Zayo carves niche in fiber-based small cell backhaul, turnkey installation services

While the largest U.S.-based wireless operators are in various stages of their small cell roll outs, Zayo is seeing growing demand to provide fiber-based backhaul connectivity and turnkey solutions.

There's plenty of evidence that the small cell trend is rising amongst a number of the largest U.S. wireless operators. Sprint (NYSE: S) and Verizon Wireless (NYSE: VZ) have launched an aggressive set of small cell deployments -- a factor that's clearly benefitting Zayo's fiber-based backhaul business.

Sprint, according to a report by RBC Capital Markets, will deploy 70,000 small cells. In order to keep costs in check, the wireless operator may have a third-party network partner construct and own the small cell network. Likewise, Verizon Wireless has launched similar initiatives in Pennsylvania where it is lighting small cells with partners Crown Castle and ExteNet, including 50 small cells in the Pittsburgh area.

"While wireless operators aren't conducting widespread deployments of thousands of these things yet, they're definitely deploying them for specific coverage and capacity reasons," said Dave Jones, SVP of mobile infrastructure at Zayo, in an interview with FierceInstaller. "We are building out fiber to small cell sites to several markets -- some of them pretty decent sizes like on the order of a couple hundred -- and others are starting off smaller than that."

But fiber connectivity is only just element of how Zayo helps wireless operators achieve their small cell deployment goals.

Besides dark fiber and lit services like Ethernet, Zayo's Mobile infrastructure unit provides a number of complementary services, including site planning, installation, permitting and network monitoring. The majority of the small cells will be placed on existing aerial utility poles. 

While he could not name any specific customer names, Jones said that wireless operators remain divided on how much they want Zayo to manage their small cell backhaul deployments. Given the challenges of securing rights-of-way, permits and overall network construction, Zayo will also attach the small cell equipment to a utility pole, turn it up and then provide the fiber backhaul back to an adjacent macro tower.

"We also have a turnkey small cell deployment service offering, which some carriers are interested in and some are not, but basically we will secure the real estate for the small cell which is a typically a utility pole," Jones said. "It could be an existing one or a new one and we're placing the small cell equipment ourselves."

In addition to network buildout services, Zayo provides remote hands maintenance service and a dedicated 24/7 network operations center to respond to any faults that occur.

Jones said that the remote hands maintenance service has resonated with "some of these carriers that are not quite ready to throw that on their technicians' plates yet. So we'll do that for them as long as they want it. So we're seeing interest in that as well as the fiber."

Getting access to utility poles, all of which are either owned by local utilities or municipalities, can either be an easy or a challenging process. When it gets ready to do small cell deployment, Zayo will amend an existing pole attachment agreement so it can install equipment.

"Generally, when we have an interest in a small cell deployment in a market, we'll go in and look to amend those agreements that allow us to put the equipment on there as well, because usually it's a separate step and is not part of the fiber agreement," Jones said. "Some of those poles are owned by utility companies and some are owned by municipalities."

Jones added that the process varies with some saying "'we know what you're talking about,' and for others it's an education proces. And we're banking those as we go along."

Fiber to the tower continues to be a hot selling business for Zayo.

As of the end of June, it sold services to over 800 macro tower and small cell sites that leverage previous anchor fiber-to-the-tower (FTTT) network builds already in place. Later in July it secured a new agreement with an unnamed wireless carrier to provide FTTT service to 500 towers, one that not only expanded its wireless backhaul business, but also could be used to target new enterprise and content service opportunities. 

Regardless of the potential challenges faced in small cells, having more turnkey services makes sense as it provides some level of differentiation as it competes with other wholesale small cell providers.

Zayo is hardly alone in its desire to provide turnkey small cell and wireless backhaul services. Other fellow fiber-centric competitive providers like Unite Private Networks (UPN) have also begun to providing similar turnkey solutions to its wireless operator customers.

Related articles:
Report: Sprint to deploy 70K small cells nationwide with help of a network partner
Zayo sees growing interest in dark fiber for macrocell, small cell backhaul
Zayo grows fiber-to-the-tower footprint to 800 macro tower, small cell sites