Fiber-optic network vendors, data center provisioners, telecommunications tower operators and the software layer all have to work together to create an end-to-end mobile infrastructure to support the demands 5G wireless network densification. This view, expressed by Ray LaChance, CEO of ZenFi Networks, characterizes the present nature of wireless infrastructure as a “horizontal” tower. LaChance said he previously has expressed this view in describing ZenFi. In short, he described ZenFi as a digital infrastructure player in the New York-New Jersey metro market.
“We don’t call ourselves a fiber company,” LaChance said. “When we started this business in 2014, we never called ourselves a fiber business. Everybody else did, because they assumed we were doing what everybody else was. But we came into the market as a mobile infrastructure play to support the densification of the mobile network evolving to ultra-dense networks.”
Modern mobile networks are in neighborhoods, LaChance said. He said the neighborhood network has an edge data center — an edge collocation facility. A fiber-optic network extends from the edge data center that connects with wireless equipment sites.
“The edge data center is analogous to the ground space on a tower,” LaChance said. “If you take the fiber span that comes out of that edge data center and goes to a light pole, for instance, with a small cell on it, the analogy of that fronthaul fiber piece is, that’s the steel in the air. That’s the vertical that you know. That’s the horizontal tower piece. So, you have ground space — horizontal tower space. They have wireless stubs where you’ll have a light pole, utility pole, street furniture or building façade, where you put radio heads or small cells. You’re building a tower outside. Rather than being 200 feet tall, though, it’s 30,000 feet tall. You cover entire neighborhoods with it. That’s a really interesting analogy, because if you’re in the mobile infrastructure space, you don’t just do towers anymore. You don’t just do small cells. You don’t just do fiber. You do all of these elements.”
In pulling all of these elements together, LaChance said, an infrastructure provider creates a turnkey solution for the mobile network operators. He said the operators do not want to obtain fiber connectivity from one player, own their own sites or even build their own nodes.
“They do it, but they’re not loving it,” he said. “It’s just it’s not their core competency. They look to intermediaries like ZenFi and others in our market to turnkey that whole solution.”
Companies that provide only fiber-optic cable connectivity that want to be in the small cell market are missing a huge piece of the opportunity, LaChance said. He said there is an opportunity for 10-, 15-, 20-year deals to be made with counterparties that have great credit — the wireless carriers — to construct the entire shared infrastructure.
“The beauty of it is, we’re building shared infrastructure, too, so once we build it once, you know that the edge collocation, the fronthaul fiber or even that wireless vertical site, it’s reusable just like a tower,” he said. “I fully expect to get complete tower economics. I want tower multiples on our business, because we’re a tower company.” Multiple refers to a method of establishing asset value that uses a multiple of cash flow. The method often sees use in setting prices when buying and selling towers.
A city like New York will have tens of thousands of small cells deployed, LaChance said. It now has fewer than 10,000, and he said that in ZenFi’s experience, AT&T, Verizon and T-Mobile won’t rent infrastructure from providers that cannot supply the edge compute, the fiber connectivity and the small cells — all three.
“Maybe it’s because we’re a unique region,” LaChance said. “It’s more expensive to work in New York. There’s a lot of New York metro challenges, and they all want turnkey from companies like us.”
LaChance spoke during the “Evolving Shared Wireless Infrastructure Landscape” fireside chat session during the Metro Connect USA 2021 meeting in February, where Jennifer Fritzsche, chief financial officer of Canopy Wireless, interviewed him.