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tw telecom Executive Overview 4Q2011
- 2. A Unique Set of Network Assets Over 27,000 local and regional fiber route miles across 75 markets Nearly 15,500 buildings with fiber based services and connectivity National footprint interconnected with fiber and 10 Gig IP backbone 2
- 3. We Have A Fully Differentiated Asset • Massive Local Optical Network Connecting nearly 15,500 enterprise buildings Largest competitive fiber based provider (lit buildings) True fiber based alternative to the incumbent Managed Quality of Service Robust portfolio of services 3
- 4. Strong Financial Performance • 2011 Financial Results Our Revenue Mix Is Increasingly • $1.367 Billion in Revenue Enterprise Focused… • $497.7 Million in POSITIVE M-EBITDA • $91.3 Million in Levered Free Cashflow • $57.9 Million in Net Income • 2.0% Sequential Revenue Growth • 7.4% Y/Y Revenue Growth • Financially Disciplined • EBIDTA Positive since 1999 • Manageable Debt Structure While Data & IP Revenue Grew 18.2%* • $484.9 Million Cash and Equivalents on 2011 over 2010 Hand tw telecom 4Q/EoY2011 Results • Investing 20-25% of Revenues in Capital *(1) Adjusted revenue for end of year 2011 and 2010. Expenditures, the majority of which is to (2) For a reconciliation to GAAP related numbers please see the supplemental earnings information on the Company’s website, www.twtelecom.com. reach enterprise locations 4
- 5. Strategic Direction & Corporate History 5
- 6. tw telecom – A Corporate History Time Warner Time Warner Telecom announces Time Warner Telecom Communications expansion into 5 new markets - Time Warner launches Metro Formed as a JV Minneapolis, Chicago, Atlanta, Ethernet product between U S WEST Telecom separates Columbia, Denver portfolio (March, 2003) and Time Warner to from Time Warner (May, 2000) Time Warner deliver residential Telecom rebranded Cable cable telephony Time Warner Telecom (April, 1993) (July, 1998) “tw telecom” Larissa Herda named completes purchase of GST Communications, completing (March, 2008) President and CEO of Time Warner Telecom expansion into 15 new markets (July, 1998) (January, 2001) 1993 1996 1998 1999 2000 2001 2003 2006 2007 2008 Time Warner Time Warner Time Warner Telecom Communications renamed Time Warner Telecom Telecom completes secondary Time Warner Telecom completes Secondary acquires ISP offering eliminating offering raising $925M inc.net controlling shareholders (April, 2000) (Sept, 1998) becoming fully independent (Sept., 2006) Time Warner Telecom completes offering of $400M in Time Warner Telecom completes Time Warner Telecom High Yield Notes Time Warner Telecom acquires Xspedius (July, 1998) IPO raising $290M completes becomes Communications, completing (May, 1999) EBITDA Positive expansion into 31 new (2Q99) markets (October, 2006) 6
- 7. Critical Differentiators • We operate our own fiber network • Over 27,000 route miles of fiber – over 70% within the metro • Ability to construct unique footprint, scale bandwidth, deliver robust array of network services • We offer a robust set of products and services • Industry leadership position in Ethernet Services – metro and wide area • We strive for world class customer care • Local management – sales & operations, coupled 2 national operations centers create a unique coverage model 7
- 9. How We Think About It 9
- 10. Ethernet and MPLS Service Classes 10
- 11. Co-location Services Localized Disaster Recovery & tw telecom Customer Site Business Continuity Strategy and Co-Location Cabinet Co-location services include: • Dedicated Internet Access • Storage Transport • Private Line Transport • IP VPN • Native LAN solutions • Local dial-tone • Business continuity • Hardened / central office facility Optical & IP Network • Communications • Power (Generator & UPS) • Security • Fire Detection / Suppression • Environment / HVAC 11
- 12. Our Ethernet Position • Leading & innovating with our Ethernet & IP strategy • Growth engine for enterprise business • Taking share from the incumbents • Leveraging our fiber footprint and connected buildings • Nearly 15,500 fiber connected buildings can have Ethernet Services • Delivering a differentiated value proposition • Highlighting convergence • Delivering Data, Internet AND Voice over IP • Industry Leader • 2011 Frost & Sullivan Growth Leadership Award for Retail Carrier Ethernet Services • 2010 MEF 9 & 14 Certification • 10 Gig, Fractional 10 Gig, Long haul • 2006 Awarded “Best in Class” for metro Ethernet Services -Atlantic ACM 12
- 13. Fractional 10 Gig Ethernet Services 2 Gig Ethernet for Servers, Storage 4 Gig Ethernet for Telepresence, Storage A Unique tw telecom Offer IP Access 4 Gig Ethernet for Telepresence, IP Access Fractional 10 Gigabit Ethernet Access (2 to 9 Gig) offering more cost effective capacity, scalability, & Class of Service to support growing Enterprise bandwidth demands for multiple, differing 10 Gig Ethernet for applications Data Center Apps MPLS, IP Access Central Office Storage & Server Systems 2 Gig Ethernet for 13 Telepresence, Office Apps IP Access
