No integration issues here

Having survived a period of turmoil, XO Communications is moving in a direction different from its national CLEC brethren

The competitive carriers that survived the bursting of telecom's bubble are a hearty lot, accustomed to the ups and downs of both demand and pricing. But over the last two years, many of them have scrambled to grow through acquisition.

XO Communications has charted a somewhat different course. Rather than expand by acquisition, XO has invested in lighting its own national fiber optic backbone network and then developing a broad service portfolio targeting both small- and medium-sized businesses and large enterprise customers. After one failed experiment in splitting its businesses, XO retained its broadband wireless assets and has deployed that service as well.

Carl Grivner, CEO of XO, recently spoke to Editor-in-Chief Carol Wilson about the company's continuing plans.

On the business environment: Demand for bandwidth is the best it's ever been. The hype of 1996-97 was 10 years ahead of its time. Everyone was running around saying that bandwidth was doubling every six months. What we are seeing now is the real boom in bandwidth demand.

How this affects XO: What we are seeing is new entrants like YouTube, Google, the cable companies in the business market now are all buying bandwidth for their customers. Global carriers are coming over here. There is a lot of opportunity for us. Plus, the traditional carriers are still there. We can rely on several segments of the market.

On XO's view of consolidation: With consolidation by AT&T and Verizon, customers are looking for diverse vendors. Beyond that at the intermediate level, we have benefited from consolidation when other companies have to integrate. You know who they are from their earnings calls. We are offering 10 Gigs in 10 days, and it's working because there are customers out there demanding that kind of bandwidth who aren't going to want to wait. But they will get over this, and we will all have to go back to basic blocking and tackling and offering the better service.

On the broadband wireless market: We do sell broadband wireless, but the market is not really taking off yet. People are buying it for diversity and testing it. I think it's still three to five years away. The industry also still struggles with roof rights.

On XO's push into Ethernet, voice over IP and more: We can't sit still; we have to keep producing new features and new things. There are so many more things that can be done with IP in terms of applications. In a way, it's easier because you can do it faster, but it still takes time and money to develop these things.

On cable as a competitor: We see Cox more than Time Warner at this point. Cable in general is at the small end of the market because they are very regionally focused, and larger customers will generally require more network coverage outside a region.

On regulatory concerns: Copper retirement is a big issue for us. Most buildings are still connected via copper. We are able to reach customers using Ethernet-over-copper, but not if the [incumbents] are allowed to pull the copper out.

On developing content delivery: I'm content with being the underlying infrastructure to content delivery customers. I like to have them as a customer, which is different strategically from other companies. I think it puts you at odds with the customer in the marketplace, and we believe the technology will evolve to where the content delivery is built into the network equipment down the road.