An Ignoble Experiment

AT&T (NYSE: T) is feeling encouraged by its initial rollout of its 1 Gbps fiber-based broadband service and a more favorable permitting process from local communities.

Stephens

AT&T CFO John Stephens told investors at the J.P. Morgan Global Technology, Media and Telecom Conference that these factors are making it more bullish about the opportunity to potentially extend service into new markets outside of Austin, Texas.

Like other telcos, AT&T needs to get permitting approval from local communities to get access to necessary rights of way (ROWs) along public streets and utility poles to lay fiber and install related network electronics.

"In Austin, we were able to do a success-based build with some of the new streamlined permitting, right of way easement processes," Stephens said. "What we have seen is great adoption by our customers of high-speed products, strong customer satisfaction scores and appreciation for the product."

The early success and acceptance of the Gigapower service in Austin combined with its ongoing U-verse broadband expansion efforts has driven the telco to consider deploying FTTH in other markets.

In April, the telco announced that it would expand its fiber network to up to 100 of what it calls candidate cities and municipalities nationwide, including 21 new major metropolitan areas.

Earlier the telco was engaged in advanced discussions with the North Carolina Next Generation Network (NCNGN), a regional initiative focused on stimulating the deployment of next-generation networks to North Carolina.

"Because we had plans to put more U-verse out there, we decided to accelerate the announcement of our willingness to do Gigapower so we could redirect the U-verse dollars to Gigapower and be efficient that way," Stephens said. "We will just jump from historical technology or assets we have to Gigapower in one step as opposed to doing it in two by first going to U-verse and then going to Gigapower."

In addition to Dallas, AT&T will work with other local government agencies to drive efficiencies in gaining rights of way, easements and permitting.

Unlike the initial days when it began rolling out its U-verse product in 2005, Stephens said that communities are now more willing to work with AT&T to bring value-added broadband services to their residents and business owners.

"There's a change in the view of us and of them that they really desire this service for as many of their citizens as possible as opposed to being willing to deny it to citizens unless someone is willing to just build the capabilities to everybody," he said. "Secondly, there's a realization that the economics that building it everywhere does not make economic sense and a company can't afford to do that so the city's realization of that makes it much easier to get things going and move forward with it."

Although he did not specifically mention Google Fiber (NASDAQ: GOOG), Stephens added that the streamlined permitting process that companies like that have gotten to deploy fiber-based broadband has helped AT&T in working with local government agencies.

"To some extent some of the other participants have caused that to happen that don't have the legacy regulatory relationships that we have," Stephens said.

For more:
- listen to the webcast (reg. req.)

This week's sponsor is the CVx ChannelVision Expo.

2. Windstream's Gardner: TDM-based wireless backhaul revenue headwinds to continue throughout 2014

By Sean Buckley

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Windstream has been one of the most aggressive telcos rolling out fiber and Ethernet to cellular towers, but like other wireline providers, it continues to weather a tough revenue storm as its customers migrate off TDM circuits.

Gardner

Speaking at the J.P. Morgan Global Technology, Media and Telecom Conference, Windstream's CEO Jeff Gardner said that although it will continue to see cannibalization of TDM revenues throughout 2014, the demand for wireless data is creating a robust opportunity for its wholesale business.

"Wireless data is growing incredibly fast across the country so that's the good news about the fiber to the tower story," Gardner said. "We are now substantially complete; we have invested $600 million in our fiber to the tower projects."

The telco is nearing the end of its wireless backhaul deployment initiative, having completed 4,700 of 5,200 towers in its region. It has another 300 under construction.

Last year it spent $185 million on FTTT projects, but this year it plans to spend only $85 million.

Wireless backhaul migration challenges were on display in its first-quarter earnings due to more customers migrating off of legacy copper-based circuits and related network transport grooming. These factors drove down carrier revenue 3 percent to $162 million. However, the overall decline was partially offset by fiber to the tower revenue growth.

"What you saw show up in our quarterly results is a lot of headwinds," Gardner said. "As these carriers is turn up their transport to the towers, they also turn down their TDM circuits so we saw some aggressive grooming of networks in the first quarter."

One area of growth that Windstream will benefit from is now that its wireless operator customers have fiber at their towers, they are asking for higher increments of bandwidth.

