Sean Buckley
Feb 1, 2017

Verizon has completed its $1.8 billion acquisition of XO Communications, deepening its metro fiber density in 45 U.S. markets after overcoming an FCC review of the deal.

The XO acquisition fulfills multiple needs for Verizon. For one, the provider can bring its network services like Ethernet to more of its enterprise and wholesale customers. Also, Verizon gains metro networks in 40 major U.S. markets with over 4,000 on-net buildings and 1.2 million fiber miles.

The service provider's intercity network also spans 20,000 route miles connecting 85 cities.

Additionally, the fiber network will help the company to densify its cellular network, and to deploy new 5G technologies.

Besides deepening its fiber footprint, Verizon has entered into an agreement to lease certain wireless spectrum from former XO affiliate NextLink Wireless. Verizon has the option to buy NextLink.

Fellow telco AT&T has also completed a deal to acquire Fiber Tower, deepening its 24-39 GHz millimeter-wave wireless spectrum holdings.

Verizon said it will begin integrating all of XO’s operations and facilities immediately, and anticipates the purchase will deliver over $1.5 billion in operating and expense savings.

Acquiring XO also feeds into Verizon’s “one fiber” strategy, which calls for Verizon to deploy fiber to meet a host of needs, including consumer wireline, wireless and business services.

One city where it is taking this approach is in Boston. Verizon established an agreement with Boston last April via a $300 million, six-year investment plan that will replace the city's aging copper network infrastructure with fiber.

Overcoming regulatory obstacles

Wrapping up the XO deal was anything but easy for Verizon as it faced a number of protests from CLECs and FCC inquiries.

In July, the FCC hit the stop button on an informal 180-day time clock for review of the acquisition applications, on day 86 of the review process. The FCC wanted clarification from both companies on 30 items related to on-net fiber buildings, interconnection agreements, internet backbone networks, and Verizon's plans for XO's existing EoC services.

The FCC’s inquiry followed protests from competitive carriers Windstream and Transbeam, which purchase XO’s Ethernet over Copper (EoC) services to augment their offerings for business customers.

Windstream claimed that Verizon’s acquisition of XO would give the telco and other large ILECs a more favorable position in the Ethernet market, resulting in higher prices for wholesale customers.

Verizon told XO's existing CLEC customers that it would continue to support EoC services after it takes control of the assets.

Verizon said that "intends to grandfather and continue to provide those XO services that are not migrated to an equivalent Verizon service."

The telco also refuted claims that it would gain a larger monopoly of on-net fiber equipped buildings.

Previously, Verizon and XO said that their pending marriage will not hinder competition, as the two companies claim that 96% of the buildings they serve have at least two fiber providers offering services to businesses.

http://www.fiercetelecom.com/telecom...ity-45-markets