For several years now, I have been tracking fiber-fed building counts for competitive operators, but for a couple years now I have been missing a recent datapoint for one of the largest metro fiber footprints out there, Level 3 Communications (NYSE:LVLT, news, filings). The Global Crossing merger only muddied the waters further, because I never had any datapoints for them and Level 3 had to reconcile the two footprints first. They have now done so, and given me the new data point I have been seeking – a bigger one than I had expected.
According to the company, Level 3 now has 13,300 traffic aggregation points on-net worldwide, or more than 5000 more than the 8,100 or so they last reported about three years ago. Global Crossing probably contributed a few thousand of those, mostly in the UK and South America where they had large metro footprints. But the rest are probably organic adds. The company had of course said over the past two years that it was investing in its metro depth, but we just hadn’t been given the numbers for a while. It should grow steadily from here, as a fair amount of the netex synergies they are seeking will come from bringing Global Crossing endpoints on-net where it is justified.
The new number puts them rather closer to TW Telecom (NASDAQ:TWTC, news, filings), which just last quarter surpassed the 15,000 mark, and Colt over in Europe, which now boasts boasts an amazing 18,000 on the other side of the Atlantic and has been adding them just as fast. The next project is to coax a new number out of a post-PAETEC-and-KDL Windstream… or maybe the Cable MSOs. I won’t do a full update of the list until June though.
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Rob, please correct me if I am wrong, but TW Telecom’s POP’s are not all “ON NET,” probably with a great deal more “leased” access points vs. “owned” compared to Level 3.
This dovetails with my expectation that Level 3’s GM’s will be increasing from the historically quoted 80 percent as well.
Nice follow up work, and great find!
TW’s are real, your definition of on-net is inconsistent. LVLT doesn’t own all its metro fiber down to the conduit level either, nobody does. There is overlap in all these footprints, the metrics I collect measure only extent of reach without looking too hard at fiber count. That’s a different question, and a harder one to resolve factually, I have found.
BTW, TW’s data gross margins, when calculated the same way, are similarly very high and its (and AboveNet’s and Zayo’s and Cogent’s) EBITDA margins leave Level 3 quite a bit of work to do to claim the bragging rights you are assigning to them — as you can see from this chart: http://www.telecomramblings.com/competitive-telecom-trends/ebitda-margin/
it is safe to say if lvlt is now giving you this data, its because the numbers going forward are going to be something that want to show wall street. when they quit giving that number out i heard it was because they were changing some definitions of what is a traffic aggregation point. my cynical view was they didnt know. ha. either way nice job rob
Thank you, Rob. You have triggered a few thoughts in my mind surrounding these phenomenons.
Firstly, I wonder if the CLEC Family are jointly cheering for each other in cases like (3) just brought to the FCC’s attention on certain “Special Access” charges being unlawful?
http://www.channelpartnersonline.com/news/2012/03/level-3-presses-fcc-for-relief-on-special-access.aspx
Secondly, the proximity of 100,000, maybe a few less now, enterprise buildings just 500′ away from Level 3’s fiber factory, has to be exciting for them at this time.
Lastly, with the rapidly changing adoption of services by Enterprises globally to Ethernet, it would seem to cause property owners “nationally” to be considering new connections into their buildings being made, in order to satisfy such demand away from older, legacy systems by their tenants if they are not owners themselves.
The key is quality of on-net foot print. One large scale Internet data center is worth hundreds (or all) small dentist offices… The build cost is the same, electronics & DWDM scale and each incremental Mbps sold is more & more marginally profitable. Impossible to find publicly, but rev per lit bldg is a metric that matters.