Case study
Concentric Network Corporation
www.xo.com
About xo:
During the first quarter of year 2000, NEXTLINK and Concentric Network Corporation (NASDAQ:CNCX) agreed to merge the two companies in a transaction that is expected to combine NEXTLINK’s unrivaled network assets with Concentric's strong positions in the business-grade DSL and shared Web hosting markets as well as its e-commerce capabilities in application hosting, managed security, and virtual private networks (VPNs). The transaction, was valued at approximately $2.9 billion at the time of the announcement.
NEXTLINK Communications, Inc., is one of the USA’s fastest growing providers of broadband communications services. It’s a VA-based company, that provides high quality, broadband communications services to businesses over fiber optic and broadband wireless facilities across the United States. The company is the largest holder of broadband fixed wireless spectrum in North America. Before the merge with concentric it’s licenses where covering 95 percent of the population in the top 30 markets in the United States
Concentric Network, is a global provider of leading data and Internet services.
XO offers local and long distance voice, Digital Subscriber Line (DSL) access, Web hosting and e-commerce, Virtual Private Networks (VPNs), dedicated access, global transit and application infrastructure services for delivering applications over the Internet or a VPN
Earlier Dan Akerson was XO Chairman and CEO, but after XO’s financial crisis and reorganization he now holds the position as a consultant. Now Nate Davis is President and COO at XO Communications. Carl Icahn, 67-years old billionaire now holds a controlling position in reorganized XO, and also has assumed the role of Chairman of the Board
http://asia.reuters.com/newsArticle.jhtml?type=businessNews&storyID=2388077
questions.
1. Was creating a new brand, xo, for the Concentric/Nextlink alliance a good idea?
Building a new online brand is expensive and time demanding, but for Concentric and Nextlink the new brand had a clear purpose. When Concentric and Nextlink merged in 2000 it signified the company’s transformation into a full-service, integrated broadband communication and service provider. It became a new era and therefore needed a new brand to underline that together they were creating something new and better. One vendor will offer you all you need of communication services. Simple to use and understand, and gives the company a flat rate bill.
The brand XO signifies the underpinnings of simplicity that make this company and its services unique. They are making a statement with the brand by showing an ‘X’ to indicating that they are right on target and an ‘O’ representing their ability to offer a complete set of services.”
This were their message. But to study the success of the new brand I will use the “10 step of building a new online brand” model:
Sources:
Nextlink and Concentric Become XO Communications
http://www.xo.com/news/28.html
10 step branding process
1. Clearly define the brand audience
Specifically targets small and medium-sized businesses
XOptions™ bundled solutions were created especially for businesses looking for a one-stop shop communications approach
2. Understand the customer
XO’s product’s are simple to understand and easy to use
They offer 24 hour a day 7 days a week services.
The XO industry-changing offerings are a group of integrated and predictable flat-rate communications packages that include local, long distance, Internet Access and web hosting (including E-mail and domain registration) This make the purchase process more easy and less time demanding, and the customer receive one invoice.
3. Identify key leverage points in customer experience
Buying process is simplified because of the bundled products. All you communication needs are fulfilled by one vendor. One vendor one invoice.
4. Continually monitor competitors
XO management must monitor competitors advertisement and activities online and offline
In the online world the tendency is that the winner gets everything. The more customers that chose XO the more customer want to chose XO in the future. Positive feed back and a large amount of customers increase your ability to be the winner. (Ref: “den nye øk. C. Shapiro and Hal R. Varian. Cap. 7) This is the reason why XO need to expand it’s network and working towards achieving positive customer response. XO is currently a leader in providing full range of communication product’s in unique bundled solutions for each customer. XO owns the largest footprint of fixed wireless spectrum, which covers 95% of the population in the top 30 U.S. cities. The frequency of the spectrum is 28-GHz and allows XO to offer broadband access services using Local to Multipoint Distribution System (LMDS) technology. This product enables XO to bypass the Regional Bell Operating Companies (RBOCs) and provide direct access to our end customers The XO domestic and metro-area networks are composed of enough metro fiber-optic cable to circle the globe more than 45 times -- 1.14 million metro fiber miles throughout 40 major US cities, including the largest 30 cities in the United States. These MANs provide XO with an unparalleled means to differentiate itself from non-facilities based providers, or long haul providers, that do not have access to the end customer. This is a great competitive advantage.
