Uniti’s Wallace: Tier 2, Tier 3 market dark fiber, small cell activity is rising

fiber wire
Wireless backhaul is just one part of Uniti Fiber that it sees potential to serve with fiber services.

Uniti says dark fiber and managed service small cell backhaul requests from the nation’s largest wireless operators in the Tier 2 and Tier 3 markets it serves are growing.

Uniti Fiber has continued to expand its fiber network through a series of acquisitions, including most recently Hunt Telecom and Southern Light, as well as its own organic network builds.

Mark Wallace, CFO of Uniti, confirmed to investors during the Goldman Sachs Communicopia event that small cell service requests are ripe.

“We continue to see an increasing need for dark fiber even in the Tier 2 and Tier 3 markets," Wallace said during the event, according to a Seeking Alpha transcript. “And I think surprisingly to some people is that we continue to see a lot of order flow for small cells in Tier 2 and Tier 3 markets.”

Wallace added that the demand for wireless operators to expand coverage in secondary markets debunks the notion that they are only focused on NFL cities.

“Whether it is either in the metro areas in those markets, or whether in a campus environment, we are pretty much seeing activity for small cells from all the carriers in those markets as well,” Wallace said. “Small cell isn't just a Tier 1 phenomenon.”

Fiber leasing rising

Uniti continues to find that the demand for dark and lit fiber leasing from the largest wireless operators in Tier 2 and Tier 3 markets is also on the rise.

As Verizon and AT&T consider whether to lease or purchase, or build fiber themselves to support wireless backhaul, Uniti is well positioned to accommodate these providers.

Verizon, for example, told investors earlier this week that the demands for each market will dictate its fiber purchasing decisions.

Matt Ellis, CFO of Verizon, said it “is going to be geography by geography will determine what the best and cost-effective approach will be to add the capacity and generate the returns off of.”

Wallace said he is seeing the same themes already playing out.

“In some cases they are building, buying or leasing fiber and it really just depends on the market,” Wallace said. “I think in the Tier 2 and Tier 3 markets, it's much more economically beneficial for them likely to continue to lease.”

Wallace added that “you will continue to see carriers going to want different things.”

Besides responding to more requests for small cell backhaul, Uniti is enabling wireless operators with more dark fiber as they densify their networks to support future 5G deployments and all-you-can-eat data plans.

“We've recently seen an increase for dark fiber as the carriers think about additional network densification sort to anticipate the rollout of 5G,” Wallace said. "I would say we've certainly recently as some of carriers have gone to unlimited plans, we’ve certainly seen bandwidth increases within our market and are processing those as quickly as we can.”  

Expanding retail business services

But wireless backhaul is just one part of Uniti Fiber that it sees potential to serve with fiber services.

By making acquisitions of other providers such as PEG Bandwidth and more recently Hunt and Southern Light, Uniti Fiber can more effectively pursue a wider range of retail business service opportunities, particularly in education and healthcare.

These acquisitions enhanced the scale of the service provider’s network. After completing the Hunt and Southern Light acquisitions, Uniti Fiber’s network now encompasses over 30,000 route miles and 1.1 million fiber strand miles, with 3,000 route miles of dark fiber presently under construction.

“We acquired number of different product lines so now we have now we have people that have expertise E-Rate, for example,” Wallace said. “We have enterprise to wholesale sales forces and so now we can take sales forces and sell those products and services across a much broader network footprint that we could have previously.”