Fatbeam takes two-pronged approach to keep fiber installation costs in check

Fatbeam has had to develop a two-pronged installation process that incorporates its own resources and third parties' depending on the nature of the build to increase efficiency and control costs.

Delivering broadband speeds that start at 1 Gbps, Fatbeam provides services extending to 400 Gbps and dark fiber as needed to a mix of business enterprise, healthcare, and education and government customers.

Being a smaller provider, Fatbeam's biggest cost comes with underground installations where it has to bore pathways underground to install conduit that will carry fiber to its customer locations.

While it could take the process in house, the service provider is outsourcing installations that require boring to third-party contractors for the foreseeable future.

"Boring underground is probably the most costly item that we have and splicing is right in there, but we've elected to not do our own boring," said Greg Green, president of Fatbeam in an interview with FierceInstaller. "I think we're going to stay with anything related aerial and we'll do our own splicing."

Complementing its mix of third-party partners, the service provider currently has its own network crew it uses for various projects.

"By having our own crews, we're able to reduce our costs so we can enter more customers because we keep it in house instead of contracting it out," Green said. "We found some success in that."

But even as Fatbeam finds way to control costs, Green admits that fiber installation costs aren't showing any signs of coming down.

"I tell you what, the cost of fiber is going up, and there's no question if you talk to UPN or anybody, the days of building fiber for $40,000 a mile are over," Green said. "The cost has gone way up and the demand has risen as municipalities and Google Fiber are building out, and as those guys are building others are trying to stay competitive."  

Similar to other service providers, Fatbeam has found that when it uses aerial plant via existing utility poles it will also use its own crews to install fiber it can also cut costs.

"In our particular case some of the smaller markets can do aerial and when that opportunity presents itself we can use our crews to install our own fiber, and that's another way we can keep our cost structure down," Green said.

Unlike Google Fiber (NASDAQ: GOOG) and AT&T (NYSE: T), which have battled over pole access in larger markets such as San Francisco, Fatbeam does not face major challenges in getting pole access.  

What makes it easier for Fatbeam to get pole access is the fact that it is operating in smaller markets such as Coeur d'Alene, Idaho and Yakima, Wash. where the competition is typically limited to a smaller incumbent telco and maybe a cable operator.

Fatbeam has a number of existing relationships with large utility companies, including Pacific Power and Light and Avista.

"When you think about make readies in Seattle and New York City, it's completely different than going into market with a population of 100,000," Green said. "Because of the market size we're in we can avoid a lot of the make ready issues and while they don't go away they are a bit simpler."

Given the size of company Fatbeam is, it typically uses its own construction crew on jobs that require hooking up just a few sites to its fiber network.

"We'll mostly use our construction crews on small E-Rate markets where there's only two or three shcools or when we're building enterprise customers out," Green said. "Otherwise, when we have 20 or 40 schools we go out to bid at that point with other construction companies because our crews aren't designed to build 40-50 miles of fiber and time is of the essence."

Related articles:
Fatbeam says 63 percent of its E-Rate customers are using dark fiber
Fatbeam acquires EMAN Networks' Spokane Valley network, gains 24.5 miles of fiber
Frontier says E-rate funding should not fund middle-mile overbuilds
Fatbeam brings 2 Gbps fiber network to Butte, Mont., school district

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