At this week’s J.P. Morgan Investor Conference, Kate Johnson, Lumen Technologies president and CEO, said the company is disrupting the telco industry, and fiber is an essential aspect.
“If you think about our priorities,” she said, “it’s really all about capturing this sort of once-in-a-lifetime opportunity that we see in the spike in demand for fiber and the associated network services that you can run on fiber.”
To seize this opportunity, Lumen is pursuing innovation and improved customer experiences. Johnson reported that the company continues to evolve its network-as-a-service (NaaS) capabilities and its security roadmap. She also noted that innovation on the cost side is important.
“We’re an amalgamation of companies,” she said. “We have four separate network architectures. There is a huge opportunity to create one simplified, unified architecture. The reason why that’s so important is it delivers two pieces of value: The first is a massive cost takeout, and the second is it enables the digital experience that we’re so excited to bring to customers in the telco space, which nobody else is doing.”
Digital capabilities
Johnson described telco as the final frontier for digital transformation.
“I think the real opportunity is what Amazon taught us: that the customer experience is the product,” she said. “It’s not about buying a book, or WD-40, or frozen shrimp; it’s about buying anything you want anytime, anywhere, instantaneously. That is the customer experience that the cloud era, the digital era, has sort of made everybody’s expectations set for, and that’s what we are doing.”
Customers, said Johnson, are looking for a virtual private fabric that delivers a different experience.
“There are at least three places where telco ceded innovation to digital upstarts and tech,” she said, “and it’s in connectivity, security, and communications or voice. And we have a right to win there because of our assets, because of our intellectual property. And with this play-to-win mindset and this belief system that the customer experience is the product, we’re now going after those markets.”
Johnson gave ExaSwitch, the network interconnection ecosystem that Lumen created in collaboration with Google and Microsoft, as an example of new digital capabilities. Another example was Lumen’s NaaS.
“We’re integrating NaaS into layers 1, 2, and 3, IP Ethernet waves, natively into the fiber so that we can provide a better experience out of the gate,” she said.
Developing innovation in security has also been an area of focus for Lumen.
“We took Black Lotus Labs,” said Johnson, “their data algorithms and various machine learning models, and we said, ‘hey, we are good at identifying bad actors on the internet, and we’ve done that eight times for the United States government over the past couple of months. Why don’t we package up that capability in the form of a digital service to make it available to all enterprises?’ This is the kind of innovation that we do every day in tech that is new for telco.”
Scaling to meet demands
For companies focused on keeping the network ahead of business needs, Lumen offers capacity and optical wavelength services on demand.
“That is not something that anybody in the industry can deliver today,” she said. “And with NaaS and ExaSwitch, we are going to be first to market with that capability.”
The customer experience, said Johnson, is what will secure customer loyalty and funnel customers to other Lumen offerings.
“The vision is any port, any service, anytime, anywhere, right? Right now, it takes six months to order a circuit with most telcos. So, this notion of instantaneous gratification, which we have all become accustomed to in the digital era, is unique.”
Segmented growth
Lumen expects the public sector to return to growth before the other sectors, followed by mid-markets.
“What we see in the public sector are these really big contracts with agencies that we have deep, deep relationships with that were done and announced a while ago, but they don’t convert to revenue for a while because they’re super complex, with multisite locations, requiring a lot of design work, a lot of implementation time required to start getting to the benefits part of the life cycle,” said Johnson.
For mid-markets, Lumen believes a well-trained and well-prepared sales force is key to success.
“So mid-market is the space where you’ve got to be fast,” Johnson said. “You’ve got to be agile. You need clear value props for your products and to be long on the channel. And we started off by augmenting our direct sales force, tightening up our product bundles, and instrumenting the sales life cycle—so we are training everybody to be able to bring the pitch.”
Lumen expects enterprise to be the last segment to return to growth, which Johnson attributed to a historical lack of sales and marketing platforms with good data. The company has such a platform now and, according to Johnson, is ready to seize enterprise opportunities.
“The thing you have to know about large enterprise is that it’s every industry and its companies that can range from absolutely gigantic global conglomerates down to fairly small companies,” she said. “So, every single one of their networks is a snowflake, right? And that requires a lot of sales engineering and technical support for us to help these companies modernize.”
Johnson also spoke on Lumen’s strategy of potentially separating the consumer and enterprise assets over time due to each’s different return profiles. Enterprise, according to Johnson, has a payback period of 18 months to three years, whereas consumer has a payback period closer to nine or ten years.
“Long term, we think that separating them makes a whole lot of sense,” she said. “It’s about timing, and what we’ve been focused on over the past 18 months is making each of them as healthy as they could possibly be.”
Regarding the shifting landscape, Johnson believes that Lumen has the right strategies in place to succeed.
“I think what I’m most excited about is this notion of we planned our way to be lucky,” she said. “It’s one of these things where you can basically prepare to deliver something, but the market is different today than it was even 18 months ago. And I think luck is the definition of when preparation meets opportunity.”
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Hayden Beeson
Hayden Beeson is a writer and editor with over seven years of experience in a variety of industries. Prior to joining Lightwave and Broadband Technology Report, he was the associate editor of Architectural SSL and LEDs Magazine.