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Windstream Underscores Need for Reach

Carol Wilson
11/28/2018
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Windstream's expansion of network on-ramps to its Cloud Connect platform, announced this week, underscores the growing competitive importance of having the right fiber facilities in the right places, both for cloud connections and diversity.

Like every other network operator, Windstream Communications Inc. (Nasdaq: WIN) is finding its business customers are moving more workloads into various cloud platforms and looking for secure network connections into the clouds, says John Nishimoto, vice president of wholesale business development at Windstream. By expanding into Dallas specifically and the Southwest region in general, Windstream hopes to improve its competitive status in delivering those network connections.

"Good on Windstream, more cloud connectivity leads to more enterprise opportunities," comments Brian Washburn, practice deader, Network Transformation & Cloud at Ovum Research. "Pretty much every large enterprise we talk to these days connects and relies on a variety of cloud resources. Providing those enterprises with the option of secure and high-performance direct links to the cloud -- that's a pretty safe bet."

Increasingly, those business customers are looking for unique routes for their mission-critical traffic, in the name of diversity and "survivability," Nishimoto says. He notes that that's another area where Windstream intends to shine.

"Some of our bread-and-butter, especially on the wholesale side but also for enterprises, is our ability to offer a diverse unique route," Nishimoto tells Light Reading. "It is what a lot of our customers want, and they will often go to multiple carriers to get their own network diversity so any unique route is valuable."

Windstream now works with its customers, offering the engineering and network planning for the large customers who can afford to build in that diversity and sharing what are called KMZ files. KMZ stands for Keyhold Markup language Zipped and is a compressed version of the file type used by Google Earth.

"We'll provide them KMZ files of our network so they can look and validate physical diversity, as they buy the circuits," he says.

That diversity becomes more important with the increased movement of mission-critical applications to cloud-based platforms, creating the need to ship data back and forth.

It's also important for Windstream to continually expand its fiber footprint to compete effectively for businesses that want to be able to link not just to clouds but to all of their locations -- headquarters and remote offices -- on one network, Nishimoto says.


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Like other US-based network operators, Windstream is working hard to sell what it sees as more strategic services to businesses, even as traditional business revenues fall. For the third quarter of 2018, the company saw enterprise revenue drop 5% to $717 million, even as Windstream accelerated sales of SD-WAN and other higher-margin services by 71% on a year-over-year basis to $165 million.

"Enabling an enterprise customer to have their remote smaller locations in some of our core markets as well as their headquarters with bigger bandwidth needs all on the same network to access an AWS or other cloud is critical," Nishimoto comments. "It all gets back to what does your network look like and your footprint. And do you have secure and diverse connections to the cloud they need to get to?"

He calls Windstream's approach "two-pronged" because it combines the network facilities-based approach of Cloud Connect, tying together data centers and businesses, with a suite of over-the-top products such as software-defined wide area networks and unified communications-as-a-service.

"The OTT services like SD-WAN and UCaaS are really strong product sets for Windstream, so we do go to enterprise customers and say we can provide that traditional or next-gen network connectivity and we can layer over that these value-added services," Nishimoto says. Businesses can buy the two combined -- network and OTT -- or mix and match, using a bring-your-own-Internet approach to some locations, he adds.

Those options let Windstream serve different customer needs, ranging from businesses that want the cheapest network option to companies that want pure dedicated wavelengths to the folks in the middle who want a hybrid.

"It gets back into customer size and what they are trying to do with their own network and local management of their own network," Nishimoto says. "Customers do come back and say 'I want to do [SD-WAN] but I want to upgrade my MPLS network as well and I wanted to try to figure out what the best hybrid solution is where I can bring my own bandwidth or network and can you help me package that together and migrate from my old business processes to new business processes.' And that's where our professional services group can come in and help marry that together."

Windstream continues to invest in expanding its fiber reach and will do so in 2019, he adds, mentioning a diverse route to one connection hotspot -- Ashburn, Va. -- as something that's in the works.

— Carol Wilson, Editor-at-Large, Light Reading

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