As wireless operators move forward with their C-RAN deployments, it could spell new opportunities for a host of competitive fiber providers and tower providers like Zayo Group and Crown Castle that offer dark and lit fiber services.
A key element in wireless operators' infrastructure is C-RAN, which places a baseband unit at a centralized location that allows an operator to serve multiple remote radio units (RRUs) attached to wireless towers. Each of these centralized baseband units and RRUs are usually connected by a fiber-based connection that's referred to as "fronthaul."
Competitive fiber providers like Zayo, Level 3 and Lightower offer a host of fronthaul services, ranging from Ethernet to dark fiber, a medium that's favored by Verizon (NYSE: VZ) and, more recently, Sprint (NYSE: S).
Jennifer Fritzsche, senior analyst for Telecommunication Services - Wireless/Wireline at Wells Fargo, said in a research note that Zayo and Level 3's fiber networks put them in a prime spot to compete for wireless operators' C-RAN dark and lit fiber fronthaul business.
"ZAYO is best positioned to play here, in our opinion, given its large exposure to the wireless space already, LVLT -- while it typically shied away from fiber-to-the-tower (FTT) builds -- certainly has the size, scale and assets to be a serious player here if it wanted," Fritzsche said.
Zayo can also provide other services including management of small backhaul and C-RAN deployments. Wireless operators remain divided on how much they want Zayo to manage their small cell backhaul deployments. However, the service provider continues to win dark fiber deals for tower and small backhaul, including a recent deal to equip 78 sites in Indiana.
Meanwhile, Level 3 told investors in January that small cells, particularly in dense areas could be an opportunity to sell fiber-based wholesale services.
But competitive fiber providers are just one element of the emerging C-RAN fronthaul segment. Tower companies like Crown Castle will also have an impact.
Crown Castle purchased Quanta last year for $1 billion with the aim of fulfilling what it says are over 3,500 small cell opportunities within its fiber footprint.
Fritzsche said that Crown Castle's acquisition of Sunesys puts it in a good position in the tower company segment to make an impact in the C-RAN fronthaul segment.
"This acquisition gave CCI ownership or rights to an additional 10K miles of dense metro fiber," Fritzsche said. "This transaction not only allows CCI to control some of the connections to its 14K small cell nodes, it also enables CCI to provision dark fiber fronthaul as C-RAN topologies expand."
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