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March 2018

FiberLight, the Black Knight of Dark Fiber, Leads the Way with Cloud Connect, Construction Smarts & Flexible Deals

FiberLight, the Black Knight of Dark Fiber, Leads the Way with Cloud Connect, Construction Smarts & Flexible Deals

Capacity’s Metro Connect conference in Miami Beach is a unique telecom lovefest.

Every late January, the snow birds fly down to escape the frigid North and to hear high-level panel discussions on the progress of North America’s metro fiber market.

So begins a two-day courtship starring metro fiber CEOs and their prospective suitors: telecom investors.  As the CEOs field dozens of questions from industry experts, the investors perk up their ears up in hope of discovering the next hot telecom stock or company to buy.

And in what’s become a beloved ritual, the CEOs on stage are seated in elegant, but very tall white-leather chairs — chairs that would even make Shaquille O'Neal look short.

Yet amid all the cooing and strategic banter at the forum, I wonder: what qualities do investors value most as they dissect these fiber players?  Is it the company’s positioning in key interconnect regions, their financial vitality, workforce experience, company leadership?

Obviously, each of these qualities is vital.  Yet if I had to choose one above the others, it would certainly be leadership, and in running a metro fiber business, I suspect leadership boils down to:

  • Recent and broad experience — Not only is the networking business fast moving, there’s a big premium on knowing the business from many angles — enterprise, content, cloud, data center, mobile, and interconnect.  Only by studying the nautical charts can the captain plot a safe course and avoid hidden rocks and shoals.
  • The executive’s own network — In telecom, “networking” is much more than a technology thing.  Personal networking in the right places is key, and today, friends at places like Amazon and Microsoft count far more than beer buddies at incumbents.
  • An over-abundance of Win-Win genes — Negotiation begins with a solid understanding of where your customer is headed and what he needs to make a deal.  And flexible ways of doing business are increasingly key to making metro fiber deals happen.
  • An ability to play the cards dealt — Every fiber company has its unique strengths.  So success often hinges on redirecting those human/experience assets into the most fruitful areas.
  • A penchant for partnering — Over the past decade, operators who tried to go-it-alone and corner broad markets have failed pretty badly.  Coopetition, wholesaling, partnering...  Call it what you like: it’s a strategy that enables a networker to hedge its bets, piggy-back on others' skills, or share costly assets.

Speaking of leadership, FiberLight recently brought in a new leader to its position of CEO.  He’s networking veteran, Don MacNeil, and we’re delighted to share his forward-thinking ideas on MetroConnect issues from dark fiber and Ashburn build-outs to... cloud connect, mobile infrastructure, and wholesaling.

Dan Baker, Editor of Top Operator: Don, congratulations on recently taking the helm at FiberLight.

Don MacNeil: Thanks, Dan.  FiberLight has been around for 15 years and I joined them in September.  I spent a lot of years at XO Communications and most recently I was at the data center company EdgeConneX.  So, I was either a supplier or customer of FiberLight and knew the company well.  Though the company has been rather dormant for many years, its great assets and strong construction capability are incredible strengths to build on.  So I jumped at the chance to run the company and reposition it for growth.

FiberLight has fiber assets in many hot regions of the country.  So is your goal to become another national fiber provider?

Actually, FiberLight is not a “national” provider today, nor do we aspire to become one.  We are “strategically regional” if I can coin a better term for it.  Our strength comes from our presence in key regional data centers.  Baltimore, Washington, Northern Virginia — these are key markets for us, and always have been at FiberLight.

We also have big footprints in Atlanta, Northern Florida, and all through Texas.  Think about these geographies through the lens of data center growth.  We are a big wholesale enabler and also serve enterprises in major metros where demand for hybrid cloud architectures is exploding.  I saw plenty of that at EdgeConneX, and believe me, we’re only in the second inning of that ballgame.

At FiberLight we take the enterprise from their building to the nearest cloud access point or cloud internet point.  That’s a compelling offer for mid-market and enterprise firms because direct connect delivers better performance, better security — plus the monthly cloud bill goes down.

Now back to your question about national providers.  There’s been big consolidation at the national level.  CenturyLink acquired Level 3, and before they came together, four other national players, WilTel, Broadwing, Qwest, and TW Telecom were rolled up into that mix, as well as several smaller regional providers during Level 3’s acquisitive phase — so, now the only other national fiber player is Zayo.

To be honest, I think all this national consolidation plays to our advantage.  Why?  Because the cloud/content/media community is leery of that trend.  As these networks combine, they see prices going up and the availability of dark fiber going down.  For example, since CenturyLink and Level 3 combined, a lot of dark fiber has dried up and come off the market.

