Fatbeam says 63 percent of its E-Rate customers are using dark fiber

Fatbeam, a regional dark fiber provider serving the Pacific Northwest, is seeing dark fiber adoption by schools in its serving area increase by 63 percent.  

This growth comes as the FCC has put forth provisions that allow school districts to use E-Rate funds to purchase dark fiber facilities.

Under the FCC's E-Rate order that was issued in 2015, the regulator amended the eligible services list to support the equal treatment of lit and dark fiber services. What this means is that local school districts will be able to purchase either kind of service depending on their specific needs via an FCC Form 470 application.

However, the FCC noted that any applicant that issues RFPs for dark fiber will be required to seek bids for lit services like wavelengths over the same time period. Additionally, applicants have to include network equipment and maintenance costs associated with lighting dark fiber in the same application with the dark fiber lease. 

Greg Green, president of Fatbeam, told FierceTelecom that school districts are either lighting up and installing the equipment themselves to take advantage of the dark fiber connection or they are working with a third-party installer.

"We find that they either have a value added reseller (VAR) or a partner that has experience or in some cases internally have the maturity and the technology acumen to do it," Green said. "They are either doing it through the fact that they have the resources internally or they're using a VAR to install their own hardware."

While Fatbeam will typically enter a market with the intent of providing dark fiber and lit services to school districts, the service provider will look for opportunities to sell services to local business customers that want an alternative to the local incumbent telco or cable operator.

Green said that it is seeing other businesses and wholesale customers sign up for service following a school district rollout.

"We were looking at the growth post the school districts, and when you look at our markets it's traditionally about 50,000 to 120,000 in population," Green said. "Those markets have had tremendous success with growth after the initial build of E-Rate, meaning we'll go to a $15,000 to $20,000 contract and in two or three years we're adding another $50,000 of recurring revenue."

Besides selling services to banks, hospitals and other local businesses, the service provider is also selling dark fiber indefeasible rights of use (IRU) leases to other service providers that need connectivity.

Green added that "we're able to grow that market incrementally and we're having good success with that."

Interestingly, Fatbeam's growth in dark fiber services comes as some ILECs like FairPoint and Lumos Networks -- two operators that traditionally did not offer such services -- enter the market.

FairPoint recently began touting its dark fiber services to take advantage of emerging small cell backhaul and E-Rate opportunities.

Green said while he acknowledges ILECs as a potential dark fiber threat, they will be challenged in their ability to price it competitively.

"I can see why E-Rate could drive that behavior from FairPoint, but my question would be is they're going to have to be competitive regardless," Green said. "Let's face it, dark fiber for a traditional phone company or an incumbent is a big move and the next part of it is how competitive can you be when it is your first toe in the water?"

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