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Ethernet services

Charter Cranks Carrier Wholesale Efforts

Charter Communications Inc. is targeting carriers with wholesale Ethernet services more aggressively than ever before after lighting up five interconnects and service packages that offer capacities in the range of 10 Mbit/s to 10 Gbit/s.

Following deals with its first two Carrier Ethernet exchange partners -- CENX Inc. and Equinix Inc. (Nasdaq: EQIX) -- Charter's business services unit has established interconnect sites in Los Angeles (two sites); Atlanta; St. Louis; and Worcester, Mass. (See Charter Connects With CENX & Equinix .)

Charter's already been selling capacity on its footprint, mostly for cell backhaul, but the new interconnects expand the MSO's overall ability to sell wholesale Ethernet access and interconnect with carriers in those initial five cities, says Scott Fairchild, senior manager of product management for Charter Business.

"It's definitely a big opportunity for us," he says of Carrier Ethernet, noting that working with its exchange partners will give Charter the flexibility to sell an entire port or smaller circuits, depending on the need of the customer.

And that should help Charter expand its commercial services targets. Traditionally, Charter has sold capacity to Tier 2/3 carriers, but is now starting to mix in business with larger carriers, as well, Fairchild says.

The majority of Charter's 2010 carrier revenue was in cell backhaul, but the company believes the business it can generate from wholesale Ethernet could eclipse that this year.

And Charter's already in expansion mode. The five initial interconnects are situated close to Charter's cable system footprint, with about 75 percent of the MSO's entire footprint reachable from those sites. The MSO is already working on adding more sites with identical capabilities and lighting them up before the end of 2011. Once those are operational, the resulting interconnects will serve Charter's entire footprint, Fairchild says.

Charter's not saying how much it's spending on the effort, but it's indicative of where it's investing its capital behind the scenes.

But that money's being pumped into a new revenue engine that still has plenty of potential for growth. For 2010, Charter generated $494 million in commercial services revenue, up 10.8 percent year-on-year, and estimates that it serves just 6 percent of its total addressable commercial market.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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