 This is JSA TV, the newsroom for tech and telecom professionals and JSA radio, your voice for tech and telecom on IHOT radio. I'm Jamie Scott-Otaya and on behalf of my team here at JSA, welcome to our monthly virtual CEO roundtable. These virtual roundtables lead us up to our on-site CEO roundtables at our C-level networking event, the telecom exchange. Next one up, June 20th in Hoboken, New Jersey at the W Hotel. And later in the year, telecom exchange LA, November 7th, Beverly Hills. More info for both events at thetelecomexchange.com. So let's get started. We are gathered here today to talk about the state of dark fiber. And we have an executive lineup for you from three absolutely innovative companies, Clarion, Xeo and Zenfide. And in true roundtable format, our live viewers can now type in their questions in the question box. And time permitting, we will pose your questions to our speakers. And I'm very proud to introduce today our star guest moderator, leading journalist and editor, particularly on dark and lit fiber news, Mr. Sean Buckley, who head up the editorial at Fierce Helicom, part of Fierce Markets for the past nine years. Sean, it's an honor to have you. And thank you so much for the many contributions and coverage in our industry's news. Great. Let me introduce today's speakers. Like Jamie just said, we have a great lineup here of some real great experts starting with Cliff Cain, this co-CEO of Clarion, Mark Serjak, a long industry veteran who's the vice president of dark fiber services at Xeo. Finally, Ray LaChance, president and chief executive officer of Zenfide. Well, I'll just get right into it with some of the questions here. The first question is, the notion of dark fibers hardly new as we all know. Well, what's different about the opportunity now versus 20 years ago when the internet began to emerge? Mark, we'll start with you. What's your take on that? Yeah, man, I lived through the first wave of DSL deployment when I was in my early days of GT. And it was literally, as we all know, back in the 2000 mark, the Wild West. Everyone wanted an ISP, a Sea Lecker Colo, and it was all great and good until the market crashed and suddenly no one could get more materials. At that time, fiber was just a barrier. They were more focused on returns and doing an IPO than they were actually about connecting real customers. I think really now is what we're seeing today is dark fiber will be deployed very strategically to support bandwidth growth, data center activity, and also content providers. We deployed very methodically, and I think really going forward, we'll see carriers in their best interest, deploying them methodically not over-promised because the marketplace really has a long memory about who will be successful and who will not be. Cliff, how about you? I would agree with everything that's said. I would add that 20 years ago, dark fiber and putting dark fiber was a bit more specialized or a lot more specialized. I'd say from my perspective, the business end is that it's commoditized greatly. It's on the present. There's a lot of fiber out there. There's a lot more that's going to be needed. That's why we're back in this fiber game. I can remember maybe even a little bit before 20 years ago when you were doing fiber jobs with the guys that would come to Splicable wearing long white lab coats. There was Splicing one fiber at a time. It was just a whole different game and everything was so expensive. It's the skill sets to install dark fibers now more widespread and easily be found and the markets commoditized. Great. How about you? Sure. I'd like to characterize the evolution of the fiber industry that we're in now as we're in the second generation or dark fiber two generation. I think all the problems, the easy problems have been solved. Enterprise connectivity and your residential connectivity in major metropolitan areas. The sparse fiber networks have been built. The next problem, so we have coverage everywhere but we don't have capacity. The next build that has to happen is we have to now look at those backhaul networks that have been built today and now infill because at the end of the day, we need fiber anywhere. You need fiber at every rooftop, every floor of every office building, every street corner, throughout every major metropolitan city in the US and then certainly have to densify in other markets. While there is a lot of fiber, it's absolutely right. There's a ton of fiber in New York City. This doesn't go to the right places and there's not enough of it. So there's a great opportunity to build a whole new infrastructure. I think we're right at the beginning of this densification wave. It's dark fiber two generation. Great. Okay. This wouldn't be a discussion about dark fiber. We didn't talk about 5G network wireless deployment. So where do you see dark fibers roll in 5G wireless network deployment? Cliff, I'll start with you and then we'll go around the world here. Sure. Front hall, front hall, front hall. And the densification is, I think, mostly going to happen between small cell, DAF systems, IoT type aggregation points to front hall edge data centers. And that's indeed what we're positioning for as Clarion. That's why we've been acquiring data center operations in the Metro to provide the hoteling function along with the ability to design, build, install, and maintain fiber, and also on top of that, the ability to do the backhaul because our broader core network connects to all the local data centers. So the access to the carriers and customers alike can be provided to those edge data centers and then the front hall is what really needs to be built. So I think the major focus of fiber construction is going to be on the front hall side. That's more localized, more neighborhood driven. So that's how I see it. Mark, how about you? You're at Zeo, certainly winning a lot of big dark fiber contracts. I think you guys won a few recently actually in some big cities. But what's your perspective? I didn't really think about 5G networks. I mean, it's going to be pivotal of the next