It's easy to get lost during earnings season in who missed what by a penny per share or whatever. When you step back and take a look at a few competitive fiber operators results side by side, there is a common trend that has been very obvious this year. Packet-based data products and services have been the source of nearly all the growth, and nothing else is even close.
Along with its earnings, Level 3 filed an older, alternative breakdown of its core network services revenues, showing data revenues were far and away the biggest contributor to their return to growth. Infrastructure, Transport, and their VoIP services grew, but nothing anywhere near the combined IP transit, IP VPN, Ethernet, CDN, and related products.
|Level 3 CNS||Q3/10||Q3/11||% Growth|
|- Local/Enterprise Voice||98||99||1.0%|
And here's Abovenet's domestic breakdown by segment, with their IP transit, Ethernet, and VPN solutions being most of the Domestic WAN category:
|Domestic Fiber Infrastructure||43.2||45.8||6.0%|
The same dominance of packet-based revenue over raw infrastructure and voice lately is blatantly obvious from tw telecom's third quarter numbers just the other day:
|tw telecom||Q3/10||Q3/11||% Growth|
|Data & Internet||138.8||164.7||18.7%|
You can find similar trends in the data for XO before it went private, and of course Cogent doesn't sell anything that isn't packet-based.
Level 3, AboveNet, and tw telecom are pursuing very different strategies to take advantage of their fiber. tw telecom has been bringing 500+ buildings on-net per quarter, AboveNet has been adding new Tier 1 markets, and Level 3 has been pushing its CDN and adding more enterprise data services. But at their core, each is doing what they are doing to sell more packet-based services because that is where the growth is.
Each of these companies is very heavy on fiber assets - in fact these are the most fiber-rich public companies out there. But while that infrastructure dominates everything they do, it is only in packet technologies that they are finding real growth these days. Raw transport and fiber haven't been as strong on their own, despite the renewed interest.
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