locations to extend its fiber.
This fiber expansion effort is part of an initiative the CLEC launched in 2014 to invest up to $500 million to grow its nationwide network.
With this plan in place, the service provider has completed fiber construction projects into nearly 550 enterprise buildings across 25 regional markets. XO has established direct connections in buildings in 11 other cities and regions: Boston, New York City, Washington, D.C., Atlanta, Houston, Dallas, Chicago, Denver, Southern California, San Francisco, and the Pacific Northwest, as well as other urban areas.
Chris Ancell, who took on the role of XO's CEO last year, told FierceTelecom that as it has increased its fiber footprint into new buildings across its territory, XO is seeing more businesses sign up for service.
"Across the business, we're seeing pretty good traction and activity and significant uptick in terms of the number of buildings we're doing versus what we have done in the past and month over month progress," Ancell said. "The program is all success-based so we're not building on spec and we have an algorithm we use to target buildings with factors like nearness of fiber, type of building, number of tenants, estimated telecom spend, and competitive providers already in the space."
Ancell added that all of the elements will "go into a scoring algorithm that says these buildings are good targets and then we'll activate the sales process to start talking to the tenants in those buildings."
Given the diversity of the markets it serves, XO is targeting a broad mix of buildings, including tall shiny multi-floor buildings in large metros where they can serve hundreds of customers.
Despite the allure of large skyscraper buildings, the other target where XO is seeing the most growth in is the suburban business parks where there's a string of four story buildings with an average of five to 12 business tenants.
"Tall shiny buildings and suburban business are the two predominant types of buildings where we're seeing the most success," Ancell said. "At least right now we wouldn't say one is dramatically better than the other."
In addition to seeing two types of building targets, Ancell said XO is seeing two different kinds of customers: those that want just plain Internet bandwidth, and those that want higher level unified communications services.
"What's also been interesting about this process is that the same ways you have these two types of target buildings, what we also see is two major types of how do you successfully approach the customer," Ancell said. "One of the ways is with a customer that's really looking for Internet bandwidth and a product like DIA and the other is the customer who is interested in a higher level service like unified communications."
Like other service providers, XO finds that the level of acceptance and understanding from building owners about bringing its fiber facilities varies.
On one hand, they have to educate some building owners on what is required while others have technical knowledge about how they want equipment and fiber to be placed in their buildings.
Although progress has been made over the past decade to penetrate more buildings, fiber was only available to 42 percent of U.S. buildings in 2014, according to Vertical Systems Group's latest figures.
"In some cases they're just anxious to have a fiber provider because there's a surprising number of buildings that still don't have fiber and only access mechanism is copper so in those cases the building owners are pretty happy because it can be used as a tenant draw," Ancell said. "What you also see is building owners with the rise of colocation more technically savvy in terms of what they expect in terms of where your gear will sit in the meet me room, but I don't think we have seen that's been surprising from business owners."
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