But as you think about Facebook and Google and Microsoft — those guys don’t deploy their large data centers on the high traffic routes.  That means their need for data center interconnection and bandwidth is massive.  Now even more than in prior days, the larger cloud and content players are all big fans of long haul dark fiber to connect their data centers.

So I think this creates opportunity for FiberLight, not only in our existing footprint but also in building new routes that complement existing legacy routes.

The fiber CEOs on this year’s Metro Connect conference were clearly excited about new mobile infrastructure.  And the term C-RAN, Centralized Radio Access Network (or some say Cloud-based Radio Access Network) was mentioned more than once.  What’s your take here?

Dan, I’ve played in the tower backhaul space for many years, and I’ll tell you it’s a huge focus here.  For instance, the anchor tenant of our 6,000-mile Texas network is a global mobile operator.  Now, naturally we love the bandwidth spike coming from smart phones, but mobile operators are also on the verge of several architectural changes — C-RAN, Small Cells, and increasingly both fixed and mobile 5G, and all of these trends are moving at a pace in the Radio Access Network that we haven’t seen for years.

C-RAN is in the center of all this.  It’s about reducing the footprint at the macro tower by centralizing Radio Access Network intelligence.  So instead of putting a base station controller in each of 10 towers, the idea is to put a BSC in only one in maybe 10.  Further, as part of the architectural expansion, every major macro cell tower may have at least 10 small cells hubbed into it.  The good news for FiberLight is that all of these trends require fiber!

Why do mobile operators need to move to small cells in the first place?

It basically comes down to managing a scarce and expensive resource, spectrum.

In the early days of cellular, the idea was to blanket a region with a big tower so you could minimize your cellular infrastructure.  That was when voice and maybe texting were the drivers and there was a lot being done on voice compression to squeeze every last bit of capacity out of T1s — remember those?

Now, the demands associated with data and, more importantly, the increasing expectation of quality of service and the need for efficient use of spectrum is essential to ensure sufficient bandwidth to each smartphone.  Hence, operators now need to distribute and enhance connectivity in the “Urban Canyons” of our large cities.

The secret to small cells is managing spectrum in smaller and denser cells to facilitate better spectrum allocation and re-use and the optionality on using more or different frequency regimes to maximize end-user connectivity and bandwidth.

So in the future, we won’t really know what tower is carrying our phones call.  The hard part will be managing the many hand offs between these small cells.  That’s where software-defined networks come in.  Immensely complex and fast analytics are needed to make those handoffs smooth.

Take a look at Crown Castle, the biggest supplier of macro sites in the country.  As you know, Crown has recently been on an acquisition spree, buying up fiber assets left and right.  Now contrary to popular opinion, their motivation was not, “Hey!  I can now be a one-stop shop for cell towers and fiber.”  No, the real motivation is almost defensive: Crown is setting itself up to profit in the era when small cells become a larger part of the “mobile real estate” business.

So, as a strong regional fiber player, what’s your strategy?  How are you going to grow?  And I saw a recent press release explaining how you teamed up with LOGIX, another fiber provider in Texas.  What’s the rationale for that deal?

Dan, what differentiates us is very simple.  We’re about providing fiber-based services our customers really want — and delivering those services with the right terms and level of support they require.

A great example here is dark fiber, a service FiberLight has offered consistently over the years.  Now if you look at Zayo, their support of dark fiber has fluctuated.  At times they actively supported it, and at other times they would not sell dark fiber.  And that volatility makes large dark fiber buyers nervous.

So, we’re doing the opposite: we’ve doubled down on dark fiber.  And we sell it in very flexible ways.  We will sell to you on an IRU basis; a medium or long-term lease, or, if the customer is interested, we will sell it under a bill of sale — take ownership by whatever accounting treatment you prefer.  Finally, if desired, we can also light the fiber and offer our customers high-capacity lit services.

The LOGIX deal is a great example of how we work.  LOGIX is crucial to supporting their small to medium business and mid-market customers, but they want to avoid the expense and risk of building out their own network.  But construction is FiberLight’s forte, so a long-term IRU allows LOGIX to focus on what they do best — provide voice and data services to their customers — while allowing FiberLight to focus on what we do best — design, build and operate fiber-optic networks.

That infrastructure piece will be important as I look down the road.  I am not afraid to sign long-term agreements and do deals that some traditional service providers see as enabling competitors.  Because of this, many companies shy away from infrastructure deals, so they may end up proposing a short-term three or five-year term because they want the option of changing their mind down the road.

We are not going to change our mind; I resist that every day.  People are always encouraging us to “move up the stack” and get more into services, but I know how hard that business really is.  Never say never, of course, but for the foreseeable future, the services business would be a huge distraction.  Infrastructure is a very viable business for us, so we need to stay focused.



