December 22, 2016 —
The importance of fiber to future generations of high-speed, low-latency wireless networks was underscored in February of this year as Verizon purchased XO Communications’ fiber network business for $1.8 billion. XO’s fiber network spans 20,000 inter-city route miles, 13,000 metro route miles, more than 4,000 on-net buildings and more than 2 million business locations.
Fiber optics are seen by analysts as the bedrock for small cell deployment. In April, when Verizon announced that it was expanding fiber-optic network platform known as FiOS into Boston, analysts saw it as a sign of a small cell play.
Wells Fargo Analyst Jennifer Fritzsche wrote “Fiber is KEY to its small cells and VZ is very serious there. So while wireline is still important to them … many of these recent ‘wireline moves’ by Verizon (think XO acquisition, FiOS push, etc) may be more related to wireless than anything.”
Tower services heard the fiber call and diversified. In March, SQUAN acquired Osmose Communications Services (OCS) giving the New Jersey infrastructure service provider new services in fiber-optic transport engineering, outside plant delivery and fiber-optic delivery management.
“Fiber is the backbone of our three-pronged [towers, small cells and DAS] approach,” said SQUAN CEO Leighton Carroll.
In the other major fiber transaction of the year, CenturyLink agreed to buy Level 3 Communications for $34 billion in cash and stock. It will indirectly affect cell tower and small cell backhaul. More directly, it will create a stronger competitor for AT&T business internet traffic.
In November, Crown Castle International’s acquisition of FPL FiberNet Holdings was the towerco’s third purchase of a fiber provider in three years, having picked up Quanta Fiber Networks (Sunesys) in April 2015 and before that, in 2014, purchasing 24/7 Mid-Atlantic Network. And it probably won’t be its last.
The $1.5 billion deal gives Crown ownership or rights to 11,500 route miles of fiber installed and under construction in Florida and Texas, including 6,000 route miles of fiber in top metro markets. As a result, Crown will own or have rights to 28,500 route miles of fiber.
In May of this year CS&L purchased PEG Bandwidth, and in August it bought Tower Cloud. Subsequently, the two fiber optics companies were merged to become Uniti Fiber, a wholly owned subsidiary of CS&L, which as a result owns 4.2 million fiber strand miles, 86 wireless towers, and other communications real estate throughout the United States and Mexico.
Fiber optics was not the be-all, end-all for everyone in 2016. In August, Google Fiber halted its fiber rollout initiative and began to test gigabit wireless.