In June of last year, Windstream Wholesale’s Intelligent Converged Optical Network (ICON) went live, enabling the provision of custom routes for enterprises and wholesalers, along with reach to the edge and layer 0-3 network insights.
In the words of Joe Scattareggia, Windstream’s executive vice-preisdent of wholesale, ICON is “the core network, the superhighway”. It is also the result of more than five years of network evolution.
“It’s all about scale and flexibility. Scale meaning more bandwidth – everybody wants more bandwidth, and they want it faster. And the flexibility means our ability to deliver diverse services and also give Layer 0 analytics, in addition to our ability to interoperate with other equipment, which is really new in the marketplace,” Scattareggia adds.
Five to six years ago he recalls, capacity was around 8Tbps. “We sold more than 34Tbps just last year. We are amazed about that growth – from what it was to where it is today,” Scattareggia continues, recalling a 2020 full year figure of 28-29Tbps.
“We are that new, nimble carrier with a ‘fast and flexible’ approach, developing the partnership with a custom design, and we move quickly,” he says.
Windstream’s growth plan for ICON is two-fold, comprising an expansion of data centre coverage – or off-ramps for the superhighway – and four long-haul fibre route builds. But more than that, ICON marks a new focal point for Windstream in the fast-evolving US market.
“Historically, we were a service provider. We’re still going to be that, but we’re going to wrap our new fibre infrastructure into managed service and extend it out to our customers. The market is going to start looking at us like a construction company,” Scattareggia says.
“You’re going to see more high-capacity fibre builds, more network expansion, and just really growing the relationships that we have based on where the customers are asking us to be. It’s a different Windstream Wholesale,” he adds.
This different Windstream will also sell “really high-count dark fibre across the country”, Scattareggia adds, because it needs to reflect the ongoing shifts happening across the industry and the resulting impact on the carrier model.
“There is a term out there called wholetail, which is wholesale retail. I hear that a bit and the reality is these banks, for example, and Fortune 1000 enterprise companies have large networks – they are buying dark fibre and they are managing their own diversity and their own routes,” Scattareggia says. “We see this as a big area of growth for us right now and it’s a big area of focus for the team.”
How far the trend could go is anybody’s guess, but for Windstream there is plenty to peg a business strategy on because as the growth trends in bandwidth confirm, these hyperscale-like enterprises have what it takes to be the next FANGs – that is the next Facebook, Amazon, Netflix or Google.
Four or five years ago, Scattareggia says, Windstream’s traditional wholesale business was centred around carriers. “Then, just like many of the carrier and wholesale organisations, we moved the FANGs into our wholesale organisation because they were set up like carriers. At first, they had little regional offices in California and we provided voice and small data circuits, and over time they went from buying like carriers to buying bigger than carriers,” he says.
Late last year, the federal business unit moved over and most recently the large global enterprise accounts moved. “These are the multinational corporations and they are buying like carriers,” Scattareggia adds.
The influence of such customers is undeniable, and they are demanding more and more from their connectivity providers.
“Time will tell. The difference between the FANGs and the large corporations we see today, is the FANGs and hyperscalers went into large dark fibre infrastructure very quickly. We are hoping that this pivot will increase our demand set for our core transport services as it has similarities, and that is what we are excited about,” he says.
Future networks
As ICON’s full name suggests, the intelligent converged optical network is disaggregated.
“It gives flexibility,” Scattareggia says. “So, if you get a better technology or a better cost structure, or you have supply chain issues, you can plug in a different vendor. That’s a new and evolving piece of our business that did not exist in the past,” he adds.
Business conditions at present will certainly put those claims to the test. Disaggregation means many of the current challenges with supply chains – and even inflation – have suitable workarounds, but it does not mitigate all marketplace challenges.
“Challenges have changed over the years. You have your growth strategies and growth challenges, but what has evolved over the last year has been different challenges based on the times we live in,” Scattareggia says, adding these mostly involve logistics and supply chain issues around securing equipment.