- 14. Ethernet Ecosystem On-Net Access -Nearly 15,500 On-Net Enterprise Buildings Cloud Access •Industry Leading Ethernet ~ 350 3rd Party Data Services Portfolio Centers •World Class Customer Care •27,000 Fiber Miles - Ethernet NNI - Special Access Internet Platform Enterprise Networking Local Reach - Thousands of -Access to 50%+ of all U.S. Global Reach -Top 10 Most Connected Internet Backbone Enterprise owned Businesses Corporate Data Centers -MPLS IP VPN Partners with Global Reach 14
- 16. IP Network Services • Variety of Connectivity - DS-1 to 10 Gigabit Ethernet • TDM Services to T1 to OC-N • Ethernet – Available in Fractional and Burstable • From 2 Mbps to 10,000 Mbps • Robust Service Suite tw telecom - one • Dedicated, Switched Solution Options • Service Level Commitments of the 10 most • 24 x 7 support – Locally, Nationally interconnected IP • Primary, Secondary DNS, BGP support networks WorldWide • Bandwidth Performance Reports 16
- 17. IPv6 from tw telecom • tw telecom has been successfully implementing customer solutions with IPv6 since 2008 • tw telecom uses a dual-stack arrangement, where both IPv4 and IPv6 traffic are handled across the same Internet circuit. • A single direct network will be assigned a /64 • /64 is size of today’s IPv4 Internet – squared! • A network with a routed connection will receive a /56 • /48 available with documented support provided to ARIN. • BGP is supported with Provider Independent space. These /48 netblocks may be requested directly from ARIN. • Customers may tunnel IPv4 / IPv6 networks directly 17
- 18. tw telecom VPN Solutions • MPLS Standards Based • RFC 2547 Compliance • Fully Meshed Architecture • Entirely Scalable • Compliments Ethernet WAN (City- • TDM - DS-1 to OC-12 (622 Mbps) to-City) Solutions • Ethernet to Gigabit (1,000 Mbps) Speeds • Business Class Capabilities • Wide Applications Support • Branch Office Connectivity • 5 Classes of Service supporting Best Effort to • Multimedia Support Latency Sensitive Voice, Video • VoIP 18
- 19. Converged Services Fully integrate Voice (lines, & PRI or Digital Trunks), secure Internet access, IP VPN and managed services onto a single IP connection. 19
- 20. Managed Services • Service provides full ordering, provisioning, maintenance and management of customer edge router equipment • Delivered in conjunction with tw telecom’s data service portfolio – Metro and National Ethernet, Internet Access, MPLS IP VPN • Foundational capability for ongoing converged applications networks • To deliver Internal Data, Internet Access, Voice 20
- 21. Managed Security Services CPE-Based Included Features: • L3SPI Firewall • Customer defined security policies at • Comprehensive Security customer premise Consultation • DDoS protection (limited to premise – doesn’t protect bandwidth) • Installation of Service • Point-to-point data encryption via IPSec VPN (inclusive of on-site technician • Network Address Translation for CPE installation) • 24x7x365 Monitoring and Response Network-Based • Dedicated Team of Security • L3SPI Firewall Professionals • “Clean-pipe” to the premise via customer • Policy Change Management* defined filters employed in the core • Monthly Executive Report* • DDoS Mitigation through static filters • Service Level Agreements • Augments CPE security solutions • Allows higher efficiency of existing security tools • Allows complex features to be used at the network edge *Inclusive with Premium level service, additional 21 charge for Business level service
- 22. Managed Firewall Reports tw telecom 22
- 23. Managed Security Services (DDoS Mitigation) DDoS Mitigation Service Included Features: • Available in two options: • Comprehensive Security • “Clean-bandwidth” via a combination of Consultation ‘learned’ traffic behaviors & alarmed • Installation of service (non- customer defined thresholds for an entire intrusive) circuit • “Clean-IPs” via a combination of ‘learned’ • Proactive monitoring with traffic behaviors & alarmed customer defined customer confirmation and thresholds for a specified IP Address mitigation of attack • Adapts to a dynamic data environment • Dedicated Team of Security • False positives eliminated through ‘attack Professionals verification’ by tw telecom’s Security • Policy Change Management Operations Center • Reporting Portal providing detailed • Attacks blocked closest to origination of and executive service reports attack as technically feasible (furthest from • Service Level Agreements the customer premise) 23
