Labor costs, capacity demands challenge middle mile growth

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FORT LAUDERDALE, Fla.--Although the growth in the middle mile has created opportunities for incumbent carriers, ILECs and upstarts, it also has some inherent challenges--such as labor costs and citing issues. Not surprisingly, much of the demand for middle mile capacity is coming from wireless providers that are trying to keep up with escalating mobile broadband growth.

"We have compounding bandwidth challenges," said Scott Mispagel, vice president, network planning and engineering at Frontier Communications. "Everyone is using more bandwidth and we are adding quite a few new customers because of the markets we acquired from Verizon that were underpenetrated and underserved.  This makes modeling difficult." Mispagel was speaking as part of a panel discussion during the FierceTelecom executive breakfast, "Building a Successful Middle Mile Strategy," held in conjunction with the FTTH 2014 event here.

Frontier isn't the only carrier feeling pressure on the middle mile. According to Curt Frankenfeld, director, access strategy and development at CenturyLink (NYSE: CTL), mobile broadband growth is forcing CenturyLink to upgrade its network to accommodate the demand. "It forces us to modernize our network and gives us capital to do that." However, he noted that it's difficult for companies like CenturyLink to predict growth. "It creates stress on the middle mile.  Cell providers don't necessarily want to go in that middle mile. It's a challenge because it almost becomes a custom middle mile for the cell providers."

For newcomer Massachusetts Broadband Institute, which recently completed a 1,338-mile fiber network that provides service to 122 towns in western Massachusetts, wireless broadband growth will likely be an opportunity in the future. And while cell towers may not be located in the current middle mile route, Brian Lippold, advisor to the Massachusetts Broadband Institute, said that often when building fiber to a cell tower there is the chance to serve other customers near the tower as well.

For Independent Optical Networks, or ION, the wireless opportunity may also come in the form of Distributed Antenna Systems, or DAS, that are being deployed in campuses and hospitals, locations where ION already has fiber. ION, which focuses on serving rural communities in upstate New York and parts of Pennsylvania and Vermont, completed its $50 million middle mile network project in January.

Noting the escalating demand for bandwidth, ION President Joe Calzone also said that one large wireless carrier recently signed a deal with ION to provide fiber to some of its cell towers. And during the contract process, the amount capacity needed to outfit 100 towers with fiber doubled. "The first order for 100 towers went from 50 Megabytes per tower to 100 Megabytes," Calzone said.

The demand from mobile is so great that some are predicting that the middle mile fiber networks may soon be handling a lot of the mobile broadband traffic. Frankenfeld said that CenturyLink is seeing a big push for getting the traffic from mobile devices to the fixed network. "In the next few years, we might see half of the mobile broadband traffic switched to our network. That means a rapid increase in bandwidth," Frankenfeld said.

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