XO tries to build momentum

XO Communications continued its newer, bolder ways when it announced both a national end-to-end wholesale offering and an IP virtual private network service this month.

Both services are intended to capitalize on XO's 18,000-fiber-route-mile network and 75-market metro facilities — turned up last year with new optical switches from Infinera. They also represent XO's newly aggressive attitude, according to industry analysts.

“You have to remember where they are coming from,” said Courtney Munroe, IDC analyst. “A year or so ago, there was all this talk about the company being sold or spun off. Some inertia set in. Now, they are being aggressive, doing what they have to do. They are going after that market that wants to unload traffic from AT&T and Verizon for diversity. They see that opportunity, and they are going after it.”

The IP VPN product, which is based on MPLS, is a bit of a catch-up offering, analysts agreed, as XO's competitors have had MPLS-based IP VPNs in the market for years.

But it's also a necessary addition to the XO data service portfolio, said Cindy Whelan, analyst for Current Analysis.

“They needed to offer this service,” she said. “This is something other carriers have offered for some time, and they need it to fill out their portfolio and keep building momentum.”

XO is marketing its IP VPNs for the same kinds of converged services other service providers offer. By enabling companies to use different classes of service (CoS), they can combine latency-sensitive voice with critical data and best-effort data in the same pipe.

XO is hoping to capture market share, according to Don Toomey, senior product manager, through attractive pricing.

“We are charging a nominal fee for class of service, but it's a flat rate,” he said. “And we are leaving our class of service scheme wide open and not limiting bandwidth in any class. This is the result of us having an offering that is more current-day versus some of the ones more aged and based on ATM. We have an arrangement that appeals to a lot of customers today.”

While it's true XO benefits from not dealing with legacy services in its optical network, the company must still handle them, Whelan said, as some customers will still have legacy interfaces.

On the wholesale side, XO is hoping to leverage what it believes is the best network reach, along with built-in guarantees on price and installation and a 90-day risk-free trial offer. The company is guaranteeing it will beat any price for service along its fiber-optic routes.

“The network we have built out with Infinera over the past year gives us major advantages over carriers using legacy gear,” said Ernie Ortega, president of XO carrier services. “Our cost structure gives us an advantage. The equipment would give us a great advantage with regard to provisioning and servicing customers. We can create end-to-end bandwidth services in the long-haul and the metro networks.

Offering that kind of guarantee makes sense if XO wants to compete with bigger players, Munroe said.

“There are a lot of big players in this market, and they are will down on the chart,” he said. “That is probably why they are providing that guarantee, which was a bit surprising to me. It's going to be tough for them, but they are being aggressive.”

XO GUARANTEES NATIONAL WHOLESALE SERVICE

Best price guarantee

XO will beat any competing price along select major routes for 2.5 Gb/s and 10 Gb/s wavelength services.

Install guarantee

XO will provide a one-month service credit if it fails to meet the agreed upon install date for these wavelength services.

90-day trial guarantee

XO will allow customers to trial IP transit services for one 90-day period.

Source: XO Communications