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More Dark Fiber Being Sold, Especially for Mobile Backhaul, Metro Apps

July 18, 2014

More Dark Fiber Being Sold, Especially for Mobile Backhaul, Metro Apps



By Gary Kim
Contributing Editor



“Dark fiber” might be the purest form of a “dumb pipe” revenue stream, as it involves the sale of rights to use unlit optical fibers, not turned-up capacity or capacity services.

And while capacity providers traditionally prefer to sell higher-margin “lit” capacity, there seems to be a new willingness to sell dark fiber access, instead of lit capacity.

Traditionally, communications carriers deliver bandwidth, but in some cases, they're willing to offer long-term leases on unused, physical fiber strands in their networks, commonly known as dark fiber, says Fedor Smith, Atlantic-ACM president.


In many ways, the reluctance to sell dark fiber is the same reason retail service providers generally are careful about selling wholesale access: doing so obviously enables competitors, or in the case of enterprise buyers, potential lost enterprise retail revenues and profit margin.

Scarcity remains a business asset for owners of those scarce assets.

So what has changed?

One might say the willingness of a fast-growing supplier--Zayo--to sell dark fiber on a growing national footprint is changing market dynamics.

When most other suppliers also loathe to sell dark fiber, every supplier can resist doing so. But if a significant competitor decides to make dark fiber sales a priority, and can reach enough of the market, the refusal to match such offers obviously becomes a bigger revenue threat over time.

Some 27 percent of the participating wholesale buyers surveyed say they buy dark fiber, and 57 percent of those already buying anticipate increased spends on dark fiber in the coming year.

In the metro market, the demand is even higher, as you might expect. Some 65 percent of respondents currently buy dark fiber, almost a quarter of which expected their spending on dark fiber to increase by at least 10 percent in the following year.

Beyond traditional wholesale buyers, it's now very common for mobile service providers to request dark fiber to their cell towers.

The biggest U.S. carriers -- AT&T (News - Alert), Verizon, and CenturyLink -- currently do not offer dark fiber, though, favoring shorter-term, lit-service deals.

That is a common strategy. Typically it is upstart, competitive providers who innovate most in pricing and packaging.



 
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