wave of the Internet of Things. And we commonly call the unknown unknowns. What's the bandwidth we need demands for today? Where does that look like even two or three years from now? It's going nowhere except we're explosively up. You know, in 5G also the potential to change the entire telecom landscape. Acceleration of cord cutting as we get into more streaming. And really to me is a shift from LIT service into wireless. If you look at low speed LIT services today, 5G is a potential of replacement. And then what happens to the carriers, you know, the AT&T's, the Verizon's, the Frontiers are from Ethernet services today. What happens long term? Really dark fiber is addition very well to enable those small cell networks we have to go through and build today. As carriers look to push out and extend and densify their networks to meet demand and backhaul that. There's really no other way to do that effectively except with dark fiber. It really gives those carriers and the ability to go through and say, hey, I have a scalable network today that for the future I have growth built into it as we deploy it. Ray, how about you? Sure. Well, it certainly couldn't agree more with Cliff and Mark on this. Look, the reality is what's 5G going to deliver 6G or 7G or whatever it ends up. And that's going to be very high capacity, very high bandwidth, low latency connectivity, both mobile users and fixed wireless users. The key is it's going to be delivered wirelessly. And what do you need to build great wireless networks? You need great wired networks. And it's all about densification, right? So you can't solve the 5G problem with more spectrum because there's just not enough spectrum to be allocated. And so what we have to do is this notion of spectral reuse, where we put antennas as close to the user as possible, use those same frequencies in close small cells that are adjacent to each other. And the best way to serve those small cells with capacity is to use fiber networking. And so we see that as the major growth. The reason the industry is seeing a huge growth in an uptick for infrastructure builders, work communications infrastructure builder in the market. We focus on this underlying connectivity, primarily for the antennas. We have nearly 5,000 street-side antennas under contract, nearly 2,000 built today in just the New York City. And that's all on a new technology that Cliff had mentioned. He talked about front-haul networking. Front-haul network is a network that reaches out and touches antenna locations and brings you back to baseband and creates baseband processing in the neighborhood. I like to characterize it as a network of neighborhood networks where there's a colo in the neighborhood, front-haul out to the antenna, and you pick up the RF signal, you get back to the colo, and then we go back to traditional networks. The legacy networks that have been built for the 20 years, the S20 years are great for that colo to core connectivity, but they're not great for that antenna connectivity. So that's the new opportunity. 5G is driving the bulk of the opportunity in the space from my perspective, certainly in large urban markets like New York. Great. Okay. Another question I have here is about the build-in versus buy. Verizon, as you all know, has tended to build-it-themselves approach, but obviously they're going to still use other suppliers, like the three of you. So how will decisions by them and other wireless operators affect the overall dock market, especially as we look at 5G? Mark, we'll start with you. Man, there's been obviously a lot in the marketplace about Verizon wanting to go with a loan, but a lot of ways going alone can be awful only in the sense that Verizon has a large provider with deep pockets and they have the time to do it, but to get the scale they need and the speed to deploy that, I really think that Verizon at some point will look at it and say, hey, is it cheaper for me and faster for me to lease a network tomorrow morning from someone else, or is it easier to go build it? I think in a lot of the markets, because of the pressure with AT&T rolling out 5G, we will see 8th Verizon look to partner with other companies. And you look at just Ericsson today. Ericsson is a very large-scale provider for Verizon. You know, Ericsson also provides services for Sprint and for the other major carriers as well. So I think when you get down to the local market level, it's going to be a really interesting dynamic to see. You may have one contractor, Ericsson, running around and working for several companies and all with competing votes. So I really think that this is why I think they will go alone as much as they can, but there's going to be a trade-off to that. Okay, Ray, how about you? Well, you know, it's interesting. We see this cycle happening all the time and it certainly has happened with, you know, even with WireLine in our market. And the reality is anybody that's serving this wireless market and books and desiccation, yes, they have a backhaul network in place and that's certainly connecting all the CEOs together. They have a Fios network. The problem is the density isn't there in their fiber networks that have enough capacity and they don't have enough accessibility. So they have to build new networks too. And when they start looking at build versus buy, they're going to have to, you know, consider the, you know, think on regional pockets by regional pockets where it makes most sense. In an electric territory where they also have a big Verizon business presence like New York and may make sense to do more on their own than less. But I think it's a mix. And I certainly see the opportunities, the fiber leasing opportunities, even on this stage of this goal quite a while ago, Verizon specifically to self-perform, they're still leasing. And I'm seeing them leasing, you know, every single cycle we go through for full-time leasing in New York City. So I think it's a little both. Okay, Cliff? Yeah, so specifically on Verizon, I think anyone who has a, you know, a large footprint like Verizon or AT&T, you