Time Warner Telecom Inc., a Littleton, Colo.-based provider of phone service for businesses, is readying to lay five miles of fiber-optic cable near John Wayne Airport in Irvine.
The county hasn’t seen a lot of expansion of fiber-optic networks here since the technology bubble burst in 2001, said Will Frederickson, Time Warner Telecom’s general manager for Orange County.
The company, a Time Warner Inc. spinoff that still uses its former parent’s name, is laying the line for a new local customer, real estate brokerage Sperry Van Ness.
What Time Warner Telecom calls its “airport ring” will add to the 200 miles of fiber-optic line the company already has in OC.
Fiber-optic cables speed the delivery of phone calls and data to businesses. They’re the backbone for telecommunications companies.
Time Warner Telecom competes in a market with big names.
The top telecom companies,AT & T; Inc., Verizon Commun-
ications Inc., Sprint Nextel Corp. and Qwest Communications Inc.,own and operate their own vast fiber-optic networks.
A good chunk of those were laid during a frenzied period of telecom growth that came after deregulation of the industry in 1996, when President Clinton signed the Telecommunications Act.
The tech boom of the late 1990s also spurred a boom in fiber-optic networks.
Deregulation brought a host of new players to the market. But much of it rests in the hands of the two top players.
AT & T; and Verizon combined have more than 75% of the national market, versus Time Warner Telecom’s 1%, according to a recent BusinessWeek.com report.
“Time Warner Telecom is next in terms of business services,” said Bob Meldrum, a spokesman for the company who has been working there for a dozen years. “Even then, we are pretty small potatoes compared to the big guys.”
The company offers high-speed connections for data networks, Web access and local and long-distance calling for small to midsize businesses.
It’s part of a group of second-tier players that includes cable companies such as Cox Communications Inc. and deregulation-spawned phone companies such as U.S. TelePacific Corp. and XO Holdings Inc.
Time Warner Telecom even competes with Time Warner Cable Inc., a Time Warner Inc. unit that uses cable lines to provide phone service to businesses.
Other players offer phone service by leasing space on the networks of big companies.
Time Warner Telecom gets about a third of its roughly $965 million in yearly sales from leasing its network to other voice and data service providers, Frederickson said.
Even the big guys lease from Time Warner Telecom in areas where they don’t have fiber optics, he said.
The company’s shares are up about 18% in the past year with a market value of about $3 billion.
Time Warner Telecom plans to keep expanding here. It has about 30 local workers, including salespeople, field technicians and engineers.
“We’ve had a 10% growth rate in revenue locally for 2007 and we are adding new customers every month,” Frederickson said.
He declined to give a local revenue figure.
Customers include schools, hospitals, manufacturers and governments.
The company targets what Meldrum calls “the unfortunate 5,000,” or small to midsize companies that “have the same needs as the Fortune 1,000.”
“The big guys are kind of ignoring them, but they have identical needs as large companies,” Meldrum said.
In February, the company landed a $1.2 million contract with the county of Orange and its various agencies.
Owning a network here is key, Frederickson said.
Companies that pay to use other networks typically get charged every time they add a customer, he said.
“We can do what we call ‘sweating the assets,'” Frederickson said. “I can add customers to the fiber ring without incurring any additional expenses.”
Time Warner Telecom got its name from a 1993 joint venture of Time Warner Cable and U.S. West Inc., one of the seven Baby Bells that were spawned by the breakup of the original AT & T; in 1983. U.S. West later became Qwest Communications.
Time Warner was looking to go after business customers on the West Coast, Meldrum said. U.S. West was looking to go after them in the East.
“Our charge at that time in 1993 was to create a business that would envelop and market business products using cable telephony,” he said.
The subsidiary later was spun off and went public in 1999.
Time Warner Inc. remained a big owner until recently. It had as much as a 44% stake in the company up until late 2006, when it sold its shares.
Time Warner Telecom got to keep its parent’s name under a licensing pact that was signed in 1998. The agreement is set to expire in June.
“We will go through a name change and rebranding next year,” Meldrum said.
The company got its start in OC with its $450 million buy in 2000 of bankrupt GST Telecommunications Inc. of Vancouver, Wash., which had operations here.
The company has the right to hold onto the initials “TW” but hasn’t yet decided if it will, he said.
“Time Warner is a very powerful brand name,” Meldrum said. “It’s helped us getting our foot in the door in some markets.”
Time Warner Telecom’s biggest task is getting all the way in those doors, Frederickson said.
“We don’t have a big budget for ads or national TV spots. Neither do we have the budget to sponsor events, like the other guys,” he said. “We rely very much on our referrals from customers in OC.”
