Zayo’s aggressive bets on building out fiber networks may have initially been viewed as risky, but now the service provider is getting a steady flow for more fiber to fuel wireless and online content providers’ needs for bandwidth.
Dan Caruso, CEO of Zayo, told investors during the Citi TMT West Conference that the notion of fiber glut is no longer a concern.
“The fiber assets are positioned well,” Caruso said. “It was only a few years ago where I would be at conferences like this where analysts would ask is there too much metro fiber out there?”
Caruso added that today the bigger concern is whether there is enough fiber.
“A short period of time later, the pendulum has swung in the other direction: there’s so much of a need for fiber out there and are you sure there’s enough fiber?” Caruso said. “The pendulum has swung the other way.”
While Zayo could not cite specific names, the service provider is seeing several customers come back and demand more dark fiber following an initial order.
Caruso said that customers, particularly internet-facing companies, who place an initial order will come back with a request a larger set of fibers.
“Even on the inter-city side, we’re seeing customers who ordered four fibers on a route saying they need 12 or 24 fibers connecting to major cities,” Caruso said. “They tend to be web-scale type companies so the need for fiber looks like a lot like interconnect and colocation companies.”
Unlike other regional providers that may serve only one or two markets, Zayo is positioned well to address wide-scale fiber needs that span multiple areas.
In the Western United States and Canada, Zayo’s local fiber leaders will put together deals that cut across various geographies, for example.
“Dan Stoll, SVP Fiber Solutions at Zayo Group, and his team may be putting together deals that might involve many markets,” Caruso said. “We might have a competitor in one of those markets, but they are just not relevant because they can’t do that deal. You could also have a relationship with a customer where a deal might not involve multiple markets, but the deal construct gets rolled into multiple markets.”
Caruso added that many of its larger customers don’t want to maintain a laundry list of fiber suppliers.
“Like the data center business, the big customers don’t want to work with dozens and dozens of vendors,” Caruso said. “If you have a great small fiber network in one city, you’re not going to get the attention today of the bigger customers because they would rather have someone like Zayo to do that city over there as well because you’re already doing eight other cities for us.”