TDS Telecom may be making waves with its own 1 Gbps fiber-to-the-premises (FTTP) services for residential, but the telco is being no less aggressive with its own fiber-to-the-building (FTTB) initiatives for businesses in the territories it serves as an ILEC and as a CLEC.
The telco takes a three-pronged approach to its FTTB initiative that addresses the needs differently across the ILEC, CLEC and targeted fiber builds.
Similar to AT&T's (NYSE: T) FTTB initiative as part of its Project VIP program, what has prompted TDS to drive fiber into more buildings was its own desire to get fiber-based services into more area businesses.
In an interview with FierceTelecom, Mark Lyons, manager of commercial product management for TDS Telecom, said that each of these domains comes with its own set of opportunities and challenges.
"TDS corporate wanted to explore through some discussions they had to proactively build fiber into business areas," Lyons said. "It's traditionally difficult for a CLEC to do because of the finite resource of a fiber ring, but in our ILEC areas it's totally different because we have a lot of fiber."
In the ILEC space, TDS will conduct an evaluation on what a particular building's needs are from a bandwidth perspective, outside plant costs and how much it will cost to terminate the fiber inside the building.
Given the amount of fiber it has in its ILEC territories, bringing fiber into a building typically requires building a lateral extension and gaining permits to bring facilities into a location.
"A lot of fiber in our ILEC territories is really close to business opportunities and if we have a need to deliver fiber because of bandwidth considerations or there's a lack of copper facilities to satisfy their bandwidth needs are, we'll do a fiber build," Lyons said. "This includes traditional outside plant costs to deliver the fiber entrance into the building, inside plant costs to terminate it, and those costs are relatively low on the ILEC because we're not trying to maintain ringed electronics."
However, the process of bringing fiber into buildings in its CLEC territory is more complicated. Unlike the ILEC territory, TDS Telecom's CLEC business does not have an abundance of fiber facilities and each community is based on a ringed architecture.
"Typically, the builds are going to be a bit longer," Lyons said. "You have some kind of ringed architecture in a community and you have the outside plant costs to build it, but then you're trying to maintain the rings so it costs more on the electronics by a factor of 5X."
To complement its fiber builds in the CLEC area, TDS will also purchase wholesale fiber-based Ethernet services from other larger providers like AT&T. The service provider will purchase such a service as a way to reduce costs while getting services to more customers quickly.
"Similar to what a lot of the competitors do in traditional AT&T and Verizon (NYSE: VZ) areas, they are trying to maintain these rings, it costs more to do so that's why services like AT&T Switched Ethernet that's available on a wholesale basis to us and many other has some appeal," Lyons said. "We can buy the service for a competitive price, make a few bucks on it and they deliver the service."
One way to get over the fiber build expense in the CLEC area was to pre-build routes along streets in a community located near buildings with a particular focus on multi-tenant units.
This strategy enabled it to gain two benefits: negotiate better rates with local construction companies to dig up streets to lay fiber and connect it to buildings and exposure to potential new clients.
"We could negotiate good rates where we had a contractor to build six miles of fiber in a suburban business park versus doing ten 300-yard builds, so our prices were very good," Lyons said. "We had a lot of exposure because we had contractors with backhoes and trucks up and down the streets and we paired that up with a very aggressive marketing campaign and worked with a couple of primary multi-tenant buildings and we signed a master building entrance agreement."
While TDS is seeing more building owners be proactive and cooperative to get their buildings ready for fiber, the majority of them tend to be in the targeted fiber build domain.
A key element of its target fiber builds involved establishing a multi-tenant master agreement with a building owner. By having the multi-tenant master agreement in place, businesses that resided in a multi-tenant unit (MTU) could go to TDS Telecom to get fiber-based Ethernet and related services.
"The master building entrance agreement was one of the thoughts that became surprisingly successful to take into these multi-tenant buildings," Lyons said. "Oftentimes an occupant is reluctant to do something to a building they don't own, but if your owner is already approved for this to be delivered, you don't have to worry about it."
Finally, in the targeted fiber build domain, TDS continues to find opportunities to either convert existing copper customers to fiber or attract new customers in business parks in cities like Appleton, Wis.
Within these business parks, TDS has been able to migrate 30 percent of the existing customers to fiber. On top of that, it has been able to also pick up 25 percent additional customers that used another provider.
"Our objective is to pick up 25 percent or more who were not TDS customers," Lyons. "We're growing our share from zero to 25 percent of the total population and then we got 30 percent of customers that are TDS customers already."
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