WilTel CEO talks strategy

NETWORK WORLD NEWSLETTER: OPTICAL NETWORKING
07/13/05

Dear networking.world@gmail.com,

In this issue:

* Q&A with WilTel CEO Jeff Storey
* Links related to Optical Networking
* Featured reader resource
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Today's focus: WilTel CEO talks strategy

By Carolyn Duffy Marsan

A leading wholesale provider of telecom services, WilTel
Communications has been pursuing the enterprise market directly
as a next-generation ISP for the last two years. Network World
Senior Editor Carolyn Duffy Marsan spoke recently with WilTel
CEO Jeff Storey about the company's enterprise strategy and its
critical but changing relationship with SBC. Here are excerpts
from their conversation:

NW: What success has WilTel had in its push into the enterprise
market?

Storey: We target the type of customers that need a wide-area
networking specialist that will engineer a solution specifically
to meet their needs. They need capabilities that other carriers
can't bring. They need access to people and resources that other
carriers won't bring. ... We have Lava Trading, a firm that
handles 20% to 25% of all the trades on Nasdaq. That's certainly
a company where the network is a key, critical component of the
business that they operate. Another recent win is ING, a large
insurance company where data is absolutely critical to their
success.

We have all the capabilities to support enterprise customers
very successfully. We're good on the data side, with MPLS,
private-line and IP services.

We had a great voice business on the wholesale side, supporting
5 billion minutes per month. Now we're offering voice services
to both our government and enterprise customers. Vonage is one
of our largest voice customers... We don't release numbers about
our growth in enterprise sales, but our revenues are continually
going up. And with only 2,000 employees, we have a cost
structure that's remarkable.

NW: This year, WilTel announced Ethernet and storage services
for the enterprise market, as well as new voice services. Can
you explain the significance of these in terms of building
WilTel's share of the enterprise market?

Storey: Storage-area networking is very important. Our Vyvx
subsidiary is the leader in the transmission of
broadcast-quality video over fiber for the media and
entertainment business. We want to be the Vyvx of storage-area
networking. Ethernet - both managed and unmanaged - is just the
way the world is going. Voice services are part of the portfolio
that an enterprise wants to buy. These services fill out our
portfolio so enterprises can do one-stop shopping.

NW: What other enterprise services does WilTel have planned for
2005?

Storey: We're going to continue to grow our IP VPN services.
We're going to continue to expand on storage-area networking and
Ethernet products. And we're going to focus very specifically on
professional services and managed services for our customers. I
think there's an opportunity to help clear up the networking
confusion for our customers. We're also going to expand our
voice products and our integrated access.

NW: How much of WilTel's enterprise revenue is direct vs.
through subcontracting deals with foreign carriers such as KDDI?

Storey: It's a mix. Historically, we've only been in the
enterprise market through our wholesale arrangements. There are
some wholesale customers that buy great big pipes and do
finished services on top. There are other customers that work
with us. We provide the enterprise services under their banner
and their name. KDDI and SBC are two of these. We've been
winning enterprise customers in both ways.

NW: SBC is WilTel's largest customer, representing 70% of its
revenues, according to analysts. Can you explain the
significance of the new master services agreement WilTel
recently signed with SBC?

Storey: The agreement means several things. It is a testimony to
the quality of the service that we provide that it was important
to SBC to sign up for a new master services agreement. With
their intention to buy AT&T, certainly they're going to move
traffic they have on our network to AT&T. This agreement is
intended to make sure that they provide the same quality of
service to their customers [during the transition].

From a stability standpoint, we've been making this transition
into the enterprise and government markets for the last 18
months to two years, but it takes a long time. The primary
revenue we get from SBC is long-distance voice. We've known for
a long time that was going to go away, whether it was going VoIP
or to AT&T. Our strategy has been to launch into these other
markets with other products so that as the SBC business goes
away, we can continue to grow and be healthy. Before the
timeline was always vague. This [agreement] puts clarity around
the timeline because this is a five-year deal.

Having this [agreement] gives us a leg up on enterprise deals.
We can very clearly sit down with customers and talk about the
health of our financials. When you compare our cash growth to
any of our competitors, you will see that WilTel has
outperformed everybody else.

NW: What's WilTel's strategy for surviving and thriving in the
midst of all the telecom mergers?

Storey: One of the things we have learned that has become part
of our culture in the last three years is a disciplined
financial approach. There are a lot of companies out there
trying to grow revenue without regard to whether it's good
revenue or bad revenue. We pass on bad business. We focus very
closely on winning good quality customers. We're going to be
very aggressive at looking at consolidation opportunities. We
want to participate in the consolidation without doing something
stupid. We think we'll have the opportunity to roll up a lot of
good providers or good offerings. I'm not predicting anything.
We're going to be very disciplined about it.
_______________________________________________________________
To contact: Carolyn Duffy Marsan

Carolyn Duffy Marsan is a senior editor with Network World and
covers emerging Internet technologies and standards. Reach her
at <mailto:cmarsan@nww.com>
_______________________________________________________________
This newsletter is sponsored by Fluke Networks
Special Report: Understanding the Changing Nature of Branch
Office Networks

Significant revenue is generated at the branch office. Business
needs to be seamless between locations. This special report
provides an approach to a resourceful way of using new tools and
analysis for branch offices. Learn about the analysis and
tools used to run a seamless branch business, click here to
download the report now,
http://www.fattail.com/redir/redirect.asp?CID=108362
_______________________________________________________________
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