XO Acquisition Fuels Verizon Ethernet Growth

Ethernet network cables

Verizon has increased its number of Ethernet ports thanks to its acquisition of XO Communications.

Vertical Systems Group's Mid-Year 2017 Carrier Ethernet LeaderboardThe latest Vertical Systems Group U.S. Ethernet Carrier Services Leaderboard has AT&T and Level 3 in the top two spots, respectively, but Verizon is gaining ground. Verizon leapfrogged Spectrum Enterprise from fourth to third. Vertical Systems attributed the change to Verizon’s recently completed purchase of XO. Verizon bought XO’s fiber-optic business for $1.8 billion.

It’s no surprise that last year Windstream complained that the acquisition would hurt fair pricing in the Ethernet market.

The 2017 Mid-Year Leaderboard stayed almost entirely the same as the 2016 year-end ranking that was released in March. The only difference is that Verizon jumped over Spectrum, and XO disappeared from the list as a result of Verizon’s purchase. XO was ranked seventh in Vertical Systems’ last leaderboard. Frontier joined the challenger tier alongside Altice USA, Sprint, Zayo and Cogent. Read our summary of the 2016 year-end ranking.

“While the pace of growth has slowed from the market-ramp years, demand for carrier ethernet services remains very strong in 2017,” said Rick Malone, principal at Vertical Systems Group. “The revenue and profitability outlooks for many providers are improving as fiber build-outs are completed and pricing begins to stabilize.”

The study noted that Level 3 is the only remaining competitive provider on the list. AT&T, Verizon, CenturyLink and Windstream represent incumbent carriers, and Spectrum Enterprise, Comcast and Cox represent cable multiple system operators (MSO).

Companies on the leaderboard maintain 4 percent or more of the U.S. Ethernet services market, as measured by customer ports. Read Vertical Systems’ announcement.

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