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Doing the Dirty Work Pays Off

Carol Wilson
3/27/2014
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The past 12 months have been a heady period for tw telecom, as the US competitive services provider has garnered awards from Light Reading, Atlantic-ACM, and others, in addition to being recognized by Vertical Systems Group as the top CLEC providing business Ethernet services in the US. (See Light Reading Announces 2013 Leading Lights Winners.)

But the single greatest honor probably came last week when tw telecom inc. (Nasdaq: TWTC) was named to Forbes's 2014 list of America's Most Trustworthy companies, one of 100 firms so honored.

Only two other telecom entities were named -- U.S. Cellular Corp. (NYSE: USM) and Shenandoah Telecommunications Co. (Nasdaq: SHEN) -- and tw telecom's rating of 96 out of 100 on the composite scoring put it higher up the ranking than those two.

Purely by coincidence, tw telecom's CEO, Larissa Herda, had granted Light Reading an interview on the day after the Forbes news broke, and while she was still feeling some of the euphoria of that honor, Herda was also willing to get back down into the weeds to explain her firm's recent success.

She sees the Forbes award as recognition of her company's commitment to customer experience -- "something we as an industry haven't always been good at," Herda notes -- and ties that into one of tw telecom's major technical accomplishments of 2013, its E-Access service for wholesale Ethernet, and its dynamic capacity services for enterprises. (See 2013 Leading Lights Finalists: Most Innovative Enterprise Service and 2013 Leading Lights Finalists: Most Innovative Ethernet/Optical Service.)

tw telecom CEO Larissa Herda

"What we have been trying to do is give our customers as much visibility and control of their network as we can," Herda says. "Generally speaking, in everything we do, we are thinking about how we can make it easier for our customers to do business with us."

Doing the "hard, dirty work"
That sounds a bit like typical CEO-speak, but she goes further in her explanation, tracing back the current success to some tough decisions tw telecom made eight years ago, when it was in the process of growing through a series of acquisitions.

Having survived the telecom meltdown of the late 90s and the recession of the early noughties, tw telecom had just purchased Xpedius Communications, a Missouri-based fiber optic network operator that bloomed in the wake of the Telecommunications Act of 1996. Her firm paid $531 million, more than half in stock, to Thermo Capital Partners, a private equity firm, to acquire a metro fiber network in 30 states and 75 markets, including Washington, D.C.

"They were a compilation of a bunch of companies owned by a private equity company," Herda says. "We got this magnificent network that we have been able to really capitalize on."

But tw telecom decided it wouldn't just add Xpedius to its current mix. Instead, the company decided to shut down its new product pipeline and even allow some customers (those deemed unprofitable) to disconnect, while it invested heavily in moving the data from its networks into a single network data system.

"It was hard, dirty work, because you have to do things with customer data that impacts how that data comes together into a new system, and for the first six months, while we went through this painful transition, our customer service levels were affected. But we knew we had to take a step back."

Sorting through customer records and applying exacting standards such as whether to use "street" or "st," avenue or "ave," road or "rd" to create a single clean set of records, also put tw telecom 18 months behind in new product development, forcing the company to play catchup with competitors. Some long-time customers noticed the impact on customer service, and Wall Street noticed the lack of new products and revenues.

Herda and her team then made the decision not to cut capital spending or do sweeping layoffs when the recession hit in 2007, and those decisions also frustrated investors, she says.

"We had the same management team in place from the first recession, and we saw then that when we stopped investing, it took us five years to get back to top line revenue growth," she says. "We took those learnings and applied them to our decision-making during this recession."

As a result, tw telecom was hammered in the investment community and saw its stock fall to $4 a share. Fortunately for the company, everyone's stocks were falling at the same time -- and it turned out the bets tw telecom made in clean data positioned the firm to roll out new products such as dynamic capacity.

Next page: Taking the next steps

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Leo Zancani
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Leo Zancani,
User Rank: Light Beer
7/7/2014 | 4:52:43 AM
Re: SDN and NFV: Automation avalanche will hate dirty data
Carol,

I couldn't agree more. A significant number of Ontology Systems' engagements in the telecomms sector have been a direct result of struggles associated with the impact of data integrity on the forward motion of large technology projects.

As you also note, one might imagine that these effects would be entirely predictable, and therefore planned for - yet it seems that they ambush projects every time.

