Comcast, Level 3 Flex Ethernet Muscles

Alan Breznick
News Analysis
Alan Breznick, Cable/Video Practice Leader, Light Reading
8/22/2014



Competing intensely in a still-expanding market, Comcast and Level 3 Communications are scoring the biggest gains among US Ethernet service providers this year.

Both Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Level 3 Communications Inc. (NYSE: LVLT) picked up retail-port market share in the mid-year rankings of Ethernet service providers conducted by Vertical Systems Group . Comcast climbed two slots on the firm's US Carrier Ethernet Leaderboard to sixth place in the overall rankings since the end of last year, while Level 3 climbed one slot to eighth place.

Plus, both service providers stand to gain a lot more market share if their respective takeover deals go through as planned. Comcast's pending acquisition of Time Warner Cable Inc. (NYSE: TWC) would easily catapult the combined company into the one of the top five slots, given that TW Cable currently occupies fifth place in the rankings. At the same time, Level 3's pending purchase of tw telecom inc. (Nasdaq: TWTC) would easily transform that combined company into one of the nation's top three Ethernet providers, given that tw telecom already holds third place.

In turn, that could mean that one or both companies could challenge AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) as the top two US Ethernet providers. Although Vertical Systems Group doesn't release actual market-share figures, the two big telcos have dominated the US Ethernet market for years.


Get the latest updates on the Ethernet services market by visiting Light Reading's Ethernet services content channel.


Comcast, which cracked the Leaderboard rankings of top nine Ethernet providers for the first time in 2013, leapfrogged Cox Communications Inc. and XO Communications Inc. to take over sixth place and slip in right behind Time Warner Cable, the leading MSO in the rankings. Over the last couple of years, Comcast's commercial services unit has been putting great emphasis on its Metro Ethernet services for small-to-midsized businesses (SMBs).

In its latest press release Thursday, for instance, Comcast announced that it has extended its all-fiber network to 10 New York towns and villages in the counties above New York City, enabling it to offer "multi-Gigabit Ethernet services" to "businesses, schools, hospitals and other organizations requiring more bandwidth, looking to network multiple locations together, or planning to connect their offices to a third-party data center." The MSO offers up to 10 Gbit/s of bandwidth over its network and three different classes of service.

Thanks in part to its push, Comcast racked up a record total of $965 million in commercial services revenue for the second quarter, putting it on track to approach the $4 billion mark for the year. In a blog post Thursday, Mike Tighe, executive director of data services for Comcast Business, wrote that Ethernet is "a key engine in that growth." Tighe noted that the MSO's "growth and success with Ethernet is largely driven by the fact that too many businesses have had to rely on T1s or DSL because they had no other option" until now. (See Comcast Seeks More X1 Magic.)

For its part, Level 3 also overhauled XO to take over eighth place in the rankings. As a result, XO, which had finished last year in seventh place, fell back two slots to ninth place on the Leaderboard.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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