Allied Fiber's Southeast subsidiaries file for bankruptcy protection, seeks alternative options for dark fiber network

Allied Fiber's Southeast network subsidiaries have filed for Chapter 11 bankruptcy protection amidst its struggles to sell dark fiber on its new Atlanta-to-Miami route.

Following a failed effort to build a Northeast network linking New York, Chicago, and Washington , D.C., Allied Fiber turned its attention in late 2012 to building a Southeast route. According to the Chapter 11 filing, the service provider spent $20.5 million on making preparations to build the Northeast route.

It launched plans to construct what it said was a "lower capital cost route extending along railroad right-of-ways" in the Southeast from Miami to Atlanta.

For the so-called Southeast Segment, Allied Fiber built out 708 route miles of fiber with colocation huts about 1,200 square feet in size set every 60 miles along the path of the network.  After completing the network in February 2015, Allied Fiber could not attract enough interest to cover its indefeasible right of use (IRU) costs along the route.

Allied Fiber did manage to attract a number of regional service providers including C&W Networks and Planters Communications, a Georgia-based independent telco.

The Southeast Segment generated $8.5 million in 2015 revenues, but only had $0.5 million in annual recurring revenues. To reduce costs, the company laid off all of the employees working along the Southeast route, then hired back a core group while searching for an alternative to keep the business going.

A possible new scenario for Allied Fiber is that the assets could be purchased by either a large national fiber provider like Zayo Group or a regional player like FPL Fibernet or Southern Light.

Since it does not have a Southeast fiber route of its own and already provides dark fiber to a host of wireless operators and enterprise, Zayo could find the assets to be an attractive addition to its growing network. Zayo has continued to expand its fiber network organically and through purchasing various regional network providers.

Likewise, Southeastern-based regional providers like FPL Fibernet and Southern Light which also have experience in selling dark and lit fiber services, could also find the assets to be a potential complement to their own network holdings.

Southern Light is already very familiar with Allied Fiber as the company signed a 20-year IRU agreement in January.

It could use the Allied Fiber assets to support its growing wireless backhaul business. In December 2015, Southern Light won a new wireless backhaul contract where it will install over 1,650 route miles and 14,000 fiber miles to connect 446 tower sites in Louisiana, Mississippi, Alabama and Florida.

For more:
- telecomramblings has this article
- see the chapter 11 filing (PDF)

Related articles:
Southern Light to build 1,650 mile dark fiber network
Southern Light, Allied Fiber ink 20-year fiber agreement to extend network across Southeast

This article was updated on April 26 to note that it was Allied Fiber's southeastern subsidiaries that declared bankruptcy in a Delaware court.