Allied Fiber's formal announcement on Monday of its national dark fiber buildout rankled more than a few readers. The conventional wisdom has been that following the dot com crash, no new national intercity conduit level network builds were even remotely feasible. Prices had fallen too far, rights of way were too contentious, too much fiber remained untapped in the ground between major markets, and financial backers would simply never go for it. Whether Allied Fiber succeeds or not in its venture, they may have already blown a fatal hole in that wisdom. There are many factors that have contributed to this, but for a moment I'd like to focus on how the industry's view of intercity dark fiber in the USA has changed, and may be changing again.
Back in the last bubble as the fiber barons built out their networks, selling or swapping dark fiber was a way to help fund the process and staggering amounts changed hands. Literally dozens of domestic ventures were built around such assets, just about every European PTT held dark fiber IRUs across the USA as well, and far too many networks were lit. Just a few years later, of course, carnage ensued. Much of the new fiber got consolidated into a half dozen or so surviving intercity networks. A new view of selling dark fiber emerged: that selling too much of it enabled the competition and was therefore a bad idea. You had to be careful about who you sold it to, where you sold it, and what other products could tag along to make it worthwhile. Such newfound self discipline made so much sense in light of the experiences in the telecom nuclear winter that it quickly became the rule across the industry.
But that self policing has now run into the law of unintended consequences. If customers want to buy dark fiber IRUs, and existing owners are reluctant sell them, then there is a market opportunity for someone to step into the breach. Enter Allied Fiber with its innovative wholesale dark-fiber-only business model, a modern approach to on-ramps, a little luck from the timing of the low latency movement, some PTT customers in the wings - and lo and behold the initial funding wasn't actually that hard to get. One of the major selling points Allied Fiber has used is that there is a shortage, not in the quantity of fiber in existence but in the quantity of fiber actually for sale via dark fiber IRUs since existing providers have given such priority to lit services. The decision by the industry that made so much sense now risks being turned on its head: instead of less dark fiber there may now be even more.
But Allied Fiber may face its own unintended consequences. If they succeed in breaking the dark fiber logjam on the major intercity routes, the Level3s and Qwests and AT&Ts holding their own dark fiber in reserve could now be forced back into the market, thus driving prices down again. After all, someone's going to sell the stuff, it might as well be them. Whoever sells the fiber, though, the fear is that a plethora of dark-fiber-enabled networks will bring back the dreaded buzzphrase 'fiber glut' in spades.
Will that happen? I suppose that depends on what people think they can do with intercity dark fiber now. Ten years ago, they all thought they could sell the same stuff to the same people and exponential traffic growth would take care of everything. But it didn't work out that way and each learned the hard way just how much it costs to run your own network from the fiber on up. Even the European PTTs mostly returned their dark fiber IRUs rather than continue lighting it: FT, DT, C&W all did in one form or another. If they return again, surely it will be with a different plan in mind? Is there an ecosystem in which hundreds of intercity networks at the dark fiber level can coexist?