An Ignoble Experiment

Windstream is aware that the pending Comcast-Time Warner Cable merger could potentially have implications in the competitive business market, but in the near-term the hybrid telco/CLEC says it will have the upper hand in the multi-site enterprise market where cable has little experience in serving.

Gardner

Speaking to investors during the Sanford C. Bernstein Thirtieth Annual Strategic Decisions Conference, Jeff Gardner, CEO of Windstream, told investors that cable will continue to focus most of its attention on the small to medium (SMB) business space.

The customers that cable is chasing typically spend less than $750 a month. Unlike the larger enterprise space, SMB customers usually require a phone line and some data but not the managed services that Windstream provides.

"As far as Comcast-Time Warner, [it's] an enormous deal in our space, and yes, it will have implications," Gardner said, according to a Seeking Alpha transcript. "The good news is I don't really think it will change their focus in the short run. They will still be focused on the small business side. That's where both companies have been focused to date."

While Comcast will have a lot to do in terms of integration of operations and divesting assets if the merger is approved, it will have a greater set of assets, particularly a fiber network, to compete for larger business accounts. This means that Windstream will continue to sharpen its skills to deliver IP and managed services.

"They'll get better," Gardner said. "And so it's incumbent upon us to really focus over the next 15 to 24 months, as they are preoccupied with this large transaction and all the challenges that a big merger like that brings, to really continue to improve our game, to get better at that enterprise space so that we're well-positioned with our customers as they get better in this space."

Cable's presence in the business market should not be overlooked.

During the first quarter both Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) reported strong gains in their business revenues. Comcast Business Services revenues rose 23.9 percent to $917 million. Likewise, Time Warner Cable reported business revenues rose to $402 million due to increases in high-speed data and voice subscribers, organic growth in cell tower backhaul revenue and $29 million of revenue from its acquisition of DukeNet.

Besides competing for business dollars, Gardner said the other issue is how this mega-deal will affect its current wholesale relationship with Time Warner Cable. Windstream uses a mix of other telco and cable operator facilities to reach customers where it does not have its own network facilities.

"There are a couple of things that we need to be concerned about with this merger because as a competitive player, we rely on other partners to really offer our services to our customers," Gardner said. "And so today, Time Warner is a big partner for us, Comcast is not as involved in the wholesale side of the business so that's going to be an important issue for us to watch as this unfolds and I think it's important that, again I said, for all of us to be successful and serve our customers well, we have to work together."

For more:
- see the transcript (sub. req.)

Read more about: Wholesale, Comcast
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2. Verizon says migrating customers to fiber will provide a better phone service experience

By Sean Buckley

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Verizon (NYSE: VZ) is wasting no time firing back at critics who say its plan to retire copper facilities in Ocean View, Va., and Belle Harbor, N.Y., is going to cause harm to consumers.

The service provider said that customers in these two wire centers--which cover over 15,000 homes--have either moved to Verizon's fiber-based FiOS services or abandoned their POTS service for a cable operator or VoIP competitor.

Today, only 40 area homes remain on the copper lines. According to a series of filings it made with the FCC this month, Verizon said that area's copper wire service will be shut down by Nov. 1.

"Completing the migration to Verizon's more advanced and reliable fiber facilities, and retiring the legacy copper loops and the switches in these wire centers, is not just a logical and efficient step, but it is also an incremental one," wrote Verizon in an FCC filing. "There has been no valid objection to the copper retirement filed by customers living or working in these areas or by providers serving them, and no request for an extension of time made."

Verizon said that the majority of the consumers who have remained on copper-based services in these two wire centers only purchase POTS service, but added that when it retires the copper at these two facilities, there will be no change to the service.

"There is no change in the underlying features and functionalities in their service: voice mail, collect calling, and other features will continue to work just as they did over copper; customers will continue to be able to use fax machines, medical monitoring devices, and home alarms; and accessibility services – such as relay services used by customers who are deaf or hard of hearing – also will continue to work as before," wrote Verizon. "There will be no change to customers' ability to call 911: public safety answering points will receive the same E911 information as before."

Verizon also struck out at Comptel, a competitive industry association, in a separate filing. Earlier this month, Comptel asked the FCC to suspend copper retirement rules because it claims that the rules are "insufficient to protect the public interest."

