Tuesday, June 6, 2017

Windstream moves swiftly into agile network services

Windstream is a publicly traded telecommunications operator based in Little Rock, Arkansas that has not hesitated to move faster than its industry peers in executing transformative business strategies or in adopting cutting-edge networking technologies. The company has just launched a service called SDNow Waves for data centre cloud applications. While many rivals are rushing to address the pressing need for big-pipe data centre interconnects, Windstream's new service pushed the concept further with SDN controls over an agile optical transport layer. Mike Shippey, president of Windstream Wholesale, puts it this way:

-    "We are investing in strategic technologies that enable us to deliver flexible, on-demand services across our multi-vendor network… providing SDNow services to our customers via multi-vendor service orchestration and automated provisioning truly differentiates Windstream in the marketplace".

Windstream background

Windstream Communications was formed in 2006 when Alltell spun out its local wireline phone business and merged it with VALOR Communications Group. The deal, which was valued at $9.1 billion at the time, created a major wireline operator focused on the rural U.S. market with approximately 3.4 million access lines in 16 states and about $3.4 billion in annual revenues in 2006. Windstream then went on a buying spree. Acquisitions included CT Communications on North Carolina for $585 million, D&E Communications of Pennsylvania for $330 million, Iowa Telecom for $1.1 billion, Q-Comm of Kentucky for $782 million, Hosted Solutions of North Carolina for $310 million, and PAETEC of New York for $2.3 billion.

In November 2016, Windstream announced plans to acquire Earthlink for $1.1 billion. The merger creates an extensive national footprint spanning approximately 145,000 fibre route miles and provide advanced network connectivity, managed services, voice, internet and other value-added services. The deal brings together Windstream's scale in the enterprise segment and EarthLink's newly-launched SD-WAN service. Upon closing of the transaction, Windstream shareholders represented approximately 51% and EarthLink shareholders represented. approximately 49% of the combined company. Earthlink was founded in 1994 and was based in Atlanta, Georgia.

In April 2017, Windstream announced plans to acquire Broadview Networks for $227 million. Broadview operates a regional MPLS backbone serving small and medium-sized businesses in the Northeastern and Mid-Atlantic states.

The REIT Spin-off

In August 2015, Windstream completed a tax-free spin-off of select telecommunications network assets into a new company, Communications Sales and Leasing (CSAL), an independent publicly traded real estate investment trust (REIT). This network operations business leases back the physical assets to Windstream through a long-term triple-net exclusive lease with an initial estimated rent payment of $650 million per year. In addition, at the time of the REIT transactions Windstream also announced the near completion of a one-for-six reverse stock split of Windstream's shares. Also, Windstream repaid debt in an aggregate amount equal to $2.4 billion under its outstanding credit agreement.

Recent business highlights

For Q1 2017, Windstream reported total revenue of $1.515 billion, a decline of 7% compared to $1.632 billion a year earlier. The ILEC and Consumer business declined to $391 million from $397 million a year earlier. The Wholesale division business declined $178 million from $196 million a year earlier, the Enterprise division declined to $578 million from $594 million a year earlier, and the CLEC Consumer and SMB division declined to $198 million from $241 million a year earlier. During 2016, consumer households declined 6.3%.

To combat these trends, Windstream has been focused on expanding its network capabilities by adding metro fibre extensions (Cleveland, Dallas, Detroit, Little Rock and St. Louis) and especially be adding new capabilities via software. This includes a new SD-WAN and the new SDNow Waves launch. For consumers in its ILEC business, Windstream is working to bump up Internet access speeds by expanding the number of markets where it can deliver gigabit service.

More on the SDNow Waves service

Windstream's new SDNow Waves introduces optical wave services based on multi-vendor service orchestration and automated provisioning across the Windstream long-haul core network. It is initially available at five major third-party carrier neutral data centres in Chicago, Dallas, Ashburn, Miami and Atlanta. Windstream plans to expand the service to 50 additional locations this summer. The service is aimed at hyperscale web content and application companies in need of high capacity long-haul transport services. While the company's service launch release does not explicitly state how the multi-vendor provisioning works, below is what has previously been disclosed about the Windstream SDN strategy.

First, Windstream currently offers regional, metro and long-haul optical wavelength services at speeds ranging from 1 to 100 Gbit/s in targeted cities across the U.S. within the Windstream service area. The network reaches enterprise customers, carrier hotels, data centres and POPs with over 60,000 route combinations.

Second, Windstream has been using Infinera's DTN-X platform, featuring 500 Gbit/s super-channels, across its long-haul express network since 2014. In April 2015, Infinera announced an expanded rollout of the Windstream 100 Gbit/s long-haul express network to additional markets across the U.S.  In August 2016, Infinera cited Windstream as a test site for its new Xceed Software Suite (Xceed), which allows service providers to extend SDN automation to Infinera’s end-to-end Intelligent Transport Network portfolio, spanning long-haul, metro and data centre interconnect applications.

Thirdly, in October 2016 Ciena announced that its Blue Planet orchestration software had been selected by Windstream to automate the delivery of managed wavelength services across its multi-vendor optical network. The idea here was to utilise the optical network as a programmable resource to speed the delivery of managed 1, 10 and 100 Gigabit Ethernet wavelength services.

Another significant aspect to Windstream's SDNow Waves announcement is that it takes the carrier another step further down the road to DevOps, removing human touch-points in the service fulfilment process. Windstream says this will bring a better customer experience with improved accuracy through automated standard configurations.

The SD-WAN and Diverse Connect Services

In April, Windstream launched an all-new SD-WAN solution for the reseller community. The service, powered by VeloCloud, uses SDN to dynamically route traffic over a combination of private and public access types to reach multiple locations. The goal is to help customers maintain control over their network from a convenient centralised location rather than requiring them to manage various routers, firewalls and switches. It also simplifies management and monitoring by presenting comprehensive information to the customer in a unified management console a 'single pane of glass'.

Windstream's Wholesale portfolio also includes MEF 2.0 certified Carrier Ethernet, MPLS and Dedicated Internet Access. Also in April, Windstream announced the availability of a new business continuity service designed to ensure reliable connectivity for enterprises that rely on the cloud to support mission-critical applications. Windstream said this new Diverse Connect service helps to keep a customer's network endpoints connected while ensuring the performance of business functions including in the event of a major network issue. Diverse Connect is offered with a 99.999% (5-9s) uptime SLA that covers services from end-to-end, including over the last mile from Windstream's provider service point to the business' internal network.

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