know, they're going to provide for themselves where it makes the most sense. These guys have been doing network for a hundred years and they understand the build process and, you know, look at, they bought or committed to buy $2 billion with the fiber from Corning a year or so ago. They made a big stink out of making that known to the world. So they're going to be building quite a bit of fiber, I would assume, at least probably deploy all that fiber that they're getting from Corning. So, you know, they're smart guys. They've been doing this, it's in their DNA. So for, they'll augment where they need to augment and they'll lease where they need to lease. I don't know how, it will all probably benefit from some of the leasing. I mean, the panelists and Clarion, but at the end of the day, you know, in telecom, no one can do it all. You always have to touch the network. Somebody else's network someplace and that's why we work together. Very true. So what are the challenges you folks are facing today as you roll out new and existing dock fiber installations? Ray, I'll start with you. So, you know, clearly the challenges we have in the market in a dense urban environment like New York City is congestion, right? We're working in a system that has a whole lot of cables and a whole lot of capacity. It just doesn't go to the right place. So we're all rebuilding in a very congested environment. So one of our, that's the most significant challenge we have getting around. So what does that do? That drives costs up. The other challenge we have is we're also doing turnkey sightings and small cell installation and commissioning. And we actually own the infrastructure, the whole heart, the entire heart infrastructure from antenna to sprout all the way down. The carriers bring their own electronics. The challenge there is sighting, right? So you need to, in this case for outdoor, you need pole top locations or street furniture locations to sight stuff. So that is clearly a, you know, challenging environment creates a challenging environment. It's stuff that you have to work around. However, it gives us a great opportunity to add value. So while there may be hurdles for everyone else, we think we've mastered getting around these things. And it's a, I think a strategic opportunity because it is challenging. And we can run, you know, we can stand between the municipality and the carriers and turnkey for the carriers and make it easy for them. Great, yeah, all those exciting issues. Cliff, how about you? I think, you know, challenging-wise, challenges, we're, I think, one of the broader, and we're in the same market as Ray Lachance and Zenfie. And so we see all the congestion challenges and the sighting challenges that he mentioned. But, you know, for us, we're also carriers, carriers delivering access and transport services. So, you know, one of the challenges that kind of irks me the most is that there's this expectation that these prices will be so incredibly cheap. And you just don't know when you're being fed a line. You know, they say, well, your competitor is bidding on this for half your price. And then you do the math and you just can't see it. But that's what, there's a lot of, you know, misunderstanding or in the market that, you know, that the pricing is just falling through the floor. But when you have an asset like Fiber, there is a theoretical price limitation to that. It's not like let's services where you can constantly, you know, add more capacity. So in dark Fiber, it's physical infrastructure. Basically, you get down to a point where there's, you know, a baseline costs. So at some point, if you're getting below those costs in the marketplace, that's certainly a challenge. But my biggest gripe is that everyone has this downward price pressure and expectation. Mark, how about you? What do you see? Yeah, I mean, I look at this as more of an industry issue. It is really with the improved economy, building and construction is taking off in a lot of key markets across the country. You've got localities operating infrastructure, sewers, water, roads. If Congress could ever agree on anything that may actually have an infrastructure bill that gets passed sometime in the next couple of years. But the real question is, can localities and cities keep up with permitting and engineering? In some markets, like here, markets in Atlanta, for example, I think it may take you six months to get a permit. So really, you know, and you get down to the small cell deployments as well, approval of poles and attachments, hitting the carriers. All of these things must go through the same groups that are approving permits for office buildings, approving permits for roads. So it's really all these different points are all emerging at the same time. I mean, you've got building access agreements and easements. So really, the carriers and the providers must be very aggressively engaged with the localities, making sure that relationships are very strong and making sure that process does not get in the way. And conversely, we're also seeing, and this probably is across the country as well, the localities know how important small cells are to the carriers. They're becoming much more savvy in what their asks are back to those carriers and what they want to see from themselves as well. So really, it's going forward. Providers must consider all these aspects from permitting and entering terms all the way through build, how long it will take to get the network put in place. Great. Okay. Another kind of question here is, what is the advantage of using Doc Fiber or Lit Fiber? Does it depend on the networking situation of customer need? Cliff, I'll start with you. Yeah, I think it's a use case dependent question to be asked. You know, that involves not only the, you know, what the use is, but the economics when you dive deeper into a use case. So, you know, I think when we, there's a threshold that's been moving along over the years where now it's probably in maybe 10 gig or even 100 gig in some places, you know, on the core networks between the