With lead times on key kit still exceeding 52 weeks, the current situation has demanded a change in strategy for Windstream’s supply chain management. Now it is buying kit way ahead of orders being sold, but Scattareggia says that being forced to abandon the just-in-time approach to procurement has proven advantageous.
By way of example, he quotes a recent feat by Windstream Wholesale for an unnamed communications provider, which saw it turn up approximately two terabits of long-haul wave capacity between Seattle and Chicago in less than five business days. Scattareggia says the original brief allowed for a 14-day delivery time.
“You can’t do that unless your sales teams is aligned with network planning and has equipment on-hand. Pre-purchasing inventory has actually helped us quite a bit in some ways,” he explains.
One challenge more difficult to mitigate is a shortage of the physical fibre itself. “Trying to get the glass out of Corning and some of the other manufacturers is very challenging right now,” says Scattareggia.
He adds: “We were fortunate enough to have these four long-haul builds budgeted, we had the engineering studies done and we were able to secure fibre. Of course, that becomes a problem because you have all these companies building out fibre-to-the-home.”
New chapter
It is easy to forget that the industry is not the only thing to have changed Windstream in recent years. Its new focus comes three years after it filed for Chapter 11 bankruptcy protection and delisted its stock. A restructure was finalised in September 2020, and now Scattareggia reports that Windstream has “US$5 billion in revenue and about $2 billion in debt, so our ratio is good”.
Windstream is also an award-winning company now, with Global Carrier Awards and Datacloud Global trophies on its corporate mantle (although the 2021 Global Carrier Award currently spends more time touring the US with Scattareggia and the Windstream team).
In its new chapter as a privately held company, Windstream’s investments are now focused on the long-term instead of the short. “I really like the position we’re in now,” Scattareggia says. “We can make logical decisions without outside static or interference and run our business the right way,” he adds.
“We were very fortunate that our first list of projects for more than $100 million was approved by our private equity firm. In fact, the team there has challenged us by asking, ‘If we give you more money, what can you do with it?’ So, get ready to start seeing even more of these fibre builds,” Scattareggia says.
The line-up of the company’s board helps too. On the telecoms side it features FairPoint’s former CEO Paul H Sunu; former Zayo executive Randy Dunbar; former Abovenet CEO William G LaPerch; former president and CEO of Lightower Fiber Networks, Robert Shanahan; and Anand Vadapalli, who as previously held the positions of president and CEO at Alaska Communications and chair of the board for USTelecom. They are joined by five investment executives and, of course, Windstream’s company president and CEO, Tony Thomas.
In tandem with these developments – and, no doubt, in part because of them – Scattareggia says Windstream has evolved from a fast follower into a market leader. As one would expect, it has an avalanche of new project announcements on the horizon, “both on the network expansion standpoint and optical technology leadership – we’re not giving that position up anytime soon,” he says.
Densification of the west US network sees new routes connecting Hillsboro and Portland to Sacramento, and Los Angeles to Las Vegas. The work may be complete, but the demand is way ahead.
“Last year we actually sold more capacity on the US west coast than we did the east. These areas have been really large growth places for us as we built out the network,” Scattareggia says.
Another “very large fibre build” will see a ring connect Hillsboro and downtown Portland – both the Pittock Block and 707 Southwest Washington – giving Windstream high fibre counts in and around all the data centres in Hillsboro.
“It’s a high-count 4x32 count fibre ring,” Scattareggia says. That one was due at the end of March and it will be followed in August by the T-Rock Express, connecting Little Rock and Tulsa.
Work is ongoing on the transport network expansions announced last August. Windstream is adding fibre to three routes with CanAm2 – New York City to Albany to Montreal – due to complete in mid-2023 and the Beach Route – Raleigh, North Carolina to Jacksonville, Florida – due in Q1, 2024.
Rounding off Windstream’s projects and corporate strategy, Scattareggia teases that in the not too distant future “you’ll see announcements on new resources joining the group”.
“Be on the lookout for Windstream. You’re going to hear about a lot of new projects and you’re going to see Windstream Wholesale really evolve into an infrastructure player,” Scattareggia concludes.