- 24. IP Backbone Value Summary • National Footprint with “Best of Breed” infrastructure • Multiple 10 Gb/s backbone links • Diverse / Redundant Network Connectivity • Within Network Backbone • To Customer Premise • MPLS used within the core increases performance, enables additional services • 60% utilization target for backbone links and connections. 24
- 25. Intelligent Network Strategies 25
- 27. Evolution Of The Cloud 27
- 28. tw telecom’s Intelligent Network Real-time, granular visibility of application traffic Applications Aware and the ability to adjust prioritization by specific Networking application on the fly to optimize performance and minimize non-business impacting bandwidth consumption. Cost effective, on-demand, dynamic bandwidth capacity when and where you need it allowing Dynamic Capacity your network to adopt to specific application traffic demands Easy access to end-to-end network performance metrics including utilization, CoS, latency, jitter and packet delivery to assist with planning, trouble Enhanced Management shooting and fine tuning your network for optimal application performance. Backed by comprehensive performance SLAs 28
- 29. What An Intelligent Network Enables Traffic/Demands Types of Applications ERP Phase 3 Applications Aware Financial Networking Consumer Traffic Telepresence Phase 2 Dynamic Capacity Storage Phase 1 Instant Portal Enhanced Management Visibility 29
- 30. The Capabilities of Intelligent Networks Visibility Applications Aware Networking Dynamic Capacity Doorstep-to-Doorstep real time visibility Granular visibility segment by segment Enhanced Management Ability to detect network congestion Ability to make real time network decisions 30
- 31. Customer Network Click to Export Data Choose Class of Service Key Metrics by Location, Sort Ascending or Sample Summary Report Descending Click to View Site Click to view Choose Time Frame Specific Charts POP to POP Metrics 31
- 32. Site Specific • Actual data for a specific site: • Bandwidth Utilization • Jitter • Latency • Packet Delivery • Measures Premise to POP traffic • Reports available hourly, daily, weekly or monthly • Data presented as frequent as every 5 minutes • Easy export to Excel 32 Sample Latency Report
- 33. The Capabilities of Intelligent Networks Telepresence Storage Applications Aware Networking • Ability to add “on-demand” capacity Dynamic Capacity • When & where customers need it • More cost effective than fixed capacity • Improved ROI - pay for what you use Enhanced Management 33
- 34. Dynamic Capacity* • Ordering interface via MyPortal (prototype) • Allows customers to scale to line rate • Provides appropriate budgeting information • Real time performance management • Highlights bandwidth utilization during increased consumption period 34 * Prototype and proposed user interface screens
- 35. The Capabilities of Intelligent Networks Applications Aware • Improves - critical application network Networking performance • Mitigates - unwanted bandwidth consumption Dynamic Capacity Financial Consumer ERP Traffic Enhanced Management 35
- 36. Applications Enabling Platform ~350 3rd Party Data Centers Connected 36
- 37. Voice over IP 37
- 38. Our VoIP Product Strategy • Rapidly develop and implement new services that create new and incremental value for our customers • Cap Legacy Switching Infrastructure – Grow Next-Gen Capabilities • Implemented Traditional Services • Implement Value Added Services Packet/IP Infrastructure Gateway End User Unified Messaging Digital Trunks IP Trunks Multimedia Conferencing PRIs Voice VPN (Site-to-Site) Hosted Telephony Long Distance VoIP Virtual Number Service Distributed Call Center Disaster Recovery VoIP “Features” to Digital PBXs Mobility International Termination VoIP Network Peering IM, Presence Management Calling Cards Next-Gen IAD WiFi Integration HD Voice Lower Cost Voice Convergence Value Added Applications Current Capabilities Future Opportunities 38
- 39. Convergence > 100% Bandwidth Increase 20 – 30% Savings on Monthly Spend 39
- 40. What Makes tw telecom Different? 40
- 41. Customer Experience Strategy tw telecom’s commitment to customer service excellence is based on: • passionate people in local and national customer service roles • customer service choices personalized to your preferences • voice of the customer programs that help us capture customer feedback and use it to improve the service we provide With every customer interaction, we strive to Listen, Collaborate and Improve 41
- 42. Passionate People Over two- thirds of our employees are dedicated to customer service 42