data centers where you may consider going to a lit versus a dark. So, that's the economics. And then on the enterprise side, going out to the buildings, enterprise buildings and the commercial building, which is, you know, that we don't do residential. So, I think that really depends on what the customer wants in that building. So, that's that part of it. Insofar as front hall, you know, I think all the front hall is going to dark fiber back to the edge data center, but it will be lit from the edge data center into the core. So, we're, you know, we're prepared to do both of those. So, I think it's really a question that really depends on the use case. Right. How about you? What are you seeing? Well, that's an interesting question. And we've seen it. We've seen a cycle here, right? In the early 2000s, there were, you know, everyone always stopped with both services from the carriers because it's because it wasn't dark, pervasive dark fiber availability. And frankly, enterprises didn't know how to light it themselves. And we're troubled with it. Then as we moved on, we moved through an environment where there became pervasive dark fiber and there was a lot of optical gears started ending up in enterprise hands and certainly Ethernet speeds increased. And a lot of companies decided they wanted the security, you know, the privacy, the virtually unlimited bandwidth and the total control of the network. So they started taking down dark fiber and lighting it themselves. Then we started, you know, as we moved closer to now, we've seen a shift in the enterprises where it's because of software-defined networking and the ability to dial up your bandwidth really easy with carriers that provide a, you know, a more robust set of lit services that gives you a lot more of those private network feels, feeling that you used to have when you did it yourself. I think we're seeing a lot of deals go to lit services. However, when we move over to this environment, like Cliff mentioned, front-haul technologies, when they're a true front-haul connection where it's baseband processing and separated from an antenna and RF endpoint, the front-haul technologies like SIPRI are really not meant to be lit in switched environments. But when you do small sales with Ethernet interfaces, some of the models will ask for dark fiber because they wanted dedicated control and the option to do, you know, these other front-haul technologies. And then some of the carriers will ask for Ethernet because they're used to bringing a 1-gig ethernet to a macro site and lighting up while a small sale has 100 meg to a 1-gig interface and then typically it's a digital interface. And a lit service works there. So we've seen both and we've seen the same carriers ask for about a lit or dark service to a small sale location. But again, we're seeing less enterprise demand for private networks built on dark fiber and we're seeing a lot of mold demand for dark fiber. Okay, Mark, how about you? Yeah, I agree with what Ray and Cliff are saying about dark fiber use. Dark fiber provides scalability and adaptability and really the end of carrier-dependent speed upgrades like you've seen in Ethernet services which for 5G is critical. But dark fiber tradition is also required a much more savvy customer than other types of network services have. And I think on the wireless side, they have the deep pockets. They also are savvy enough to understand how to run their own networks as content providers have. I think the real thing you start seeing now in the next probably two to three years that has stood back a little bit from dark fiber starts seeing deployment and the network actually being pushed further out because of small sale. It ultimately will reduce the cost and drive more people to it. Lit services will be with us for considerable amount of time in the future but obviously for the higher bandwidth demand dark fiber will be the play. Great. Another question here from me. What will differentiate dark fiber players? Will it be reach, fiber count, experience? Ray, I'll start with you and then I'll go around the horn here. So as I said, we're in the second generation of dark fiber 2.0 generation. The differentiator now is the fiber network serving the traditional large scale enterprise locations in large residential locations and the hybrid fiber networks for cable. That stuff is roughly in place. The new generation of builds are really focused on as Mark and Cliff had said it's this front hall piece, this densification of your fiber network. So higher capacity cables have to be laid along the same routes and many more routes that have been done in the past and they also have to be accessible everywhere and I'll give you a great example. When I'm building up Fifth Avenue right now or up Broadway in New York City, we're building a network that you can access at every single manhole we traverse which is a very different architecture. Our front hall architecture is very different than the legacy networks that were built to support sparse networking. In the analogy, you could look at the legacy networks as the back hall networks and think of those as the highway system and you think of the front hall network as the local system and we interface those two together and we create a whole new highly accessible very high capacity fiber network and when I say high capacity, we're running 1728 cables, we pair these down. Our access cable used to be a 48 fiber cable or 72. The minimum access cable we're putting in place in the streets to get off to serve small cells is 576 fibers. It's pretty big and those trunk cables are now they've grown up to 34 56 cables over the next step that we're seeing that will actually fit in ducts that we're working. That's certainly how we see it. Cliff, how about you? I think my response would be very similar to Ray's so very repetitive but I think that's the challenge of getting out to the edge is really what we're looking at and how do you best serve that and basically the physical constraints of physics in terms of where you place these edge data centers