MegaPath to Raise Ethernet over Copper Performance in 2011-2012 Expansion

| Mar 17, 2011 | Network Access and VPN Services
| Analyst: Brian Washburn

Event Summary

March 15, 2011 -- MegaPath announced that it will add new Ethernet over copper (EoC) infrastructure to 300 central offices in 15 markets by year-end 2011 and an additional 35 markets and 680 central offices by year-end 2012. The carrier will update CPE and core infrastructure to support symmetrical Ethernet speeds from 2 Mbps to 20 Mbps, as well as eventually adding VDSL2-based access to its existing broadband and Ethernet access options. The company's new EoC services offer QoS for voice and employ MegaPath's MPLS core network for control and security.

Quick Take

Analytical Summary

• Current Perspective: Positive on MegaPath's plan to upgrade platforms across 50 metros nationwide in 2011-2012, because the provider needs a new generation of access technologies to win over customers no longer satisfied with aging conventional DSL broadband or high-cost/low-speed T1 services. MegaPath already offers EoTDM and EoSDSL across its national footprint. The Ethernet over copper (EoC) upgrade uses newer generations of bonded DSL to offer more capacity at a lower price per bit, an attractive option for SMBs, distributed enterprises, and MegaPath's wholesale partners.

• Vendor Importance: High to MegaPath, because the ADTRAN platform being deployed by MegaPath can support EoC to start, but it also is capable of supporting services such as VDSL2. The incumbent providers and cable operators are continually increasing available broadband speed tiers through technologies such as DOCSIS 3.0, PONs/GPONs, and VDSL/VDSL2. VDSL2's theoretical performance up to 100 Mbps up/downstream would put MegaPath firmly in the game, able to provide speeds as high as leading incumbent broadband peers and competitors.

• Market Impact: Moderate on the national access market, because MegaPath is playing both wholesale and retail competitor. MegaPath will use the latest EoC and other technologies on its new platforms to boost its service speeds at a lower cost per bit. Competitors will be able to source MegaPath's services for their own use; at the same time, they should anticipate that rivals may source MegaPath's access technologies for their services. However, MegaPath's upgrade plan will only add EoC to about the top 15% of central office locations the company serves.

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