Industry Spotlight: Optimum Lightpath’s Dave Pistacchio

January 9th, 2012 by · Leave a Comment

In December Optimum Lightpath crossed a substantial milestone, connecting its 5,000th building in the New York City metro area – the most I know of by any non-incumbent provider in a single market. The company, which is the independently run metro fiber arm of Cablevision, has been very actively building out its network and has been steadily taking share in the mid-market from the incumbents. With us today is Optimum Lightpath's President, Dave Pistacchio, to offer his viewpoint on the where the company is now and where it is headed.

TR: Optimum Lightpath has a very deep presence in the New York City metro area. How large is the overall market opportunity as compared to your current penetration?

DP: It's a moving target. As you know, this is the largest telecom market in North America, and there are many thousands of buildings. We look at the market opportunity in terms of the dollars available, and there's many billions of dollars being spent on telecom in the tri-state area and that's not including managed services and other things these companies are buying. It remains a huge opportunity, and we have a lot of runway left in terms of growth. Our strategy for capturing that opportunity is simply to have as many of the buildings where businesses are located in the tri-state area connected to our network. In the last five years we've grown from 1,500 to 5,000 lit buildings.

TR: Do you have a target number of buildings to bring on net in the next year or five years?

DP: There's no number that we're aiming for. We consistently and continually invest in our network. The economics of the business are such that within our footprint we can bring fiber into buildings probably more economically than anyone else. One of the reasons for that is that our fiber network is pretty ubiquitous and leverages our parent company's rights of way. Most of the buildings that we'd like to get to are very close to our network already, so it doesn't take much to get there. We invest not with a target number of buildings in mind, but trying to serve businesses that need the services we provide. We light buildings based on what our customers need to do and where they need to connect to.

TR: Which verticals have you seen the most success in recently?

DP: Optimum Lightpath serves the mid and large enterprise spaces, and we really think of those a bit differently. In the very large enterprise space, we have a significant amount of business in the financial vertical and we have a big healthcare presence too, as well as a fair amount in other verticals like media and entertainment. But the biggest opportunity for us, frankly, is in the mid-market where we are seeing across-the-board acceptance of the products and service that we offer, from law firms to the healthcare ecosystem all the way to retail and manufacturing. There's no one single area there where we're heavy, it's quite broad-based.

TR: Have you seen any shift in the underlying economics of metro fiber?

DP: We haven't really seen a change, it's been fairly consistent for the last several years. Clearly the more buildings we light and the further our network reaches out, the more prospective customers we have and the more economical those opportunities are. We can serve companies that are on the lower end of the mid-market scale economically.

TR: Has the overall economy affected you substantially?

DP: The economy has been challenging certainly, but we have continued to grow consistently even through the downturn. In particular, the mid-market segment is very interested in trying to do more with less, and that's what we enable them to do so we've seen a lot of success there.

TR: Over the last year, service providers have become increasingly interested in offering more managed services, particularly cloud-based services. Where do such products fit in Optimum Lightpath's plans?

DP: We do have a hosted IP voice platform as well as a premises-based voice platform. We have conferencing services, and it's very likely we will be adding more cloud-based services. However, it's not our intention to transition entirely to a cloud-based portfolio. There are many cloud-based companies out there selling managed services that do a really good job of it, and many are our customers. We happen to have a great network that connects to thousands of businesses, and so we also want to be the underlying network for our partners to help them reach their customers with the right amount of bandwidth at the right cost and vice versa. It's a combination of adding services where we can bring value bundled with our core transport, and then supporting the services of our partners and helping them reach their customers.

TR: The other story over the past several years has been consolidation. Has Optimum Lightpath considered expanding inorganically, and would you ever go outside your parent company's territory to do it?

DP: We always look, but we have no driving need to go beyond our footprint. There are billions of dollars being spent here and plenty of opportunity for organic growth for some time to come. However, we did go outside our footprint to buy 4Connections in 2008, which went outside the Cablevision franchise boundaries. We certainly look at opportunities that come up, and if one is compelling we will take advantage of it. But we're pretty comfortable where we are.

TR: We've spoken mostly about the enterprise business, do you have much wholesale business and in particular has tower backhaul been an opportunity for you in the NYC metro area?

DP: We're very focused on enterprise services. We do have a wholesale business, but it's not growing as strongly as the enterprise business and it's not our main focus. We actually do a lot of tower backhaul. The economics are tougher in New York for it than many other metro areas, just because of the cost to build. But the ubiquity of our network is such that it's not a long haul to reach many of those tower sites. That being said, there are some deals that are worth doing for us and some that we will pass on until the economics get better.

TR: Thank you for talking with Telecom Ramblings!

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Categories: Industry Spotlight · Metro fiber

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