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.
You may not have heard of ZenFi Networks and Cross River Fiber, which agreed to merge this week. But the communications infrastructure provider that will result will have operations across the New York City and northern New Jersey metro areas spanning both wireline and wireless worlds.
ZenFi brings its primary focus on helping mobile operators densify their networks to the merger, while Cross River Fiber delivers its primary concentration on telecom solutions for large enterprises and carriers. The resulting entity will have more than 700 route miles of fiber optic network, 130 on-net buildings, 49 colocation facilities and 1,700 outdoor wireless locations with more than 3,000 under contract.
“The merger enhances our network reach, deepens our product portfolio, and delivers a next generation network infrastructure that is the foundation of tomorrow’s communications networks,” Ray LaChance, CEO of ZenFi Networks, said. “The merger not only extends each company’s network reach but also provides an enhanced product set and customer diversity. The entity known as ZenFi Networks will deliver the combined services of both companies.”
The next generation of network infrastructure, according to LaChance, is one where the underlying infrastructure supports both enterprises’ wireline telecom services needs and carriers’ wireless needs.
“In the future, there is going to be less and less differentiation between traditional telecoms and tower companies,” he said. “It is all converging. It is one unifying infrastructure and the glue that keeps it together is under fiber and a network of collocation facilities.”
ZenFi deployed its first fiber infrastructure in support of outdoor DAS installations alongside existing enterprise fiber networks in 2008. There was a distinct separation of the networks.
“The old networks were built for backhaul of sparsely connected end points,” La Chance said. “We saw a need for a new type of network that is focused on a lot of fiber capacity and a lot of connection points, one on every street corner.”
ZenFi provides fronthaul fiber and passive wavelength services, facilitating the wireless industry’s initiative to move baseband processing from antenna sites to hub locations, known as centralized RAN.
“When I meet with the mobile operators now, they clearly see that fronthaul is a horizontal tower. There is a lot of velocity behind this convergence,” LaChance said. “Fronthaul fiber is being built much like towers are. It is a shared resource to get economies of scale. We see that as a huge opportunity.”
Both companies provide services in their respective markets: ZenFi Networks in the five boroughs of New York City, and Cross River Fiber in New Jersey. The current ZenFi Networks and Cross River management teams will continue to lead the combined company with the support of Ridgemont Equity Partners, a middle market private equity firm and majority shareholder of Cross River Fiber.
“In addition, our partnership with Ridgemont Equity Partners further strengthens ZenFi Network’s financial position by providing access to additional capital to continue to deliver on our vision of building the most pervasive and high capacity connectivity platform in the region,” LaChance said.
ExteNet’s Acquisition of Axiom Another Example of Blurring Lines
Another example of wireline/wireless convergence occurred in December of last year when ExteNet Systems acquired MetroFiber d/b/a Axiom Fiber Networks, which added 20 miles of 864-strand fiber-count network in lower Manhattan ExteNet’s fiber-optic network that supports the firm’s +2,000 nodes constructed or under construction in the New York metropolitan area.
But there was more to Axiom Fiber Networks than just fiber. The firm provided telecom infrastructure services over its dark fiber network to enterprise customers including, financial firms, government agencies, healthcare providers, educational institutions and media organizations.
Axiom goes deep inside the enterprise to provide companies with dark fiber and custom network solutions. With the deal closed, ExteNet can pursue new vectors in the enterprise space.
The Axiom network, which has five major carrier hotels, allows interconnection and connectivity to the cloud. It also gives the firm the ability to put together solutions that interconnect buildings with edge devices at the carrier hotels.
J. Sharpe Smith
J. Sharpe Smith joined AGL in 2007 as contributing editor to the magazine and as editor of eDigest email newsletter. He has 27 years of experience writing about industrial communications, paging, cellular, small cells, DAS and towers. Previously, he worked for the Enterprise Wireless Alliance as editor of the Enterprise Wireless Magazine. Before that, he edited the Wireless Journal for CTIA and he began his wireless journalism career with Phillips Publishing, now Access Intelligence. Sharpe Smith may be contacted at: [email protected]