I spent the last few days at Metro Connect wearing out both my ears and my voice. It’s always a great event, where the metro fiber industry’s leaders get together and talk straight both in private and in public. Some of the northeastern contingent had its flights canceled by the snow, but it was very well attended nonetheless. Here are a few things I took away from Miami — there are probably more, but they are still ricocheting around in my skull.
New kid in town: Last year the cable companies finally arrived in force, but this year the new kid in town was a tower company. After buying 24/7 MidAtlantic in 2014, Crown Castle itself came to Metro Connect to talk about wireless backhaul networks and small cells, and people were listening carefully. Dan Caruso’s keynote comparing the pros and cons of the metro fiber business to the tower business, using a batman to superman analogy, was therefore quite topical.
Small Cells: These were definitely a hot topic across a wide range of providers, although mostly still in the context of defining terms and markets. This is still obviously a rapidly evolving concept, and along with the general optimism of a new market opportunity there remains a substantial undercurrent of wariness about the business models. There are definitely still a lot of unresolved issues out there, and some impatience too.
Acquisition rumors: Windstream to buy Lightower? That rumor was definitely rumbling, but I’d be shocked if it was more than talk. Even if the network REIT were ready to rumble, which isn’t quite yet, I have a hard time imagining Windstream paying the sort of multiple it would have to pay to buy Lightower from its private equity backers at present.
But I got the strong feeling that overall the metro fiber consolidation game was in flux, with several potential deals bubbling just under the surface. Level 3 and XO? I haven’t thought about Icahn in a while, and I dare not speculate now after so many false starts over the years. Zayo and [anybody]? Well, obviously! But perhaps what we might see is some of the PE guys pool their regional fiber plays and try to assemble another national operator alongside Zayo, as some of those guys were acting decidedly chummy.
No place like New York: We may have been in Miami, but the Big Apple had an outsized profile. In recent months, two new entries (Axiom and ZenFI) started pulling fiber in Manhattan with very different approaches and plenty of local knowledge, and each was in Miami to make its case. Given that they are joining the likes of OCG and of course Verizon, Level 3, Zayo, TWC, Lightower, Lightpath and the rest, it’s looking like a rather dynamic couple of years are ahead for NYC metro fiber.
And I also greatly enjoyed my second trip to Bank Street’s exclusive dinner, complete with the skull and all that, courtesy of James Henry. James contributes great stuff here on Ramblings now and then, perhaps we’ll manage to wheedle another article out of him this spring…
Were you at Metro Connect this week? If so, what did you take away from it? Leave a comment below!
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Was there any dialouge of the success or perception of the REIT model. WIndstream is stepping into new terrain and there success would drive others, just curious. And how long do you believe after inception would they be willing to add others to REIT and operating model, do they need proof of concept time
They did talk about it. They asked Zayo’s Dan Caruso, and he said it wasn’t in the cards for Zayo any time soon. He also expressed the thought that the drawbacks of the REIT model (data center or network) haven’t been fully considered. When the market evolves and opportunities arise whose revenues aren’t REIT-able, you have restrictions others don’t have.
As for Windstream, I personally think they’ll try to do an acquisition of some sort not long after the deal closes. But I think it will be something more like Earthlink’s network biz or Broadview etc than something as fiber-heavy as Lightower. Until they take on other assets, it’s just paperwork shuffling for tax purposes – not a proof of concept. Colby Synaesel also talked of Windstream’s REIT’s likely appetite as very substantial.
not to dominate with Windstream REIT conversation but add on question( layman trying to understand the larger picture of REIT). After Fiber assets sale and the REIT owns fiber the left over Windstream using long term Operate lease maintain network and revenue sold on network. When the follow on asset puchase lets say Earthlink moves it fiber to REIT is the general idea that they remain independent or do they merge with WIndstream operating company to form larger business.
Until we see such a deal, we won’t know exactly. However, there are two types here. There is type where an operator could sell and lease back the assets and still operate them as always just like Windstream proper is doing. In that case, it’s just the REIT doing the buying. But the REIT doesn’t operate anything. So the second type would be the acquisition of a full business, in which case I’d say both Windstream and its REIT would take their piece. Both have their logic IMHO, it’s more about what Windstream decides to do next than anything we can decipher now.
I understand there was a layoff at FiberLight?
I know people that were looking around in expectation of being laid off, but hadn’t heard anything.
I heard close to 20 maybe were let go including CEO, head of sales, head of engineering and many others. Wonder what this means?
It does appear that Paul Pierron is no longer CEO, as the company’s leadership page has indeed changed. Thermo’s Lynch has stepped in, though whether it’s permanent or temporary I don’t know. http://www.fiberlight.com/About_Us/Leadership.aspx