A recent FierceTelecom review of the first quarter results for U.S. ILECs highlights important trends for enterprises, and potential pitfalls from relying solely on this roundup. This is a year of transition and transformation as service providers are realigning their technology strategies and assets.
AT&T is on track to move 30 percent of its network functions to software by the end of 2016. For enterprises, this transition promises a simpler alternative to buying, configuring, and testing individual proprietary network appliances. Software instances of appliances or virtual network functions (VNFs) can be downloaded and deployed within the network, for data centers or remote offices.
Verizon sold its wireline assets in California, Florida and Texas to Frontier Communications, and now Verizon is working to acquire XO’s fiber network. If regulatory authorities allow the deal, Verizon will be able to dramatically expand Ethernet services for businesses and gain new backhaul capacity for its small cell wireless network.
Frontier Communications’ acquisition of Verizon’s 3.7 million voice connections and about 2.2 million broadband customers has doubled its wireline footprint. However, customers in all three states have complained of service outages and network issues since transitioning from Verizon to Frontier in April.
CenturyLink is looking for ways to avoid investing more in its co-location business whose revenue is shrinking, and cut its costs. Windstream has been making progress enhancing its last mile consumer network, building fiber to more business buildings, and opening more long haul routes for its wholesale business.
This is where enterprises need to consider how an ILEC market roundup addresses their needs.
First, the majority of providers in the review fall below one billion in annual revenue. Enterprises should include the smaller providers when bidding to get competitive rates for services. Telecom managers must partner with sourcing teams to ensure that smaller local providers are invited to quote for new business and evaluations of current services.
Second, enterprises need to maintain healthy relationships with the top five providers because AT&T, Verizon, CenturyLink, Frontier and Windstream are key players. They must also avoid the pitfall of getting too close; the largest providers shouldn’t get complacent or think that they will not have to compete for legacy business.
Third, this review states upfront that it focuses on ILECs or the former Bell Operating Companies (BOCs). This is fine, but enterprise networks rely on a wide range of other providers that are not included in this review. ILEC industry roundups are interesting, but telecom managers need to be sure that sourcing, IT, and executives realize that cable firms and other providers are also part of the ecosystem of service providers that enterprises use.