Source: www.xo.com
Although most of XO's smaller competitors have closed, the biggest companies , particularly the regional phone companies, such as Verizon Communications Inc. now are its closest competitors
http://www.washingtonpost.com/ac2/wp-dyn/admin/emailfriend?contentId=A29247-2003Mar25&sent=no
(more about XO’s competitors in 3rd question/answer)
5. Design compelling and complete Brand Intent
Address the needs of target customer.
http://query.nytimes.com/search/query?query=xo+comm&date=past30days
The message is that with XO you have one vendor to fulfill all you communication needs. And that XO are unique.
Not every telecommunications company is equipped to provide sound and dependable communications services to Fortune 500 and enterprise companies. But then, not every telecommunications company can offer what XO can.
Source: http://www.xo.com/products/
XO Communications offers full communication services, dedicated to world-class, customer care and to providing simple solutions for all businesses from ones just starting to grow to Fortune 500 companies.
XO Communications is a unique name for a unique company.
· XO Communications are customer-centric
· XO Communications have a robust product portfolio,
· XO Communications have a leadership team of seasoned telecommunications professionals and
· XO Communications have the financial resources to ensure they are here for the long haul.
Together, these pieces help XO Communications realize its vision of redefining telecommunications by putting their customers at the center. That's why they are "not just talk." It's a promise of who XO Communications are and what they deliver as a company
http://www.cheapest-phone-calls.com/Phone-Calls/Virginia/XO-Communications.shtml
6. Execute with integrity
XO’s financial crisis may have reduced the customers trust, but XO is working to regain this trust and claim they have raised from their difficulties due to large depts.
XO is seeking to execute with integrity:
We're so confident in our products that if you are not completely satisfied after three months of service, we'll switch you back to your old provider with no hassles or fees.
Source: http://www.xo.com/products/smallgrowing/
7. Be consistent over time
The XO brand has existed only since 2000. Therefore the “over time” term is hard to answer to. But in the short time of XO’s existence the message is clear. XO will provide it’s customers with all they need due to communication. One vendor, one bill, and service 24 ours a day 7 days a week.
8. Establish feedback systems
Labeled as a specific menu
Customer care page were you can write to XO and mail your question to them.
9. Be opportunistic
XO provides broadband communications services to businesses over fiber-optic facilities across the United States. It has plans to enter the global market. It is the largest holder of fixed wireless spectrum in North America, and has acquired exclusive rights to use certain fibers and a conduit throughout a 16,000-mile high-speed, IP-centric fiber optic backbone network that will connect over 50 cities in the United States and Canada when completed.
Source: http://www.internetnews.com/bus-news/article.php/1366631
Washington Post Staff Writer
Saturday, November 16, 2002; Page E01
A judge yesterday approved XO Communications Inc.'s plan to emerge from bankruptcy protection, which means the Reston-based telecommunications firm will soon begin a new life as a private company with a new owner -- billionaire financier Carl C. Icahn -- who plans to look for opportunities to merge XO with smaller telecom firms
10. Invest and be patient
Large investments have been made in technology for the future.
But their rapid growth have been more then their finances could handle.
But recently their finances are back on track because of financier Carl C. Icahn.
Conclusion: XO’s brand building and investment where to heavy, but XO seem to have been rescued from their financial crisis and will prevail under a new leader. XO is a good brand and I believe it will do well in the future.
(http://edition.cnn.com/2001/BUSINESS/05/25/carpetbag/index.html)
Nextlink and Concentric Become XO Communications
http://www.xo.com/news/28.html
2. What are the key benefits that XO will attempt to deliver?
Now we are using broadband to make phone-calls. Earlier it was only written data trough computers that had access to broadband lines, but now also voice is passing trough the cable’s. IP network makes the difference. As of today, the distinction between voice and data communications is gone and the term ‘long distance’ becomes a memory. In the new XO world there are virtually no time or distance restraints. When a customer has a seat on the XO network it makes no difference if they are communicating across the street or across the United States, or if they’re calling on the phone or sending data. XO is a company made up of strategic alliances that make XO provide total communication solution provided by one vendor and you will receive one bill. The XO industry-changing offerings are a group of integrated and predictable flat-rate communications packages that include local, long distance, Internet Access and web hosting (including E-mail and domain registration) services designed specifically for small and medium-sized businesses.