"The good news is if you look at the end game in terms of what it looks like, these companies that signed up originally 50 Mbps of service for their fiber to the tower investments have quickly turned that up," Gardner said. "That fiber activity is really ramping up quickly so once you get the noise out around these TDM disconnects, you'll see that it's a fast growing wireless data business."

Despite the short-term TDM-to-IP migration challenge, the telco expects the tide to begin turning in 2015.

"I think that in 2014 there's still going to be some headwinds on the TDM disconnects, but that will be worked out," Gardner said. "In 2015 you should see more of what I would call organic growth that's more consistent with the data increases you're seeing around the country."

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

Read more about: Cellular Towers, Carrier Ethernet
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3. Level 3, Equinix pact addresses need for secure path to the cloud

By Sean Buckley

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Level 3 Communications is giving business and government customers another way to migrate into the cloud by integrating the Equinix Cloud Exchange into its Cloud Connect Solutions ecosystem out of 80 of Equinix's data center locations.

Customers that want to deploy global public, private and hybrid cloud solutions will be able to access Equinix's International Business Exchange (IBX) data centers on four continents.

A key part of this agreement is it takes the guesswork out of the business customers' hands as they look to apply cloud services inside their organizations.

"By combining Level 3's network with the Equinix Cloud Exchange, we are making it easier for our customers to grow and improve the efficiency of their business operations with access to a broader range of cloud services," said Anthony Christie, Level 3's chief marketing officer. "With pre-established network-to-network interfaces (NNIs) from Level 3 to Equinix, combined with Level 3's dynamic bandwidth capability, customers can quickly turn up and scale their cloud solutions."

Although Level 3 has been building a sizeable cloud service business itself, working with Equinix will help it address its customers' needs to support applications and workloads distributed globally across Equinix data centers and the multiple cloud services available through the Equinix Cloud Exchange. And since many businesses aren't immediately ready to put all of their applications into the cloud, they will be able to build a hybrid cloud environment.

Level 3's agreement with Equinix is just one of a number of initiatives it has taken to broaden its cloud capabilities by working with partners.

In April, the service provider announced a partnership with Digital Realty Trust where it will provide the data center provider's customers in 14 U.S. and European markets access to its growing base of cloud service partners including Amazon (NASDAQ: AMZN) Web Services (AWS Direct Connect) and Microsoft Azure (NASDAQ: MSFT) (ExpressRoute), for example.

For more:
- see the release

4. CenturyLink lights up Minneapolis-St. Paul data center, addresses growing cloud, colocation needs

By Sean Buckley

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CenturyLink (NYSE: CTL) has added Minneapolis-St. Paul to its growing roster of data center locations, a move that it says will help it address the region's growing demand for colocation, cloud, managed hosting and network services.

Known as MP2, the new center as previously reported will support 4.8 megawatts of IT load on 100,000 square feet of raised floor space. Initially, it will offer 1.2 megawatts of power and 13,000 square feet of raised floor space.

Located in Shakopee, Minn., MP2 is a multitenant Tier III-constructed data center certified by the Uptime Institute and holds gold certification status from the U.S. Green Building Institute's Leadership in Energy & Environmental Design.

This is the second data center CenturyLink Technology Solutions will operate in the Minneapolis-St. Paul region.

The service provider said MP2 will enable businesses to deploy hybrid cloud solutions that leverage network, colocation, managed hosting and managed services. In addition, customers will have access to CenturyLink Technology Solutions' ClientConnect, an online gateway that expands their capabilities by locating, connecting and sharing services with other businesses residing across its global data center footprint.

Besides Minneapolis, CenturyLink is expanding its data center presence in seven other U.S. and European markets including: Phoenix; Weehawken, N.J.; Sterling, Va.; Irvine, Calif.; Toronto; Reading, England; and Chicago. Upon completion, the service provider will have a total of 180,000 feet of additional data center space.

Introducing the new data center comes at a time when CenturyLink continues to see strong revenue growth in the data hosting segment.

In the first quarter of 2014, CenturyLink reported that data hosting operating revenues rose 6 percent to $354 million year-over-year. A key part of that segment was managed hosting where revenues rose 12.7 percent to $142 million year-over-year, and colocation revenues were $158 million, up 3.3 percent over the same period a year ago.

For more:
- see the release

Read more about: data center
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5. Lightower bolsters Greater Baltimore presence with 270-mile network extension

By Sean Buckley

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