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tw telecom Executive Overview 4Q2011


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The question asked by those who switch to tw telecom isn\'t "Why tw telecom?" but rather "Why didn\'t we switch to tw telecom sooner?" That\'s because we see it as less of a business-to-business transaction and more as a people-to-people dedicated partnership.

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tw telecom Executive Overview 4Q2011

  1. 1. tw telecomExecutive OverviewFebruary, 2012
  2. 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. 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. 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, reach enterprise locations 4
  5. 5. Strategic Direction & Corporate History5
  6. 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 productbetween 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 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. 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
  8. 8. Product Portfolio8
  9. 9. How We Think About It9
  10. 10. Ethernet and MPLS Service Classes10
  11. 11. Co-location ServicesLocalized Disaster Recovery & tw telecom Customer Site Business Continuity Strategy and Co-Location CabinetCo-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 / HVAC11
  12. 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. 13. Fractional 10 Gig Ethernet Services 2 Gig Ethernet for Servers, Storage 4 Gig Ethernet forTelepresence, 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. 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
  15. 15. Internet Services Suite15
  16. 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. 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 directly17
  18. 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. 19. Converged Services Fully integrate Voice (lines, & PRI or Digital Trunks), secure Internet access, IP VPN andmanaged services onto a single IP connection.19
  20. 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. 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, additional21 charge for Business level service
  22. 22. Managed Firewall Reports tw telecom22
  23. 23. Managed Security Services (DDoSMitigation) 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. 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. 25. Intelligent Network Strategies25
  26. 26. Bridging the Gap26
  27. 27. Evolution Of The Cloud27
  28. 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 SLAs28
  29. 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 PortalEnhanced Management Visibility29
  30. 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. 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 viewChoose Time Frame Specific Charts POP to POP Metrics31
  32. 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 Excel32 Sample Latency Report
  33. 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. 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 period34 * Prototype and proposed user interface screens
  35. 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. 36. Applications Enabling Platform ~350 3rd Party Data Centers Connected36
  37. 37. Voice over IP37
  38. 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 Opportunities38
  39. 39. Convergence > 100% Bandwidth Increase 20 – 30% Savings on Monthly Spend39
  40. 40. What Makes tw telecom Different?40
  41. 41. Customer Experience Strategytw 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 provideWith every customer interaction, we strive to Listen, Collaborate and Improve41
  42. 42. Passionate People Over two- thirds of ouremployees are dedicated to customer service42
  43. 43. Unique Approach to Customer Care STRONG LOCAL OPERATIONS AND MANAGEMENT TEAMSNetwork 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 Status43
  44. 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. 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 services45
  46. 46. Voice of the Customer•Customers consistently said that tw telecom provides asuperior customer experience compared to the othertelecommunications providers they work with *tw telecom and competitor satisfaction ratings from tw telecoms September 2009 Customer Relationship Survey46
  47. 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. 48. Examples of Our Satisfied Customers Public Sector Health Services Professional Services Financial Media & Information Industry Leaders48
  49. 49. Summary49
  50. 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 Markets50
  51. 51. Thank You51