Wholesale providers add more dark fiber to their service diet

Sean Buckley, FierceTelecom

Whether it's a traditional carrier that needs to fill in a coverage gap, a content company that wants control over its infrastructure, or a school district that wants to be able to flexibly scale bandwidth to fulfill the growth of digital learning initiatives, we address these issues in our latest special report, Dark fiber creates new fortunes for ILECs, cable and CLECs.

There are various drivers for dark fiber.

On one hand, many of the fiber indefeasible rights of use (IRUs) leases that service providers entered into during the mid-1990s "telecom boom" will expire throughout this decade. Service providers will soon be seeking to either build out new fiber networks of their own or establish new IRUs with their existing suppliers or look for alternative sources.

Another key area of growth is wireless backhaul. Led today mainly by Verizon Wireless (NYSE: VZ), dark fiber will give the operator the ability to scale its backhaul network for its growing 4G LTE and eventual 5G wireless networks. 

However, the dark fiber industry segment is a house divided amongst service providers. While next-gen competitive providers such as Allied Fiber, Fatbeam, FiberLight, Level 3, Wilcon and Zayo are aggressively chasing this segment, traditional telcos and cable operators have shied away from the opportunity, arguing that they would be giving an unfair advantage to a competitor.

Greg Green, co-founder and president of regional fiber provider Fatbeam, said he's not surprised that telcos aren't interested in aggressively offering dark fiber to other carriers.

"Dark fiber is an extreme disruptor for the telcos and the cable companies, and they don't like that disruption in the marketplace," Green said. "Because of that disruption, it's creating a tremendous amount of success and opportunity for us."

Nevertheless, it's hard to overlook the value the overall telecom market is placing on dark fiber.

Consider the fact that Zayo, a 7-year-old company that mainly provides dark fiber and lit services to carriers and enterprise customers, saw its stock soar to a high of $22.85 on the NYSE, driving the company's value to $5.35 billion during its first day of trading in October.

Analysts are also noting the trend. According to Atlantic-ACM, 55.1 percent of wireless and wireline carrier participants in a 2014 survey said they will increase spending on dark fiber.

The growing demand for dark fiber could also be a potential boom for traditional fiber vendors like Corning. During the third quarter, Corning reported that its optical communications segment core sales rose 7 percent to $698 million.   

If you're interested in the dark fiber topic, check out our new special report, Dark fiber creates new fortunes for ILECs, cable and CLECs.--Sean

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