An Ignoble Experiment

Windstream (Nasdaq: WIN) may still have work to do to integrate Paetec's assets into its fold, but CEO Jeff Gardner says that they are ready to begin searching for assets that would complement its growing enterprise service business.

Gardner

"We're really at a time where we can start looking out at acquisitions again to accelerate this transformation focused on the enterprise space obviously," Gardner said during the Bank of America Merrill Lynch 2013 Leveraged Finance conference. "Our last four acquisitions were focused on the enterprise space."

Stopping short of naming any specific companies, potential acquisition targets could include more data center assets, particularly in the Western region of the United States.

"We have done a nice job growing our data center business organically, but we don't have many on the West Coast," Gardner said. "That strategy has been impeded a bit by the fact that the valuations on fiber companies and data center companies have been relatively high."

Gardner added that they have shifted their focus to grow those segments organically and "we have the opportunity to be more opportunistic."

In regards to the Paetec integration process, the last step that's left is to convert its billing systems and back office, which will take place next year.

Gardner said that this conversion will provide it with a differentiator over its competitors in the mid-market business space it serves.

"The main thing we have in front of us is related to our billing system and our back office," he said. "I think at the end of the day that's going to be a huge opportunity for us because very few large telcos have a single provisioning system from which to roll out services to their customers so what has been a challenge for us has the opportunity in 2014 to be a competitive advantage."

Gardner added these conversions will "greatly simplify" the process for its sales reps because they will be able provision services across one network.

For more:
- hear the webcast (reg. req.)

Special report: Sizing up the 25 most powerful people in the U.S. telecom industry

Read more about: Acquisition
back to top

2. Republican congressmen propose update to 1996 Telecommunications Act

By Sean Buckley

Comment |

Two House Republicans have proposed plans to update the 1996 Telecommunications Act by 2015 in an effort to reflect new technologies and innovations that have emerged since it was passed 18 years ago.

Congressmen Upton and Walden hosted a Google Hangout Tuesday to discuss updating the 1996 Act. View the video here. (Source: YouTube / Google)

House Energy & Commerce Committee Chairman Fred Upton (R-Mich.) and Communications Subcommittee Chairman Greg Walden (R-Ore.) outlined their ideas during a Google Hangout event on Tuesday.

The two lawmakers said that the process of updating the act would include a series of hearings, white papers addressing how to improve existing communications laws, and getting the public's input via the Twitter hashtag #CommActUpdate.

Upton and Walden were joined by former FCC Commissioner Robert McDowell, who said the process will take a number of years to complete.

A number of major telcos, including CenturyLink (NYSE: CTL), applauded the effort.

"How people communicate has changed dramatically over the two decades since the laws were last amended, as has the competitive marketplace," said Steve Davis, executive vice president for Public Policy and Government Relations for CenturyLink. "By taking action to modernize current law and eliminate unnecessary regulation, this reform will help foster innovation and investment across every telecommunications sector, encouraging the development of new, faster services at lower costs for consumers."

Absent from the hangout were any Democratic representatives. Rep. John Dingell (D- Mich.) said that while he supports reforming the Act, it needs to be done carefully.

"As the author of every major telecommunications statute for the past three decades, I caution my Republican colleagues to approach modernizing the Communications Act with great care and attention to detail," he said in a statement. "Changes should not be made simply for change's sake, but rather based on clear and documented need. I urge my colleagues to proceed in a bipartisan manner and to hold numerous hearings in order to generate the record an undertaking this substantial will require."

There are a number of key issues the reforms will have to address, including the ongoing migration from TDM to IP and special access, which have become hot-button issues of debate between competitive service providers and incumbent telcos such as AT&T (NYSE: T).

For more:
- see the release
- here's the hangout link
- The Verge has this article

Special report: They're cooked: The top wireline turkeys of 2013

Read more about: FCC, Google
back to top

3. tw telecom joins CLEC battle against AT&T's special access proposal

By Sean Buckley

Comment |

tw telecom (Nasdaq: TWTC), one of the largest competitive service providers, followed the route of other CLECs and asked the FCC to deny AT&T's (NYSE: T) proposal to eliminate certain long-term contracts that offer pricing discounts on TDM-based special access circuits it uses to connect business customers to its network.

As one of the largest competitive service providers, tw telecom has built out a sizeable network that includes 30,000 route miles of fiber. But that network doesn't reach all of its customers.

Like other CLECs such as Windstream (Nasdaq: WIN), tw telecom still has to lease DS1 and DS3 circuits from third party providers like AT&T to accommodate its customers' needs. In many cases, AT&T is the only ILEC they can rent these last mile facilities from. Eliminating long-term contracts will eliminate the contract associated with tw telecom as well.

Mike Rouleau, senior vice president of Business Development and Public Policy for tw telecom, said that if AT&T gets it way they will be forced to raise the prices of the services it provides.

"If these proposed tariff revisions were to take effect, we would have no choice but to seek increases to the retail prices we charge our customers in AT&T's incumbent LEC footprint," he said in a release.

According to industry estimates, AT&T and fellow ILEC Verizon (NYSE: VZ) jointly own about 80 percent of the special access market today.

AT&T argues that it is eliminating long-term contracts on TDM-based circuits because it is going to shut down its TDM network by the year 2020.

tw telecom has asked the FCC to "prohibit AT&T from implementing its proposed price increases by eliminating long-term contracts and pricing plans until the FCC has resolved its ongoing proceedings examining AT&T's market power over special access services--including Ethernet services--and the appropriate transition to IP-based networks."

Although the FCC has been investigating special access reform for over a year, the regulator has yet to issue a decision on AT&T's proposal.

For more:
- see the release

4. NTT's Dimension Data acquires NextiraOne, bolsters European presence

By Sean Buckley

Comment |

Dimension Data, an NTT subsidiary that provides ICT services and solutions, is enhancing its reach into Europe by striking a deal to acquire NextiraOne in a two-part transaction. Financial terms of the acquisition were not revealed.

Under the terms of the agreement, Dimension Data will initially acquire NextiraOne's operations in 13 countries: Austria, Belgium, the Czech Republic, Germany, Hungary, Ireland, Luxembourg, the Netherlands, Poland, Portugal, Slovakia, Spain, and the United Kingdom. In the second tranche, the company will acquire NextiraOne's businesses in France and Italy.

After gaining approvals from the EU Competition Commission under the EUMR (EU Merger Regulation), Dimension Data expects that the acquisition will be completed early next year.

The deal gives both Dimension Data and its parent NTT a broader set of solutions including IT security and unified communications services. It will also gain a key service in NextiraOne's data center business, which grew 21 percent year-over-year during the first six months of 2013.

Dimension Data will also be able to leverage NextiraOne's base of vendor partners including Alcatel-Lucent (NYSE: ALU), Cisco (Nasdaq: CSCO), Genesys and Microsoft (Nasdaq: MSFT).

For more:
- see the release

Read more about: Acquisition, Unified Communications
back to top

5. BT held liable for infringing on ASSIA's DSL patents

By Sean Buckley

Comment |