Zayo sees dark fiber dollars in content providers, data centers, and school districts

Zayo Group is seeing that its investment in dark fiber is becoming attractive not only for wireless operators, but increasingly for data center operators that need low latency routes in harder to reach locations.

Dan Caruso, CEO of Zayo, told investors during the 3rd Annual MoffettNathanson Media and Communications Summit, the company continues to win deals to build long-haul dark fiber routes for data center providers.

"There are a lot of dark fiber routes that don't exist, but there's companies out there that want them to exist because they put data centers in the middle of nowhere and they need direct, lower latency paths to connect up these data centers," Caruso said. "They need more than just two paths, but often need three or four that often go between these data centers."

The candidates for dark fiber connectivity are those companies that keep all of their data in a few sites.

"If you're one of the big West Coast companies and your business gets replicated in three or four data centers, every one of those four are extremely important," Caruso said. "You're going to need multiple lower latency connections and those routes just don't exist so part of what drives some of those how to get more direct routes between cities and these hard to reach places."

Besides data center operators, Zayo sees pockets of strength for dark fiber with internet content companies.

These companies are building what Caruso says are much deeper and denser networks at the edge that feed into data centers and connectivity to other partners. This could be used to get content to their end users, acquiring content from other sources.

"The big West Coast type internet companies, and companies similar to those, are a source of ongoing demand," Caruso said. "The tech companies that have been funded in past years and are scaling up that involve big data analytics, cloud and over the top entertainment are all sources of significant demand."

At the same time, Caruso said Zayo is seeing "more traditional verticals like health care and even school districts with a lot of the federal funding are contributing as well."

Caruso said the finance industry "has continued to consolidate and they probably are a declining source of demand, but as the years go on that could change."

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