CenturyLink says it is well-positioned to be a key supplier of lit and dark fiber-based backhaul services for wireless operators' upcoming 5G networks.
Stewart Ewing, CFO of CenturyLink, told investors during the Wells Fargo Securities Technology, Media and Telecom event that the telco has plenty of network facilities in Tier 1 and Tier 2 cities it can extend to wireless operators’ towers or small cell networks.
“As wireless operators build out 5G networks, we’ll be an obvious partner in terms of the fiber that we have in the cities as well as out in the rural areas,” Ewing said. “We should be able to work very closely with them to help expand their networks and help expand their capacity.”
CenturyLink will increase its fiber footprint when it completes its acquisition of Level 3 next year.
Already, CenturyLink has established relationships as a wireless backhaul partner for the largest wireless operators as a backhaul supplier to Verizon. When Verizon announced its LTE rollout in 2010, CenturyLink and Qwest were among several wireless backhaul suppliers chosen for the multi-market rollout, for example.
The density of towers connected to CenturyLink’s fiber network is also a key selling point. Currently, CenturyLink has fiber installed to over 24,000 towers in its footprint.
While it has not pursued the wireless backhaul as aggressively as other providers, Level 3 will also benefit from the 5G rollouts as it becomes part of CenturyLink.
“Given that they have that kind of capability with our fiber footprint it should allow us to be a bigger player in that part of the dark fiber market,” Sunit Patel, EVP and CFO of Level 3, said during the event.
A key question going forward will be how the combined company handles dark fiber. Despite growing interest from wireless operators for dark fiber, CenturyLink has traditionally shied away from advertising it as a major product.
However, Level 3 has been actively pursuing dark fiber deals. In the third quarter, the service provider reported $577 million in fiber and transport revenues as part of its Core Network Services (CNS) segment.
“We are in the dark fiber business, and it’s a growing business for us,” Patel said. “We are a broad spectrum company, and dark fiber is a solution that works for a certain narrow band of customers that have the scale and the resources to manage lighting it up and looking after that.”
Patel added that for the customers that want dark fiber, “we have found that it is a valuable thing to do for our customers and generally we have grown our relationships with those customers.”
Besides pursuing wireless backhaul and new enterprise deals for dark fiber, Level 3 and CenturyLink could also gain new revenues from existing dark fiber customers whose indefeasible rights of use (IRU) leases expire.
“There’s a well-defined market for fiber and so we would expect that when any of those IRUs get ready to expire, we expect to renew them with our customers,” Patel said. “It could be another revenue stream.”