This make the purchase process more easy and less time demanding, and the customer receive one invoice instead of five. XOptions™ bundled solutions were created especially for businesses looking for a one-stop shop communications approach. This is XO’s key benefits . If you have one large vendor that you can rely on, that provide all you need due to communication, and this vendor is more cost effective for you, the choice is simple. XO has made it easy for the customer to choose XO’s product.
- Telephone service
- Internet access
- Web site
- Network
3. Can XO deliver these benefits better than the competition?
There are not competitors that can offer the same range of products in the same scale of network as XO.
To be better than you competitors the company need to chose a strategy. According to M. Porter they will have to differentiate or to be a cost leader.
I can see tracks of both strategies in XO. They have a message of being unique, but XO is also a cost leader. Ref. www.cheapest-phonecalls
http://www.cheapest-phone-calls.com/Phone-Calls/Virginia/XO-Communications.shtml
At the starting point XO is cheap and the customer can save even more by having just one vendor, and receive just one invoice. XO’s main strategy against the competitors is to be a cost leader.
XO’s main product: flat-rate communications packages that include local, long distance, Internet Access and web hosting (including E-mail and domain registration) services designed specifically for small and medium-sized businesses. One vendor, one bill. Customer oriented with service 24 ours a day 7 days a week.
Do XO deliver these benefits better than the competitors? Without to much knowledge about the American communication market, I searched the internet to find competitors to compare XO to.
TALK AMERICA
HOMEPAGE https://secure.talk.com/web.cgi/user/pframelocal.htm?aid=8&source=OVERTURET_A
Delivers voice product, but not data and the specter of products as XO has.
TMC COMMUNICATIONS
Home page http://www.tmccom.com/
Are quite similar to XO.
Target customer are small and medium sized businesses
TMC’s message: TMC takes care of it all
TMC Communications is a nationwide telecommunications service provider offering a full range of voice and data services to meet the needs of any business or residence.
Difference between XO and TMC: XO you’ll get the entire range of business telecommunications in bundled solutions and you receive one bill. With TMC you get both voice, data and internet. But not in integrated solutions and not one bill. TMC’s strategy is not to be a cost leader but to differentiate.
The TMC difference:
Personal Service. When you call TMC, you will talk to a real person. When was the last time you called your phone company and were able to ask for an individual by name? TMC is big enough to meet the most complicated telecommunications demands, but small enough to give you the individual attention you deserve!
EMERITUS COMMUNICATIONS
Home page http://www.emerituscorp.com/
As a wholly owned subsidiary of VarTec Telecom, Inc., eMeritus is a part of the largest privately-held communications corporation in the United States. Operating privately for over ten years. eMeritus Integrated Access allows businesses to consolidate multiple services on one single high-speed access line. With voice, data and Internet connections on one pathway, businesses can simplify network operations and eliminate multiple access costs. This service gives businesses access to eMeritus' long distance network through their local providers. It offers competitive domestic and international flat-rate pricing to the world's top business destinations, regardless of the time at which calls are made.
eMeritus' competitive rates enable businesses to maximize the value of their telecommunications expenditures, and eMeritus communication is working to fit customers' specific needs.
This look like a dangerous competitor to XO. Scale means a lot when it comes to which company the customer will choose and eMeritus is the largest private held company in the states. It have operated for 10 years and XO has existed as a brand for 3 years. I takes time to build a new brand and it’s an advantage for eMeritus that it have existed longer. eMeritus offers voice, data and internet on one pathway, and have flat-rate pricing, competitive rates and are working to fit the customers specific needs.
But eMeritus has not stated which are their target customer. XO’s target customer are small and medium-sized businesses. It may be that eMeritus are heading for the larger customers, or the entire range of customers. The difference between eMeritus and XO are who they state to be target customer. And eMeritus has a competitive advantage in being larger and has existed longer.
ACC BUSINESS
www.ACCBUSINESS.COM
ACC has the same target customer as XO, and deliver both voice, and internet.
ACC Business provides all of its customers' access to the AT&T (old Bell company) Network, the largest, most advanced and reliable telecommunications network in the world