UPDATED: FairPoint to bring Ethernet backhaul to 1,300 New England towers
FairPoint Communications (Nasdaq: FRP) on Thursday forecast that its Ethernet Fiber to the Tower (FTTT) business in northern New England will grow by more than 39 percent this year.
The telco has made significant progress with FTTT, having only entered the market segment in 2010.
As of the end of last year, FairPoint reported that it had signed contracts to more than 950 mobile towers on its fiber-based backhaul network. By the end of the year, the telco will have over 1,300 connections.
"FairPoint has a significant amount of revenue tied to TDM services supporting those towers, so making this technology transition is critical not only for future growth, but for retaining the revenues we have enjoyed for so many years in this space," said Michelle Hymson, vice president of wholesale sales for FairPoint, in an interview with FierceTelecom.
This year, the telco said it will add over 1,300 new connection points on its network based on contracts with various major wireless operators. Since it could be serving more than one wireless operator at each tower, FairPoint will provide Ethernet Virtual Connections (EVCs).
Having made the investment already in building out fiber and Ethernet capabilities to towers in northern New England, Hymson said they'll be able to serve various operators that could reside at each tower.
"Because of the multi-tennant nature of the business, it's not just a 1:1 ratio so with each each tower that we add, it's not like we're adding one carrier Fiber to the Tower connection point, but multiple carriers," she said.
Hymson added that the "construction associated with bringing fiber to these towers comes with its own capital investment and that's where these multi-tennant towers are such a good payoff for FairPoint and allow us to support future investments in future towers."
Although it would not reveal what wireless operators that have bought their wholesale service, FairPoint said it will expand its Ethernet-based backhaul services to over 1,000 towers by the end of the year in all three of its Northern New England state territories: Maine, New Hampshire and Vermont.
Although every tower varies, the initial starting point is 200 Mbps EVCs, with each connection including a primary link and a backup circuit for redundancy.
To date, FairPoint has invested over $200 million in Vantage Point, an IP/MPLS network that it uses for both its wholesale and retail business customers.
Like other wholesale providers, FairPoint has been building out its fiber network accommodate new wireless radio technologies, including small cells.
"The other opportunity on the horizon, which we have not yet participated in although we put our toe in the pool for, is the small cell opportunity," Hymson said. "They have an interesting play in low-density regions like ours, but we're actually seeing most of the interest initially in our higher density metropolitan markets. I think that's going to significant play for us through 2013 and probably be our headline in 2014."
Although each wireless operator's small cell application varies, a recent Infonetics report said they will use a mix of both wireline-based fiber and copper from service providers like FairPoint in addition to licensed and unlicensed spectrum to support small cells.
Michael Howard, Infonetics Research's co-founder and principal analyst for carrier networks, said that "a cumulative $5 billion to be spent worldwide on outdoor small cell backhaul equipment between 2012 and 2016" along with "the nearly $44 billion being spent on macrocell backhaul equipment during the same 5-year period."
Regardless of the type of small cell configuration wireless operators use, wholesale and retail Ethernet services have been a growth engine for FairPoint. In Q3, the service segments collectively contributed about $10.7 million of revenue, up from $10.2 million in Q2 2012 and $4.2 million in Q3 2011.
At that time, FairPoint forecast further growth in both retail and wholesale Ethernet as "regional banks, healthcare networks and wireless carriers transition away from legacy technologies like frame relay."
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* Added quotes from Michelle Hymson.