TDS Telecom announced today the completion of the first phase of its 10G interstate IP and transport network. The newly built network hooks up the company's broadband markets in 30 states. The network initially consists of some 45 10G wavelengths, of which at least 25 are being provided by Level 3. Level 3 Communications (NYSE:LVLT, news, filings) also expects to be providing voice services as well to TDS in a growing relationship.
TDS Telecom mostly operates in rural and suburban markets, and in fact just won some stimulus funds for Grove Hill Alabama. Rural or not, they have been selling more and more broadband connections. By building this transport network, TDS will be able to lower its overall cost structure and offer new products to its customers. This development also suggests that the company has further aspirations of expansion, as their new capabilities become more and more effective as they grow. Given the steady drumbeat of RLEC consolidation, it is not hard to see that they might make some move of their own.
For Level 3, this sort of wholesale deal is what their network was originally built for: supplying ever growing piles of backbone capacity to established companies as internet traffic continues to build. This is a very good start for the company's effort to return to growth in 2010, I'm sure the company's wholesale group would love to win dozens of these.
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