"In particular, they only provide for notification that the copper loop will no longer be available for competitive services without ensuring an alternative form of access to last mile facilities," wrote Comptel in an FCC filing. "This creates substantial harm, particularly to small and medium size businesses that rely on competitors to provide the affordable broadband services they need to run and grow their business. We proposed that the Commission could suspend its copper retirement rules, pending its modification to the rules as described above and in more detail in COMPTEL's April 2 proposed managerial framework."

However, Verizon says that Comptel's request would actually discourage large telcos like itself and AT&T from making investments in next-gen technologies.

"Comptel seeks to unfairly and unlawfully restrict one set of providers' ability to determine the technologies to use to serve their customers, in blanket contradiction to the Commission's already established rules and findings," wrote Verizon in its FCC filing. "Suspending the copper retirement rules would effectively require incumbent LECs – and only incumbent LECs – to continue to maintain redundant or outdated facilities that they do not need to serve their customers."

Regardless of the criticism it faces, Verizon's move to drive customers off of copper to fiber has been a major initiative for the company. It claims the copper to fiber migration enabled it to reduce repair time and maintenance costs.

During the first quarter, the service provider said it migrated 78,000 of what it calls "chronic" copper customers to fiber, a move that it says enables it to upsell customers enhanced service and reduce maintenance costs.

For more:
- see Verizon's blog
- here's Verizon's New York filing
- here's Verizon's copper retirement filing
- and Comptel's filing

Read more about: Comptel, Ilec
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3. FairPoint brings 1 Gbps Ethernet to 32 New England markets

By Sean Buckley

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FairPoint Communications is bringing its new 1 Gbps speed Ethernet services to 32 markets across its New England serving territory of Maine, New Hampshire and Vermont.

Available to more than 35,000 eligible locations, FairPoint's Ethernet Private Line and Ethernet Dedicated Internet Access (DIA) products are targeting a host of large businesses such as regional healthcare facilities, financial institutions, government agencies and local school districts and colleges.

One of the beneficiaries of the new 1 Gbps speed service is the New England Telehealth Consortium (NETC), a three-state consortium of more than 300 healthcare facilities. In 2012, FairPoint won a four-year, $16 million contract to provide connectivity for the NETC.

"We offer each location speeds up to 1 Gigabit, fostering the connections needed to meet the industry requirements for fast, reliable bandwidth," said Jim Rogers, president of ProInfoNet and the founder of NETC, in a release.

Having a 1 Gbps option is another element that FairPoint can use to potentially differentiate itself from cable operators like Comcast Business and emerging competitive providers such as FirstLight, which has been growing its network presence throughout northern New England. FirstLight began offering its Ethernet Access service across its entire footprint targeting its wholesale customers.

Ethernet services continue to be a major source of growth for FairPoint.

In the first quarter of 2014, Ethernet contributed about $19.9 million in revenue, up from $14.9 million a year ago, as retail and wholesale circuits grew 56.6 percent year-over-year.

For more:
- see the release

Related articles:
FairPoint Ethernet service revenues rise to $19.9M on strong retail, wholesale sales
FairPoint expands Ethernet, hosted PBX service reach in Maine
FairPoint adds CoS, Layer-2 control features to its wholesale Ethernet service line
FairPoint's data and Internet services revenue grows 13% to $42M, partially offsets legacy losses

4. TDS brings broadband service to more households around Wyandotte, Okla.

By Sean Buckley

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TDS is putting broadband into the hands of more residents in the Wyandotte, Okla., area by completing part of its American Recovery and Reinvestment Act (ARRA) stimulus-funded broadband Internet project.

When construction on the stimulus-funded project wraps early this summer, about 225 residents will be able to get access to a broadband connection.

The service provider is laying fiber cabling and installing four remote terminals (RT) that will house necessary network electronics through its Oklahoma Communication Systems company to provide broadband access to more residents and businesses.

This is just one of three projects the telco is conducting in Oklahoma. It recently completed a project around Kellyville, Okla., that will offer nearly 900 residents, including subscribers who live around Cyril, Elgin, Fletcher and Inola, a broadband connection.

Similar to other areas where it is in the process of completing broadband stimulus projects, the telco will alert area residential and business customers when service is available to their locations.

By using the ARRA stimulus funding, TDS said it has expanded broadband service to more than 28,000 households across the U.S.

For more:
- see the release

Special report: TDS' stimulus program will breathe broadband life into 27,000 rural households

Read more about: Fiber Broadband, Oklahoma
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5. CenturyLink raises unlisted phone rates to $5 a month in Washington state, cites growing competition

By Sean Buckley

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