I often wonder whether part of the problem is that the discourse around data integrity and governance still seems to be heavily centered on the internal integrity of individual data silos (or worse, on the integrity of individual fields within those silos, such as addresses). This has the effect of sidelining the issue of integrity *across* data sources, which is of course also much harder to solve, but absolutely essential in an environment where every business process involves data from multiple sources.

I suspect from some of the quotes in the article that TW Telecom realised this and acted accordingly.

 

 
Carol Wilson
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Carol Wilson,
User Rank: Blogger
6/30/2014 | 8:08:30 AM
Re: SDN and NFV: Automation avalanche will hate dirty data
Leo, I think the combination of the move to virtualization and the current realization that Big Data/analytics can have big payoffs but only on good data is pushing the telecom industry toward cleaning up its act.

What's interesting to me is that in the almost 30 years I've been writing about telecom, the problem of  out-of-date records has been cited dozens of times for holding back technology initiatives. ISDN actually stumbled over this issue because the telcos couldn't even identify where it might work because they didn't know where their bridged taps and other impedences were located. The early DSL efforts faced the same challenges. 

It's like a lesson that has to be re-learned every few years. 
Leo Zancani
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Leo Zancani,
User Rank: Light Beer
6/30/2014 | 4:18:04 AM
SDN and NFV: Automation avalanche will hate dirty data
How refreshing to see an alternative to the myopic approach more commonly seen around the problems of data integrity, quality and alignment.

The communications industry aspires to the levels of automation seen in other verticals, but has so far mostly shied away from making the necessary investments in the data estate required to enable it.

The kind of automation that is racing towards us in the twin tornadoes of SDN and NFV is going to be extremely unforgiving of the poor condition of data across systems - both in terms of making the transition and seeing timely returns on the underlying spend.

Could these initiatives finally provide the stimulus requried to drive more companies to take the kind of radical action seen at tw telecom?

 

 
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
3/31/2014 | 10:49:54 PM
Re: A mix of insight and guts
Re: "Carriers don't get a lot of love."

Especially not in the post-Snowden era -- but then, one wonders if the mega-carriers like AT&T and Verizon and their actions act as lightning rods for the rest of the industry.
Joe Stanganelli
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Joe Stanganelli,
User Rank: Light Sabre
3/31/2014 | 10:45:36 PM
Re: Deserved
There really is a problem with the way companies are valued -- and must act and react to create and maintaine shareholder value -- in the public market.  Bad decisions often yield short-term gains, and good decisions often yield short-term losses.  The natural consqeuence: a never-ending pileup of bad decisions to puff up value.
nasimson
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nasimson,
User Rank: Light Sabre
3/30/2014 | 11:51:51 PM
Re: A mix of insight and guts
@Mitch: On carriers not getting a lot of love .. Since I work in a carrier, we are troubled by the fact that people love their phones but hate their carriers. It seems there is a lot for us to improve upon to win hearts and minds of peole.
R Clark
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R Clark,
User Rank: Blogger
3/30/2014 | 10:52:24 PM
Deserved
Wow, that kind of management stability is pretty rare in telecoms. I can't think of many CEOs who were in place five, let alone a dozen years ago. Wall St rewards underperforming companies who sack their CEOs and doesn't really reward stability, so great to see tw getting this kudos.
MarkC73
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MarkC73,
User Rank: Light Sabre
3/30/2014 | 3:00:23 PM
Re: Trustworthy Company
I was still in college when they started up locally; fortunately, I got to know a few people in there and contracted with them for a bit.  I guess it depends on where you are for who runs what, but the local team was hand selected from the local ILEC of a mix of people who were either fed up with the current system or wanted to do something different.  It's not a magical work environment or anything, but with enough good people and a balance between cooperate 'guidance' and local control, it tends to keep the people that want to do well for the company around.  And yup Lisa's been at the helm since tw meant something else.  Kudo's.
Carol Wilson
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Carol Wilson,
User Rank: Blogger
3/30/2014 | 11:00:00 AM
Re: Trustworthy Company
Dan, 

The longetivity of the tw telecom management team  is remarkable and it has paid off for them in a couple of ways that I think do relate to the Forbes' honor. Tw telecom execs have been through enough together that they don't necessarily respond to a short-term crisis in the way Wall Street might want, but they are able to coherently explain their strategy and then execute on it. 

Carol
DOShea
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DOShea,
User Rank: Blogger
3/30/2014 | 8:47:10 AM
Re: Trustworthy Company
It's also remarkable how long Herda has been in charge there, and how long many of the senior-level execs have been with the company. You have provided many reason why they never left or were pushed out, but it still sets them apart from many other telecom companies.
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