Dark Fiber Is Back In


Over the last decade the dark fiber market has changed dramatically.  Some of the change has come as result of consolidation, and another portion is based on carrier strategy.   Similar to fashion trends, what was out of style usually comes back in vogue – and in telecom dark fiber is back in.

Following the telecom meltdown, fire sales of dark fiber network assets were regular occurrences.  Companies raced to unload dark fiber and infrastructure at below market prices in an effort to stave off bankruptcies.   Some providers made it through the financial vortex; others did not.  The assets of the fallen were auctioned off at pennies on the dollar by bankruptcy trusts.  This process carried forward for several years after the turn of the century and created the myth that there was a glut of dark fiber and unused capacity.  In reality, it was the liquidation of core infrastructure of failing companies that hit the market.

As the market began to settle – and with the distressed assets off the market – the industry seemed to take a breather from selling dark fiber.  Many carriers felt that selling core infrastructure to other carriers enabled competition and saw selling fiber infrastructure to enterprise customers as harmful to their lit service revenue over time.  Both fears may very well have been warranted, particularly the latter, given the advances in optical equipment: once a fiber sale was made there was very little follow-along business.  Companies such as Level 3, RCN (now Sidera), Qwest and XO Communications all shifted strategies to selling only lit services in the latter half of the decade.  Other companies continued to sell dark fiber but placed a high price on dark fiber making their lit solutions seem more favorable to customers.

It’s interesting to note that during this same period there were a number of companies that sold dark fiber as a primary source of revenue.  These companies were typically utility providers, municipalities or CLECS with roots as construction companies.  As a whole, their operations were typically regional, their price points were reasonable, and they offered excellent alternatives to the lit services being pushed by the LEC and regional CLECs.

The clamp down on dark fiber continued, particularly over the last few years as regional CLECs have acquired many of the stand alone dark fiber networks.  As an example, Zayo Group acquired Indiana Fiber Works, Memphis Networx, AGL Networks and several dark-fiber-only markets from Citynet Fiber Network (the wholesale division of Citynet).  At the time of the acquisitions, Zayo Bandwidth (Zayo Group’s high cap network business unit) had a policy of not selling dark fiber.  In another example, Level 3 purchased Looking Glass Networks, Progress Telecom and WilTel Communications removing access to metro and longhaul dark fiber inventory from the market.

While removing access to dark fiber and “wholesale” assets was certainly a sound business strategy and seemed like an ideal way to funnel customers to the more revenue rich lit services, some carriers have found that key areas for sales and revenue growth are being overlooked. What those carriers have started to realize is that they are missing opportunities from customers that won’t buy lit services – and will absolutely buy dark fiber however they can. Those customers will find someone who will sell them dark fiber – a utility, municipality, or similar – or the customers will simply build out their own network.

Seeing the “dark fiber network only” customer base and in no small part needing the revenue in one way or another, carriers are shifting their strategy, and the recent telecom industry trend shows more companies beginning to start to sell fiber again.  This first emerged in companies that had acquired some of the dark fiber only networks that have a high fiber count in certain markets. That much fiber provides a great way for carriers to monetize inventory that would never have been tapped otherwise. Then, as the culture and sales strategies started to shift and the restrictions and policies started to loosen on considering dark fiber sales, many more companies that have sold dark in the past are starting to reevaluate their present strategy of lit service only. 

In many cases today, carriers will lease or sell dark on an individual case basis mainly in situations where there is no threat of enabling a competitor and the economics make sense for the carrier to grant access to the dark fiber.  Some of the carriers that are starting to ease back into dark fiber include Zayo, Level 3 and RCN (now Sidera). So, while dark fiber hasn’t gotten back to “mainstream” popularity and ubiquitous access – it’s certainly trending in a more open and accessible direction.

Where does NEF fit in? As the dark fiber network experts, NEF has relationships and experience that enables enterprises and carriers to know how and when to get dark fiber – and can help customers create an effective use case for getting dark fiber approved with the carrier.

Even in cases when the carriers have said no to dark fiber – check with NEF. NEF can work with you to help create a business case for the carrier to consider a dark fiber option or can help source an alternative provider to create your network.

2 Comments for this entry

  • Eric Bender, October 20th, 2010 on 8:37 pm

    Good article Mike.  At Wilcon, we thrive on leasing dark fiber strands to our many customers.  We also offer lit circuits, but for sophisticated customers, dark fiber is the preference and we're happy to satisfy this need, primarily in Los Angeles.

  • BB, December 31st, 2010 on 4:51 pm

    Great article. What types of take rates are you seeing with dark fiber (enterprise not wholesale)?

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