XO Launches IPfolio, Offering IP Service Enhancements and Simplified Pricing

| Jan 18, 2008 | Business Network Services - U.S. | Competitive Update

| Analyst: Cindy Whelan

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

January 16, 2008 -- XO Communications announced enhancements to its IP service portfolio and the launch of a new service brand. XO has upgraded its XOptions Flex service to include 4.5 Mbps and 10 Mbps options, and it is rebranding the service as XO IP Flex. XO SIP has been extended to all 75 markets in XO’s national footprint, and the carrier has changed the pricing structure for its converged IP services to a model based on port size rather than the number of voice lines. XO is launching XO IPfolio as the banner under which XO SIP, XO One iPBX, XO MPLS IP-VPN, XO IP Flex, and XO IP Flex with VPN will be offered.

Analytical Summary

• Current Perspective: Positive on XO’s launch of XO IPfolio and IP service enhancements, because the carrier is backing up an October 2007 announcement of initiatives to expand its presence in the enterprise market with the delivery of enhanced services designed to meet the needs of enterprise users. XO has steadily enhanced the depth and breadth of its IP services, by extending XO SIP to nationwide availability and by offering bandwidth options of 1.5 Mbps, 3 Mbps, 4.5 Mbps, and 10 Mbps for XO SIP and XO IP Flex customers, plus a 45 Mbps option for XO SIP.

• Vendor Importance: High to XO, because the carrier has publicly stated that it stepped up its enterprise market focus, and it needed to follow through on this plan with the delivery of services designed for this market segment. XO launched several key services in 2007 and announced plans to expand aspects of these services in 2008 (see “XO Expands IP Services Portfolio,” September 28, 2007). XO’s ability to execute successfully on these plans and deliver the planned enhancements, along with a simple pricing structure, early in 2008 increases the carrier’s visibility in the enterprise market.

• Market Impact: High on the converged IP services market, because XO has expanded its IP service capabilities and reach, and it has launched a new pricing model in order to win over enterprise users. In the past, XO has targeted small and medium-sized businesses, and the carrier is now making a move up market to reach enterprise users. Based on the enhancements XO has made to its IP service portfolio over the past year and its history of aggressive initiatives such as its “3 Guarantee” offer, XO demonstrates it is willing to do what it takes to gain a foothold in its target markets.

Recommended Competitor Actions

• Carriers that offer traditional line-based and usage-based models can emphasize that these methods offer customers a clear view of what they are being charged for, and that customers are paying only for what they use. They can mention that flat-rate models often favor the carrier, since enterprises likely overestimate calling needs rather than underestimate them and subscribe to higher-tier plans than they actually need.

• AT&T and Verizon can emphasize their extensive track record in serving large enterprise users, as well as their global reach. Both carriers have broad network coverage that extends from the local and metro level to a blanket national presence and international destinations. They can also show off that their VoIP services are available with their line of IP VPN offers.

• Sprint Nextel can emphasize its lengthy track record in providing services to large enterprises along with its recently launched IP Voice Connect Service, which is delivered over the SprintLink Global IP network. Voice Connect includes a subscriber portal that supports click-to-call, integration with Microsoft Outlook, and many other features. Sprint can work with enterprise users in integrating mobile voice and data business services, including IP VPNs.

• Level 3 can emphasize its IP VPN services, which are offered over its national MPLS backbone. Level 3 offers support for multiple classes of service, enabling enterprise users to prioritize voice and data traffic over the VPN. The carrier offers a hosted VoIP solution for customers that wish to outsource their VoIP service.

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Competitive Positives and Concerns

Recommended Vendor Actions

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