to serve that front hall network and connect to the rest of the world. Great, and Mark? Yeah, I mean basically what Ray and Cliff are saying is right on. Fiber providers right now, you mentioned Fiber Reach Services and Count. It's going to be a combination of all these things that are real successful players. The future for dark fiber will be those that can serve multiple market areas that have on that services and providing for customers. You have to find significant fiber footprint with routing options and of course large fiber and also indoor metro areas as well. Experience is going to be critical. It has to be in this game for a long period of time. You can't walk in and think you'll do dark fiber and suddenly step away from it. This ability to provide I think both pure dark fiber as well as managed network. Some customers want only dark fiber. Some customers say I want dark fiber but I want you to manage that network. It's really offered multiple types of services. Having that local presence again is very important but also pricing. The ability to deliver bandwidth on time, how will you do that and the providers that can do that quickly and schedule for the end user customer as well. Great. I think we've got time for a couple of audience and a few more questions that I'll throw out here. One question I have is do you see more consolidation of the broader dark fiber market and will new players emerge? I mean certainly, I mean Zeo was a new player at one point and multiple acquisitions and so Zenfie and everyone here but I guess I'll start with Ray and kind of go along from there. I mean do you guys see more consolidation of new players on the status quo that status quo is I guess I see both happening. I certainly see the opportunity for new players to join the market today because again the legacy players haven't built the network that needs to be built yet and there are companies like Zenfie that are going to go out in front run this. We've been talking about this since 2012-13. We started the company in 2014. Another network had to be built. So we went out and started building Frontball well before it was the Vogue we even talked about Frontball. We think that can happen all over the country in major metropolitan areas and there's a great M&A opportunity too because the legacy players rather than building it all themselves will look around the market and acquire those complementary networks that are a perfect snap to enable them to support this mobile densification wave and clearly we just announced a merger with Cross River Fiber out in New Jersey and we're very excited because that's a great compliment to what we've been doing in the New York market we want to bring our story for mobile densification infrastructure play to New Jersey across their network and leverage that and it also gives us the opportunity to take our asset within the New York market which is a very dense very pervasive fiber network with a lot of new products upon it so when you have complementary companies like this I think you'll see a lot of M&A happening to help solve this problem because ultimately the infrastructure players the large terror companies are going to they have the relationships in the mobile market they're going to dominate that space they're going to need these other players as part of the portfolio so I think there's a great opportunity for that to happen and Mark I'll get back to you now Zeo is up to what did you say 40 acquisitions over the past 11 years I've lost track myself but yeah, what do you think after being in this business for 25 years I think everyone can agree too that there are no surprises left every day something new happens especially when it comes to mergers and acquisitions every time we hear there's no more regional players left new ones pop up because they're growing organically inside of marketplaces but again in this dark fiber marketplace it's going to be scaled and really drive business so I think you're going to continue to see those going forward in the future and Cliff to you so I've been in this game for a long time and everybody's always asking when is the consolidation going to stop it just never does so it's the one continuum of the sector I think we're all kind of you know in the network effects which basically is you know the bigger the network is the the more value it has in terms of the paraphrase I think that drives the backdrop for consolidation and I think 5G and densification in IoT is going to bring a whole set of new players that may add different aspects to that which will be at the end of the day consolidated by someone like Azeo for example just think about what's going to be happening in those edge data scenarios and the specialized services software that's going to be there so I think it's just going to keep broadening out and I think 5G is really going to push it yet another wave of consolidation once 5G comes into a full effect in the marketplace great well thanks for all that great perspective about out of time but thanks to my three speakers Ray and Mark and thanks to JSA for the great opportunity to I'll hand it back to you Ray Sean and yes thank you again our all-star panelist Cliff King co-CEO Clarion Networks Mark Serjak, Vice President of Dark Fiber Services, A.O. and Ray Lechance of course CEO of Zenfine Networks and of course thank you Sean our guest moderator and the authority on dark fiber news in our industry this wraps up latest virtual CEO roundtable thanks for joining us and please come and meet us in person June 19th at the 20th telecom exchange in Hoboken New Jersey where I have to mention Cliff and Ray will be back at it again another scene it will be necessary infrastructure for wireless next-gen services so come and see them also if West Coast is your interest join us November 6th to 7th telecom exchange in LA to feature your C level here next time you are at jsa.net and thanks for tuning in to JSA TV the newsroom for tech and telecom professionals and JSA radio your voice for tech and telecom on IHOT radio until next time happy networking