Zayo says it is putting yet more money to work down in San Diego with plans to add an additional 5,000 fiber miles to their metro network. The project will add capacity to existing routes as well as extend metro connectivity into surrounding communities such as Oceanside, Encinitas, Del Mar and Escondido. Zayo will also be bringing in connectivity to their intercity fiber and IP backbone.
Zayo entered the San Diego market over a year ago, announcing plans to build out some 400 route miles covering both downtown. While the company has famously expanded into new markets via M&A, the original move into San Diego and this follow-up investment have been a completely organic expansion for them.
Although Zayo did acquire a datacenter in Austin recently, on the fiber M&A front they’ve been quiet now for two full quarters. Surely that can’t last much longer, as while the list of potential targets has been depleted over the last several years it certainly hasn’t been exhausted yet.
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The fact is that Zayo *has* either eliminated or driven out almost every technical resource that made Abovenet so successful. Who is left? Worse yet, they have been replaced by contractors and empty suits. I’m sure the passing of time will serve to pull back the curtain on the bait and switch accounting tactics and wildly optomistic projections, to fully expose the cost of replacing career professionals with cut-rate rookies and employing a “vendor agnostic” (read as: Duc tape and bailing wire) approach to building the network . How can you expect to retain Abovenet’s core customer base (major financials!) while blindly running an MPLS network that has started to run 30% over utilization best practices in prime markets, just to artificially boost EBITDA by not spending on needed buildouts and gear? The very management who is tasked with protecting the network and customer base, is unable to subnet a /24 into 4 x /26s…how long will it take the Bloomberg’s, NYSE,, and Lynchs of the world to realize that Abovenet’s service no longer exists and they now find themselves in the same leaky boat as the downtrodden victims of Arialink?
The current Operations and implementation model employed at Zayo is often and loudly decried as a transparent attempt at enabling the company officers to cash out with stock and bonuses before reality sets in. As time passes, the hope of someone like BT making the mistake of coveting those big fiber miles and breaking out the big checkbook, fades. Restructuring debt becomes more and more difficult without organic growth to convince the investors to pony up for another round. The smart customers look elsewhere.
I see this going the way of Worldcom, just on a much smaller scale.
Someone has an axe to grind…this comment is a copied word-for-word from a May comment: http://www.telecomramblings.com/2013/05/zayo-fiscal-q3-2013/
It doesn’t matter if it is word for word, relevant and true in May is relevant and true now. Instead of fallaciously discounting an opinion just because it is an echo, why not point out exactly which part you think is incorrect or arises purely from spite?
The truth is, Zayo is a shining example of what has become the race to the bottom. Cheap unskilled labor, brought in to answer the phones rather than actually fix or build the network, merely to maintain the cosmetic illusion to Abovenet’s customers that “hey, everything is just peachy and this is still the same company that Bloomberg, KPG, Meryl Lynch, UBS, and all the NY financials placed their trust in years ago”.
News flash: it isn’t. Zayo mandates a 9 to 1 profits/overhead ratio in order to provide the maximum return to investors. Since Abovenet was hovering around something to the tune of 1 to 4.7, which is far more in line with industry standard, where else are you going to be able to trim? That’s right…service and infrastructure.
Abovenet was *pro actively* monitoring their customers….Zayo can’t even keep up with support to people who call in to complain. We’re talking THOUSANDS of unresolved technical issues (tickets) a month VS. what was hundreds previously. YET, Zayo just recently (and unethically) laid off even more support staff. Screwing your customers in favor of your investors is not a viable long term model for success. It’s even worse when you do everything in your power just to maintain the façade, rather than address the causative issue.
If you have monitored services such as private metro ethernet, it is easy to prove what I am saying….all you have to do is turn off their monitoring gear on your prem, hit the stopwatch, and time how long it takes for Operations to call you. Hehe…good luck.
1whoKn0ws,
Listen, as a former ABV employee who endured the Zayo fun myself, I understand what you’re saying. Zayo inherited an MPLS network 17.5x bigger than what they had before and fired many of the IP engineers who supported it, including the network architect who oversaw it all. There’s no doubt that they were at least in over they’re heads at that point. And yes, I’ve heard of horror stories from customers all over the US about the monitoring of their services, including an 18-hour down time in NY!! So yes, I, and I suppose many others with “Zayo scars” know what you’re saying, but we all need to get over it. Zayo is what they are and that’s that. Their bottom line, investor-return focus will not go away in favor of a strong network and customer satisfied focus. Dan is a businessman; fuzzy math and accounting tricks are his game. Telecom is just the industry where he chose to practice his craft, and he’s good at it. I know of plenty of former ABV customers who all beyond pissed at the way Zayo is handling their accounts and service, and many have looked at leaving at or before the end of their contracts; if that continues long enough and the Chases and Goldmans and Facebooks of the world decide to leave as well, I believe that’s the only way things will change because otherwise, everyone else is just tiny churn.
But hey, take heart in the fact that there are still good and capable ABV employees in Zayo, and they won’t idly by while Zayo continues to act in this manner. They will get into positions of change and no doubt try to propose former ABV ideas and standards as they can. We will just have to see which happens first – collapse or change…