MectroConnect, held last week in Miami, discussed the increase demand for fiber, limited supplies and opportunities in the wireless industry in 5G, according to Matthew Niknam, analyst, Deutsch Telecom Research.
“Demand for deep, dense metro fiber is set to accelerate, as the United States nears 5G deployments and new use cases surface (autonomous cars, virtual reality, remote surgery), and given this backdrop, the current supply of high-strand/quality metro fiber may well be limited, particularly in top markets,” Niknam wrote. “The need for fiber should only accelerate as incremental use-cases like SD-WAN, more edge computing and IoT are increasingly adopted over time (even if more widespread applications are still a few years out).”
Fiber industry executives described fiber as the only component capable of supporting the bandwidth needed in communications networks.
“Fiber is the sole infrastructure class capable of supporting these technological advancements and delivering the speed, throughput and latency performance that future applications will require,” Niknam wrote.
Look for more M&A activity in the fiber space in the future, according to the fiber executives, as companies attempt to get enough scale to serve wireless carriers and enterprises and reduce costs, according to Niknam.
“The amount of capital (and number of buyers) looking at investing in fiber is growing, and the base of investors is more diverse (ie: more speculative players, vs. strategic operators),” he wrote.
Deutsche Telecom Research shared its views on investing in stocks to take advantage of that. Crown Castle is the best investment in network densification and 5G, given because of its mix of towers and fiber, according to Niknam. Zayo, Uniti and Cogent also benefit from the importance of fiber infrastructure.
“In fact, Sprint recently highlighted new deals it signed with Zayo for dark fiber, as part of its network upgrade plans,” Niknam wrote.