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With CenturyLink-Qwest merger done, No. 3 telco
targets AT&T and Verizon
SearchTelcom.com
Jessica Scarpati, News Writer
April 13, 2011
Although we've only scratched the surface on 2011, it's already
been a busy mergers and acquisitions (M&A) season for telecom.
Sandwiched between the bombshell AT&T dropped in late March
regarding its plans to buy T-Mobile and news this week of Level
3 Communications' $1.9 billion bid for Global Crossing,
CenturyLink Inc. quietly finalized its merger with Qwest
Communications on April 1.
Upon the completion of the CenturyLink-Qwest merger, the
combined companies made CenturyLink the third-largest telecom
operator in the SearchTelecom.com:
Broadly
speaking, what does the completion of the CenturyLink-Qwest
merger mean for the combined company’s business services
division? Ancell:
I would
probably combine the significant areas of impact under the terms
"scale" and "improved scale for our business." The scale
basically manifests itself in two ways. The first is just in
terms of a larger fiber network and particularly [a larger]
local fiber network. CenturyLink adds significantly to what
Qwest had previously, so that we wind up with a fiber network
that's about 190,000 [fiber-]route miles ... [which] nearly
doubled our previous local fiber footprint. What that really
does is it helps with access.
No
matter how great the backbone network is, ultimately you need to
get on that backbone. And that comes down to access.
Particularly in industries that have broad distribution of
location—and the two that immediately come to mind are financial
services and retail—a broader access [network] footprint is a
big benefit, and that will be a significant benefit for us going
forward. That's the first component of scale.
The
second component of scale is just the financials of the combined
companies. We establish ourselves as very clearly the No. 3
telecommunications provider. Revenue is significant. And as you
flow the revenue all the way down, cash flow is [improved,
which] allows you to do things in terms of being a [stronger]
competitor and introducing new products and services that meet
the needs that our customers have. SearchTelecom.com:
How does the
completion of the CenturyLink-Qwest merger affect your strategy
for competing with AT&T and Verizon, in terms of selling IT
services? Ancell:
It probably
doesn't change. Our focus within business markets has always
been it's a share-taking focus, and we continue to look to
differentiate when we meet with customers around the service we
provide. That "service" [encompasses] everything from how we go
through the contract negotiation process to how we expedite
orders to how we provision [services] to the flexibility that
we'll offer [for our] service.
Service is really the differentiating feature. But make no
mistake that we look to take share in the space, and [because]
those are the two biggest shareholders, it's a constant
[strategy] to take share from those two big players. SearchTelecom.com: Can you be
more specific, in terms of how the CenturyLink-Qwest merger
enables you to take share from AT&T and Verizon in particular
products or markets for selling IT services? Ancell:
One that
continues to be out there—while sometimes I think it dips down
in terms of visibility and attention—is the Networx contract
[program] in the federal government space. That continues to be
a significant source of opportunity, so [Qwest has] sold against
that [program] over the course of the last two years and [has]
won some pretty significant business.
As
surprising as it may be, some of the government entities have
still not made the transition to the Networx contract, so that's
one significant area of focus: to continue to take share in that
federal space as those entities continue to bring themselves
under the Networx contract. The previous [versions of the
contract program's] big participants were AT&T, Verizon and
Sprint, and with the latest iterations [of the program], the
three big participants who have the contract vehicle to sell
into are AT&T, Verizon and Qwest, now CenturyLink. SearchTelecom.com:
It seems you
can't be selling IT services these days without a cloud
strategy. Qwest was selling cloud services prior to the merger,
but what about CenturyLink? What does the completion of the
CenturyLink-Qwest merger mean for the combined company’s cloud
strategy going forward? Ancell:
CenturyLink
was absolutely doing work on reviewing customer requirements and
awareness of what was going on in the market. They didn't have
any products in the market as of the time that we closed the
merger, but it's absolutely an area of focus and there's a
recognition that real opportunity exists there.
I'm
not a big fan of 'the cloud' term only because it seems
overused. One of the things we have been very focused on—unlike
some others, and we don't have to name any names—is that we're
not going to go out and rebrand our entire portfolio as cloud
all of a sudden. We're focused on introducing services that meet
customer demands.
You
will see information from us ... as we put those things into the
market, but [the cloud] is an area of focus. What we refer to it
more as is "on-demand services." If you want to go back and
rebrand everything, I guess technically you could call Centrex a
cloud service because it's delivered over the network. But [our
strategy for] on-demand services encompasses everything from the
network itself to compute cycles, storage, applications—all
provided on an on-demand basis. Then you get into specifics
under each [service]. You have backup and recovery in that
storage space; you have just raw storage in that storage space.
You have all different kinds of permutations in computing cycles
in how you turn those up and turn those down.
In the
end, it's about providing all of those infrastructure components
in an on-demand basis. We're very focused on that and
particularly in understanding what customers are really looking
for because despite all the hype, there still is a lot of
evolution that's going on in [terms of] what customers are
really looking for.
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