- 43. Unique Approach to Customer Care STRONG LOCAL OPERATIONS AND MANAGEMENT TEAMS Network Application Customer Project Provisioning Maintenance & Organization Management Installation Repair • Applications • Comprehensive • Local Operations • Pro-Active Network Engineering Project Management Implementation Monitoring • Solutions Design • Implementation • National Provisioning • Centralized Trouble Coordination Ticket Coordination • Consultative • Testing Approach • Local Field • Service Assurance Engineering • Proactive Status Follow Up • Network Documentation • Proactive Status 43
- 44. My Portal – Transactional Services tw telecom • Comprehensive services “dashboard” • Allows customers to track and manage ongoing business with tw telecom • On-Line access to variety of activities • View Invoices, Pay Bills, Track Orders, Manage Circuit Inventory, Initiate and Manage Trouble Tickets • Delivers proactive level of customer care to facilitate a better service experience 44
- 45. My Portal - Performance Portal • Network performance data delivered graphically to highlight: • Network bandwidth utilization • Quality of network services • Enabling applications management • Compliments existing enterprise network management infrastructure to improve total service management • Circuit by circuit level detail for Ethernet, MPLS IP VPN, Internet Access services 45
- 46. Voice of the Customer •Customers consistently said that tw telecom provides a superior customer experience compared to the other telecommunications providers they work with *tw telecom and competitor satisfaction ratings from tw telecom's September 2009 Customer Relationship Survey 46
- 47. Voice of the Customer Program • External validation - Top 10 Finalist for Forrester Voice of Customer (VoC) Award • Cultural employee embracing of VoC through training and incentives • Selling the VoC as critical pillar in CE strategy - empowering Sales to have a different conversation with customers • Vision: • Master the improvements • Skip the plateau Award winners: American Express, CDW, Dell • Jump start innovation 47
- 48. Examples of Our Satisfied Customers Public Sector Health Services Professional Services Financial Media & Information Industry Leaders 48
- 49. Summary 49
- 50. tw telecom • tw telecom’s nearly 20 year Track Record of Success Means… • Financial Strength to Grow • Product and Service Innovation • Industry Leading Data & IP Services • Metro Ethernet, IP Networks, VoIP • Broad Fiber Optic Reach • Over 27,000 Route Miles of Fiber • Metro Ethernet available to nearly 15,500 Buildings in 75 Markets 50
- 51. Thank You 51
Editor's Notes
- We’re also continuing to innovate and leverage our fiber networks. We’ve recently introduced a Fractional 10 Gig Ethernet service that gives customers the bandwidth they need, where they need it, without having to buy the entire 10 Gig of bandwidth. Some others offer 10 Gigabit Ethernet, but the way they deliver the service they have to build each circuit on a custom basis, dedicating the electronics and fiber just to that customer. And the customer has to take the entire 10 Gig, even if they only need 2 or 4 Gig. With this unique service offering – we don’t know of any other provider delivering this service this way – customers can have 2 Gig at a Regional office, or they can have 6 Gig at a Disaster Recovery site, or they can have 10 Gig at their data centers. We continue to see customers needing more bandwidth at locations that are larger. This unique service offers the flexibility customers need at price points that meet their budgets. This is how we win customers and grow our share.
- IT Customers for a long time have had full control over their servers and storage, their local area networks and their application development and delivery. This has resulted in an the IT manager’s ability to deliver a secure, scalable and predictable network experience when enabling applications for their users. When their users hit the “enter” button, the IT manager knows how that application will perform and what the user will experience Today’s IT environment is now being challenged with the introduction of Cloud Computing. The IT manager likes the idea of Cloud Computing for its ability to expand infrastructure quickly, support an applications environment for short term and without capital investments in new infrastructure – servers and storage. Cloud is appealing for its “pay as you go” economics The problem with using Cloud Computing is that the IT manager starts to lose control over the applications environment. The servers and storage reside in a data center somewhere outside the control of the IT manager The connection to the data center where the cloud applications reside are often times reached only through the Internet The Internet cannot deliver a secure or predictable network environment The network plays a key role in enabling Cloud Computing This is the key link in the service delivery chain that supports the application delivery to the end-user The network must perform to particular service levels in delivering the application.
