Windstream CEO Tony Thomas says his company’s margins are going up as it taps further into software-defined wide area networking (SD-WAN) and unified communications as a service (UCaaS).

Thomas said in a Tuesday conference call for the Morgan Stanley Leveraged Finance Conference that Windstream has “reoriented” itself on the enterprise.

Windstream’s Tony Thomas

He told investors that the company aims to moderate its top-line revenue decline. While one of its plans is to “improve operational efficiency” and remove interconnection and its $1.6 billion network-access costs, Windstream sees “next-gen” technologies edge network solutions like SD-WAN as an important way forward.

Windstream’s SD-WAN and OfficeSuite UCaaS revenues continue to shine brightly in otherwise middling quarterly earnings. The company launched a VeloCloud Networks-powered SD-WAN solution in January 2017, and used its acquisition of EarthLink to beef up the offering. Thomas says both technologies make for “strategic sales” that add major value to the company.

Thomas said Windstream has differentiated itself in SD-WAN with “tailored solutions” and expertise in both the underlay – the connectivity – and the overlay – the virtual network.

Thomas made a bold claim.

“It’s pretty much unequivocal at this point. We are the leader in SD-WAN, and we have oriented our company and our capabilities around maintaining that leadership position,” he said. “When you think about what makes Windstream unique, it is going to be around our differentiation of SD-WAN along with unified communications through our OfficeSuite capabilities.”

Thomas said that thanks to SD-WAN, Windstream no longer resells costly Ethernet circuits, but rather uses public broadband IP and wireless as access methods. The lowered access expense for Windstream’s SD-WAN and OfficeSuite solutions raises gross margin from 41 percent to 58 percent, according to Thomas.

But shouldn’t Windstream be concerned about cutting into its MPLS revenues? Thomas isn’t, because his company doesn’t sell “on-network” MPLS services.

“Most of our MPLS services are on someone else’s network,” he said. “That’s why Windstream can go all in on its SD-WAN strategy. We’re not worried about the migration of MPLS to SD-WAN.”

And Windstream also isn’t concerned because MPLS moving to SD-WAN is an inevitability, Thomas said. And when it comes to the death of MPLS, Thomas disagrees with the people who think the fade-out will be slow.

“Those folks do not understand the technology. This technology (SD-WAN) changes how networks are going to build from today henceforth.”

But what about a hybrid approach, as vendors like Ecessa have championed? Thomas said hybrid SD-WAN will exist out of comfort, not out of necessity.

“The technology doesn’t require it. That’s simply because of people’s abilities to accept change,” he said. “SD-WAN does what MPLS does but does it better. It just does.”

I wrote in yesterday’s SD-WAN roundup that it will be interesting to see where carriers place the technology in their overall strategy. Will it simply be a means to end, or will it truly be a bread-and-butter offering? In the case of Windstream, it appears to be the latter.