We know that Ashburn, Virginia is one of the densest places on earth in terms of networks, data centers, and connecting fiber.  And yet, the growth never stops.  The concentration grows on itself.  Why is that?

I agree, at first glance this great density sounds crazy, but it has its roots in interconnectivity.  The data centers are eager to build on that critical element of connectivity and there’s safety in the number of networks that are there.  This trend continues despite the fact that the price of land is going up in Ashburn and there is another 4 million square-feet of data center space set to be delivered in the next 18-24 months — on top pf the already nearly 10 million square-feet that already exists.

One of things FiberLight just announced is a significant over-build in Ashburn, Virginia, as well as a build out of another 1,200 miles in Texas.  We already have a pretty good set of projects underway.

The Ashburn build out will be great for FiberLight because we own all of the infrastructure — from the conduits, hand holes and manholes right on up to the fiber.  We have not IRU-ed fiber from other providers.  The other factor we like is that Ashburn is a construction nightmare because it sits on a lot of granite.  Boring and digging the trenches is a real beast, but once again, with our strength in construction, we have an advantage there too — we worked a lot of this in the past and the barriers to entry get more difficult and expensive.

Megaport is one the emerging software defined network companies.  Their mission is to move people to the cloud so they only need to connect one time to reach the cloud anywhere on the cloud.  But longer term, doesn’t that lower enterprise demand for individual fiber connections?

I’m a big fan of Megaport and worked with them at EdgeConneX.  In fact, we have begun a relationship with Megaport here at FiberLight.  They have effectively demystified the complexity of connecting directly to the cloud for enterprises and mid-market companies. 

So if you’re a mid-market enterprise customer migrating to the cloud, some of your applications, data storage and computational resources may be spread across, say Google, Oracle, Microsoft, Amazon, and Sales Force. 

Well, the only way to connect to these SaaS, PaaS and IaaS providers directly — for the benefits of improved performance, and lowering your cloud bill — would be to buy a different pipe to each cloud platform.  Remember: none of these cloud providers is incentivized to help the customer go from one cloud to the other.

However, Megaport makes that simple.  I can buy one pipe and allocate dynamically between Oracle and Amazon, and in that way prevent packets from having to hairpin back and forth between discrete Internet or direct connections. 

This is a great catalyst for FiberLight to serve and offer those mid-market and enterprise customers within our footprint a high capacity fiber-based lit or dark fiber circuit.  The potential for combined solutions with Megaport is, all in all, a great point of inspiration and a potentially high-value emerging partnership for our Enterprise sales team.

Additionally, as Megaport expands, getting more direct connections to the large cloud provider data centers is also an area where FiberLight can help — again, either using dark fiber or lit services, both of which allow the most efficient, least congested path to these clouds and avoid the traditional Internet.

What about the hyper-scale players — the Facebooks, Googles, and Microsofts?  What role will these players contribute to the growth of the metro fiber business?

Dan, extrapolating the drivers in the cloud and mobile market segments, there are two fundamental characteristics for all networks of the future:

  1. Densification, or a move to the edge — getting closer to the end users, whether that is small cell and an RF link to a mobile device or a fiber-based gig-plus connection to a mid-market business; and,
  2. Acceleration, specifically increasing the line rates of these end-user connections.

For all providers of SaaS-, PaaS- and IaaS-based services, these characteristics offer insurance that their end users have the best possible quality of experience.  And what underpins the attainment of these important characteristics?  Metro fiber.

Don, thank you.  This is wonderful analysis.  And you've shed much light on dark fiber, a market you make a strong case will grow. 

Copyright 2018 Top Operator Journal

 

About the Experts

Don MacNeil

Don MacNeil

Don MacNeil has over 25 years of experience in network architecture and design; network engineering, access and optimization; customer operations; product and more.  In his role as Chief Executive Officer for FiberLight, he will be responsible leading revenue growth efforts, enhancing the customer experience, and expanding the company’s network and product portfolio.

Before joining FiberLight, Don served as Chief Technology Officer for EdgeConneX, where he was responsible for identifying and introducing new technologies and product capabilities to address evolving data center needs.  His industry experience also includes roles as Executive Vice President, Chief Operating Officer, Chief Marketing Officer and Vice President of Carrier Services Operations during a 15-year tenure with XO Communications.

Don retired from the United States Navy in 2013, where his duties as a Surface Warfare Officer included serving at-sea in operational leadership roles as well as various leadership roles in weapon system design and procurement.

Don has an MBA, Business Administration from William and Mary and a Master’s Degree of Physics from the United States Naval Postgraduate School.  He completed his BS in Naval Architecture from the United States Naval Academy.   Contact Don via

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