- The cloud business is evolving into 3 different models The first model for cloud computing is what we refer to as “the Walled Garden” approach Here we have telcos that are getting into the Cloud Computing business either by building it out themselves or by buying Cloud companies The theory here is that you would have the cloud service and network offered by 1 company. The problem with this is Telcos have never been good at building IT applications And with a walled garden, when there is a new application that arises it takes time for the provider to integrate that application into the walled garden The walled garden approach is slow and may not offer the applications or services the enterprise is looking for. The second model is a Best of Breed applications approach Here we have great applications like Salesforce.com or Amazon Web Services or Rackspace. The problem is that none of these providers have a network to deliver their applications over. They ask the enterprise to use the Internet to have access to their applications. The CIOs we speak with say that using Cloud Computing services over the Internet is just a science experiment. They want and need a secure, scalable and predictable network experience to use these applications. The third model is one tw telecom is promoting. It leverages a secure, scalable and predictable network experience to access the Best of Breed applications that reside in the 400 of our own colos and 3 rd party data centers already connected to our network This is The Intelligent Network.
- Begin with the foundation – Ethernet platform expertise / Resiliant networks / Reach / One network platform This unique combination of network intelligence allows tw telecom customers to forecast, plan and adapt their networks to harness their mission critical applications more efficiently. Intelligent networks give you the visibility, flexibility, and control you need to easily manage your application performance in a distributed IT environment.
- The Intelligent Network – a service suite being developed and delivered uniquely by tw telecom – enables a secure, scalable and predictable network experience for the IT manager to implement a Cloud Computing services strategy and deliver those applications to their end-users. The service suite includes: Enhanced Performance Management. This is where the customer is able to view their network performance – each segment along the path – in real time to see how the applications can perform over the network. This is unique in the industry Dynamic Capacity. This allows the customer to scale their bandwidth over our Ethernet network to increase capacity real time (immediately) when the applications environment requires it. Applications Aware Network. The third phase of our Intelligent Network is to give customers real time access and ability to reprioritize their traffic across the network and move traffic around to meet the needs of the business critical applications.
- Enhanced Performance Management. This is where the customer is able to view their network performance – each segment along the path – in real time to see how the applications can perform over the network. This is unique in the industry
- Dynamic Capacity. This allows the customer to scale their bandwidth over our Ethernet network to increase capacity real time (immediately) when the applications environment requires it. Most people in the industry refer to this capability as “bandwidth on demand”. In the first phase of our deployment of Dynamic Capacity, the customer will have the ability to go to our portal and turn up the bandwidth they need – up to the line rate of the bandwidth – and the network delivers the incremental capacity immediately. In the second phase of our deployment of Dynamic Capacity, the customer will have an application or network condition that will automatically increase the bandwidth required to support the application. For example, if the network is say 80% utilized, the customer may want to automatically increase capacity by 20%. Another example would be for Telepresence video conferencing. Telepresence requires an incremental 20 Megabytes of bandwidth during the video call. When our network sees the telepresence call set up, we would allocate the required incremental bandwidth, and when we see the customer “hang up” the telepresence call, we would take the bandwidth back down to the normal levels. We would do this automatically and immediately.
- Applications Aware Network. The third phase of our Intelligent Network is to give customers real time access and ability to reprioritize their traffic across the network and move traffic around to meet the needs of the business critical applications. We intend to give the customer the ability to constrain or mitigate traffic that would take network resources away from business critical applications. For example, when the customer is running a storage or PeopleSoft process, we would give the customer the ability to prioritize those applications while we mitigate or constrain general traffic like YouTube or iTunes traffic. This way, the customer has the network resources they need to best manage their business critical applications environment.
- - empowered to advise and collaborate on delivering solutions to meet your needs
- 3 mins And this year, we received that external validation of our leadership position from Forrester Research. And we’re in good company There are numerous Success Criteria for a Mature Voice of the Customer Program that we have obtained from objective practice consultants: Executive Sponsorship Financial Results Cultural Adoption Operational Adoption Lara to add One of the innovative leading elements of our program is our cultural adoption – one of the harder elements but easier here because of the culture Larissa nurtures from the top down We are selling this – this gives us a new conversation to have with customers But our program is not without challenges – we need to skip the plateau and jump start innovation