Big, But Not Too Big: Scale for Fiber Networks

March 10, 2016

Part One — Macro towers continue to lead small cells in Lightower’s fiber network. Reliability, scale and using the fiber network to serve other customers besides wireless carriers are important for profitability.

By Don Bishop

Bishop

Bringing scale to the table helps Lightower Fiber Networks provide fiber-optic cable service customers, including wireless carriers, what they need. Lightower Fiber Network’s merger with Fibertech Networks in August 2015 doubled Lightower’s network reach.

Lightower builds fiber from North Carolina to Maine and west to Indiana, constructing all of its own network. As a core product, it provides dark fiber, which is unused cable that can be leased to individuals or companies that want connections among their own locations. Lightower also provides Ethernet local-area network architecture service. Data speed on Lightower’s network ranges from 5 Mbps to 100 Gbps.

Drew Mullin, senior vice president of business development and strategy, Lightower Fiber Networks, talked about connecting telecommunications towers and small cells with fiber during a session at the Tower & Small Cell Summit in September 2015. Mullin’s experience includes using fiber assets to obtain a return on investment capital; managing products involving dense wavelength-division multiplexing, asynchronous transfer mode and Ethernet equipment; and helping Lightower support Connecticut’s use of a $93 million Broadband Technology Opportunities Program grant to use 5,500 miles of new fiber infrastructure to connect anchor institutions. Mullin spoke at the session “Macro Tower Backhaul Solutions” led by Jennifer P. Clark, a vice president at 451 Research, a New York-based consulting company

Referring to the seven-layer open systems interconnection model of communications functions for telecommunications, Mullin said Lightower is active in Layer 1, the physical layer, and Layer 2, the data link layer. He likened fiber to plumbing — the foundation for telecommunications networks, which represent Layer 3.

Lightower has 30,000 miles of network that serve 15,000 locations. Of those, 5,000 are wireless locations, including 4,500 macro towers and 500 small cells. Mullin said wireless carriers need cost-effective backhaul, and achieving it with fiber is easier said than done. Lightower expects to extend fiber to most locations, and there’s a place in the network for serving wireless locations. He said a cost-component discussion during the next three to five years would be integral to providing wireless carriers with service.

Regarding the service wireless carriers want, Mullin said resiliency is one of the most important aspects. “During the next three to five years, wireless providers are going to be very cognizant of outages,” he said. “They’re not going to tolerate them, because all of us who have cell phones won’t tolerate it. That’s important, and scale also will be important. In the fiber business, you need to have enough scale to connect multiple places cost-effectively, but not so much scale that it makes you inflexible. During the next three to five years, the successful fiber network companies will be mid-sized, not the local exchange carriers, the cable TV companies or the startups. They’re going to be in the middle range.”

When it comes to fiber network reliability, some wireless carriers place important on measuring the fiber network performance to see whether it conforms with the service-level agreement (SLA) between the carrier and the fiber network provider.

“It’s all about what the network operating center is doing and how well it goes,” Mullin said. “Companies that monitor SLA performance would like to give a report every day on every packet that got lost. But the reality is, that doesn’t help much. What’s more important is if there’s a fiber outage, how do you react to it? How can you get your crews out there? How can you splice around it quickly? How do you communicate with the wireless provider and give them updates on a regular basis? Those are the type of things that, at the end of the year, when the monitor sends a reliability report, people remember and say, ‘OK, I had a good experience working with Lightower before. I’m going to give them top marks.’ There’s a place for reporting packet-level details, but it’s probably more on the carrier side than our side, the fiber side.”

Mullin said that although the wireless carriers and wireless infrastructure providers have slowed their construction of towers, the mobile network business continues to be healthy, with towers at the heart of what the wireless carriers are constructing, as opposed to small cells. Carriers approach Lightower to bid on providing fiber to single new towers. Sometimes they come to Lightower to bid on serving a large group of towers that were previously awarded to other fiber network providers that proved to be too small to deliver the necessary service.

Also, Mullin said that every day, the fiber network extends a little farther out. “Wireless carrier towers that previously had to be served by microwave suddenly are that much closer to the fiber network’s backbone,” he said “Then you can make the economics for a fiber connection work. Although the business of serving telecommunications towers has slowed down a little bit, it’s still a healthy business for us.”

In conclusion, Mullin reiterated that reliability and scale would be key in order for fiber service providers to attract wireless carrier business during the next few years. “Being a flexible company that can help build reliable networks for the wireless carriers is going to be integral,” he said. “As for scale, you need to be large enough that you can actually get to a significant amount of macro locations. And a fiber service provider can’t just be in the wireless business because you need to have other ways to sweat the asset. You also need to be doing enterprise, wholesale and many other things because you can’t make the economics work with just wireless.”