November 2009 Archives

Colby Synesael and Jon Charbonneau of Kaufman Brothers have recently produced the first really solid piece of research on dark fiber-based service providers in a long time - Rise of the Horizontally Aligned Fiber Company - A Newly Defined Opportunity

What is a horizontally aligned fiber company? 

In their own words:

"Horizontally aligned fiber companies focus almost entirely on IP based/data oriented services. We estimate a 15% three-year industry CAGR for revenue, more than double wireline telecom, based on increasing bandwidth demand for things such as 

1) low latency requirements, 
2) use of online video, and 
3) storage/SaaS/cloud computing. 

We also believe demand for fiber-to-the-tower backhaul service will accelerate demand, although its longer payback period has limited the amount of companies chasing this opportunity thus far."

How do horizontally aligned companies differentiate themselves? 

"Although IP-based/data oriented service is the fastest growing sub-segment for both horizontally and (typically larger) vertically aligned wireline service providers, many horizontally aligned companies have been able to differentiate their offer by focusing on 

1) unique routes, and 
2) unique locations. 

In addition, pricing for intra-city and regional-based fiber solutions has been relatively stable compared to legacy circuit switch pricing that is being impacted by increasing pressure from cheaper IP-based offers and the current economy."

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This is really good research because it focuses on the real issues and where the real value is found:

1) In dark fiber control - "ownership", either by IRU, or long-term lease. This controls underlying costs as well as provides for the control and flexibility of technology advances in DWDM, Ethernet and IP by those that actually deploy the network.
2) Unique routes! Physical diverisity is one thing, but also fiber type, age, count, aerial, or burried and points of interest that can actually be interconnected to along the way - such as NEW data center sites and, or towers (that currently have NO fiber)
3) Low Latency - this is very route specific, such as New York to Chicago and back, and VERY important to those that seek it as milliseconds equate to millions of dollars.

A few things of interest to note are that they see this is a NEW opportunity. Continue Reading...

Indonesian telco PT Indotsat president Harry Sasongko said that they will build a new 1300km subsea system called SKKL to be installed in cooperation with NEC. It will have four landing points on the islands of Tanjung Pakis (Karawang, West Java), Sungai Kakap (Pontianak, West Kalimantan), Tanjung Bemban (Batam), and Changi (Singapore).

For Island Nations this is equivalent to a major inter-national fiber build and given the size (population and geography) of the countries involved this is a big step. It is yet another example of how many Nations of the world have recognized the need for fiber to support broadband and the applications that ride above it and have a plan in motion to do something about it.

The five years following the completion of these subsea and National fiber systems will be quite an amazing time to watch IP applications be born, evolve and mature. Massive intellectual wealth will be created along with untold financial gains for those that invest TODAY in the proper fiber infrastructure to bring it all about.

Continue Reading...

I came across this blog mention of the recent Zayo announcement about them bringing fiber (and their transport services) to more towers in the USA.

"As 4G networks start coming online in force and people start using them to their fullest potential, those who are ready with fiber stand to make good money."
Rob Powell

Right on Rob Powell!

The USA is just catching on to what other countries (most of which are much smaller geographically hence their advanced state) already know - the future is mobile and people use a ton of data, so fiber is essential for backhaul from towers.

I was in London last week speaking at a unique conference - the Dark Fibre Convention. (yes they spell it fibre). The fact that they have such a gathering and it is the 2nd annual says a lot. A specific event around dark fiber would never happen in the US right now as no one really understands the issues/demand around the need for "new" dark fiber as it relates to wireless backhaul, Ethernet for the enterprise, Internet growth, etc. Many people in the US continue to believe that there is enough fiber already out there and no new routes ever need to be built.

Continue Reading...