EarthLink says one-box approach will differentiate its SD-WAN service from competitors

EarthLink continues to move its SDN-based WAN (SD-WAN) initiative forward with plans to debut what it calls a one-box solution for its business customers that are transitioning more of their workloads to the cloud.

Speaking to investors during the first quarter earnings call, Joe Eazor, CEO of EarthLink, said its integrated approach to SD-WAN will set it apart from a growing pack of competitors.

SD-WAN applies SDN technology to WAN connections, which are used to connect enterprise networks over large geographic distances. These services will move the network control into the cloud via a software approach.

"A lot of people have launched SD-WAN solutions where it is basically a cobbling together of multiple boxes and actually to provide what are the benefits of SD-WAN but it takes multiple different devices and a location to deliver that service or that value," Eazor said during the call, according to a Thomson Reuters transcript. "We are partnering with a technology provider or two that have great single box SD-WAN solutions with great software orchestration capabilities that then combined with our service capabilities provide a simpler and more cost effective solution over the long run."

Eazor said that its management capabilities will further differentiate the SD-WAN service regardless of whether the service is being carried over its own network or that of one of its interconnection partners.  

"We work with multiple axis providers that have the ability to aggregate and manage numerous types of access, broadband, what have you, across the nation and a nationwide capability that we think no one compares to, and that combined with the technology that we are rolling out and the orchestration capabilities is unique in the market," Eazor said. "And we will also be early compared to where a lot of people are, where they are at today."

The service provider is currently is conducting two customer beta trials and plans a full release of the SD-WAN product sometime later this year.

While the majority of EarthLink's customers will operate in a hybrid fashion, the service provider is in an interesting position to capitalize on the SD-WAN opportunity in that it serves a number of large customers in key industry verticals like retail and hospitality.

On a segment basis, EarthLink's results were a mixed bag as it saw an increase in Carrier/Transport, while Enterprise/Mid-Market and Small Business declined. Enterprise/Mid-Market and Small Business revenues were $104.7 and $62.1 million, down from $114 and $79 million, respectively.

Louis Alterman, CFO of EarthLink, said that the company has implemented elements to reverse the revenue downturn in the Small Business segment.

"They have got a lot of improvements in flight including more targeted account management that has already increased customer renewals, and they've also got new product offerings which will enable us to get more proactive on the sales front," Alterman said. "With both of those things in flight, I do expect further progress in reducing the rate of the decline in this segment."

Alternatively, Carrier/Transport was $36.1 million, up 9.7 percent year-over-year from $32.9 in the first quarter of 2015.

"We've had some good success," Alterman said. "I do think there is more market out there, particularly with the wholesale products that Joe mentioned and we are all excited to have David Zimmer on board to help take carrier transport to the next level."

From an overall financial standpoint, EarthLink's total revenue was $254.3 million during the first quarter of 2016, down 10 percent from the prior year quarter and 2.3 percent from the fourth quarter of 2015. In February, the company sold certain assets related to its IT services product offerings.

For more:
- see the earnings transcript

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