Verizon’s aggressive do-it-yourself fiber build plan with Corning and Prysmian has prompted investor concerns about its impact on fiber provider wholesalers, but Uniti said it does not see any major effect on its wholesale revenues.
Instead, the service provider continues to talk to Verizon and other large wireless operators about lit and dark fiber-based wholesale service opportunities.
Kenny Gunderman, CEO of Uniti, told investors during Cowen and Company 3rd Annual Communications Infrastructure Summit, the company isn’t seeing any slowing down of interest for its solutions.
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“We watch it closely and it hasn’t been a headwind as we continue to see booking grow with all of our wireless carriers,” Gunderman said. “We have an active dialogue with Verizon and they continue to say they’re interested in working with third-party providers.”
Gunderman said that Verizon’s One fiber strategy is focused on what the service provider needs for a particular market.
“Verizon has always been focused on controlling their fiber and the economics of acquiring fiber so I don’t think those are the things that are driving their One Fiber initiative,” Gunderman said. “What’s really driving it is that in a lot of these metro markets, including some of the Tier 2 markets we serve, the fiber isn’t where it needs to be.”
Gunderman added that Verizon is simply trying to shore up resources it needs.
“Verizon needs more new fiber and more dense fiber and in these markets where they don’t have the option for fiber that they need, they are looking for options,” Gunderman said. “If the third-party fiber does not exist, they will do it themselves, which is true of all the wireless carriers.”
For its own part, Verizon has maintained that it would look at various options to procure fiber: conducting builds, leasing and purchasing other fiber assets.
Verizon recently signed a deal to acquire WideOpenWest’s Chicago fiber network for $225 million, a move that will bolster the service provider’s wireless backhaul capabilities for current 4G and upcoming 5G wireless deployments, for example.
Bundling small cells, enterprise opportunities
Uniti Fiber, which has been growing through various acquisitions including its recent acquisitions of Hunt Telecom and Southern Light, has positioned itself to also take part in wireless operators’ small cell densification projects.
While a lot of the early momentum for small cells has been in the large Tier-1 cities, Uniti is seeing similar demand in Tier 2 markets.
But unlike other pure play providers such as Crown Castle, Uniti sees an opportunity use a small cell fiber deployment as a way to pursue adjacent enterprise and E-rate opportunities.
“We like the small cell business, but our strategy is to package small cells as part of an overall fiber strategy,” Gunderman said. “We sell to enterprise, fiber to the tower, schools and government and we think to drive maximum economics on our network it’s a full lease up instead of focusing on small cells.”
When it serves small-cell opportunities, Uniti is finding growing bookings in Tier 2 markets it operates in today.
“The conventional wisdom is that small cell or network densification is focused on the top 25-30 markets, but that is definitely not the case,” Gunderman said. “We see small cell demand in Tier 2 and Tier 3 markets and it’s growing from the four largest wireless carriers.”
One advantage Uniti Fiber has is that the Tier 2 and Tier 3 markets the service provider focuses on are not as competitive as an NFL city.
“The difference is in our markets is there’s fewer fiber options and usually your competitor is the local LEC or the cable company as opposed to a pure fiber provider,” said Gunderman. “The reality is for small cell densification in these Tier 2 markets, you need to build new fiber in order to enable small cell deployments.”
Maintaining Tier 2 focus
In serving the Tier 2 markets, Uniti stands out because it is not typically competing with large incumbent telcos or larger fiber providers like Crown or Zayo.
When it is pursuing wireless backhaul and other enterprise service deals in the Tier 2 and Tier 3 markets, Uniti does not typically compete with Crown Castle and their newly acquired subsidiary Lightower simply because they mainly operate in Tier 1 markets.
“Lightower is operating in some Tier 2 markets, but I think the majority of the business is in Tier 1 markets so we seldom compete with them,” Gunderman said. “We also very seldom see Crown Castle in our footprint.”
Uniti’s Tier 2 market focus also leads it to pursue a unique set of acquisitions like Hunt Telecom, a Louisiana-based independent regional provider. Hunt Telecom provides data transport to K-12 schools and government agencies with a dense network of 140,000 fiber strand miles and 2,600 fiber route miles in Louisiana.
“We’re more focused on Tier 2 and Tier 3 markets, which leads us to different companies,” Gunderman said. “When we announced the Hunt Telecom deal, a lot of public investors said they did not who it was.”