AT&T, CenturyLink and competitors are divided on dark fiber potential
Interest in dark fiber has reemerged in telecom due to the escalating demands for business services and by wireless operators that need bigger backhaul pipes to keep up with the insatiable demand for wireless data.
Just how big is the dark fiber opportunity? According to ATLANTIC-ACM US Long Haul Wholesale Carrier Report Card, 27 percent of the participating wholesale buyers reported purchasing dark fiber, and 57 percent of those already buying anticipate increased spends on dark fiber in the coming year.
However, the thirst for dark fiber isn't like the dot-com boom of the late 1990s. During that time, many competitive carriers like Level 3, WorldCom (now Verizon Business) and a host of startups built out dozens of dark fiber networks that were left largely unutilized.
Service providers remain largely divided on providing it particularly to carriers--a number of which could be their competitors in neighboring markets.
The three largest U.S.-based telcos--AT&T (NYSE: T), Verizon (NYSE: VZ) and CenturyLink (NYSE: CTL)--have chosen to sell an array of fiber-based Ethernet or wavelength services. Fedor Smith, president of Atlantic ACM, wrote in a report that their concern is that they would give an advantage to a nearby competitor.
"There were many reasons carriers were hesitant to sell dark fiber in the past, but two of the most prominent were their fear of enabling competitors, and the belief that by selling dark fiber to customers, they were foregoing key long-term revenue," wrote Smith.
CenturyLink, while boasting a 240,000 route mile national fiber network, echoed the idea that it doesn't want to arm the competition with its own facilities. "We don't like to do it," said Curt Frankenfeld, director of access networks for CenturyLink, during FierceTelecom's middle mile breakfast event at the FTTH trade show in Fort Lauderdale, Fla. "If we sell dark fiber today, it could put us at risk for our future."
Likewise, cable operators, while expanding their fiber footprint to serve their own internal backhaul needs and their growing business and wholesale service segments, are also reluctant to enter the dark fiber business.
Cox Business, an early business services and wholesale operator, maintains that it would rather give each wholesale customer a better experience by managing those lines.
"I think only in a very strategic sense that would have to be approved by our senior executive level," said Jeremy Bye, vice president, Cox Business Carrier and Wholesale. "The way we view it with the mobile network operators is we would, in a total cost of operations view of things, deliver a lit service that is more cost effective than them running their own dark fiber network."
That's not to say there aren't suppliers that aren't willing to serve up these services. A number of competitive providers and consortiums--including Allied Fiber, FiberLight, Maine Fiber Company, Wilcon and Zayo--are pursuing a dark fiber strategy.
Hunter Newby, CEO of Allied Fiber, a network-neutral dark fiber, colocation and interconnection service provider that connects multiple wireline operators, sees a strong demand from all segments of the telecom industry, including incumbent telcos, for dark fiber. The service provider recently announced that its 360-mile, 528-fiber-count southeast Florida segment is officially Ready for Service (RFS), while establishing a point of presence (PoP) in Cologix's meet-me room in Jacksonville, Fla.
"Our fiber route in Jacksonville, Florida is obviously an important place and we're signing and connecting to a lot of different networks there who are moving off of buying leased lit to dark fiber," Newby told FierceTelecom. "That's more than a trend--it's a necessity. The physical upper limits of capacity on carrier backbones can't handle it and all carriers and non-carriers want control of everything such as cost per bit, mean time to repair, provisioning, scalability, and they only get that through dark fiber."
The emerging interest in dark fiber is also driving a new wave of consolidation in the wireline industry segment.
Level 3 made the biggest statement last month when it announced its $5.65 billion acquisition of tw telecom. By acquiring tw telecom, Level 3 will be able to connect an additional 35,000 commercial buildings nationwide to its fiber network. More recently, Consolidated Communications revealed its intent to acquire Enventis for $350 million in order to deepen its fiber asset base.
Dark fiber may not be the answer to every network problem or something that every service provider is willing to offer, but it's clear that it is a product that carriers and large enterprises want. And while it's unlikely that large telcos are going to change their minds about feeding the dark fiber animal, carriers and enterprises will have plenty of options to choose from.--Sean