Industry Spotlight: Wilcon’s Jon DeLuca Talks California Fiber

January 12th, 2015 by · 2 Comments

image001If one had to name a major US metro infrastructure market that might be justified in feeling that it hasn’t gotten its fair share of coverage on this site over the years, it would be southern California.  Part of that has been the relative paucity of independent network operators with a particular focus on the region.  But with the purchase of Freedom in 2014 and the lighting of all that dark fiber just last quarter, Wilcon has emerged as a new regional network power. With us today to talk about where Wilcon is headed next is President and CEO Jon DeLuca.  

TR: It’s been over a year now since Wilcon bought Freedom Dark Fiber, how has the integration gone?  Is there more work yet to do?

JDL: It has been an exciting year for us, and the integration has gone very well.  From a network perspective, the Freedom dark fiber network throughout southern California has been fully integrated with the legacy Wilcon network and data center infrastructure.  What we had to do was create new tie points and building access entries into One Wilshire, which is really the hub of all our operations.  Just a month ago we completed that work. Where there is more to do still is on the OSS and systems side.  We spent quite a bit of the last year launching a new, overarching software architecture to manage our network, workflow, and processes.  We completed that two months ago, but as you know that is a never-ending story.  With a year behind us, we are more excited than ever.

TR: Where has most of your OSS work been focused?

JDL:  Our mantra internally is that we want to be a spreadsheet-free environment.  And we’re getting pretty close. The businesses we acquired were solely spreadsheet-based businesses, and didn’t have legacy OSS systems. The migration of that type of environment to an integrated OSS has been a big undertaking, but we haven’t had to deal with legacy issues you might find in similar situations.  We were able to look out and whiteboard what we wanted to accomplish, what the systems we needed were and how they would interoperate.  That’s been a tremendous benefit for us.

TR: Why have you chosen to make the transition from a purely dark fiber business into a lit services provider?

JDL: The reason we chose to make the transition is that the market opportunity mandated that we deliver a lit capability.  It’s a huge opportunity, and we knew this going in three years ago.  Part of the attraction of these acquisition targets for us at the time was that they hadn’t really developed a lit capability, so there was a big segment of the market that wasn’t being tapped.  It has taken us some time, but it was always a key part of our investment strategy.  There are still many customers, in the carrier space, the wireless space, and all enterprise verticals, that want a lit managed service.

The advantage for us was that we didn’t have any legacy systems to build around.  There was no SONET or TDM service to deal with, and we don’t have any intention of putting them in the network.  We are really focused on Ethernet and waves and IP, which are all nextgen services that customers are requiring.

TR: Do you still like the dark fiber business as well?

JDL: Yes, and the dark fiber business is actively growing.  There are segments of the customer base across the board that want dark fiber.  Carrier wireless and virtually all enterprise verticals are interested in dark fiber, to varying degrees.  I think that as the operation of the lit network becomes more manageable for the customer, the benefits of dark fiber are accentuated.  People understand that if they have the glass and manage their private network in-region, maybe connecting multiple locations like a school district or a hospital for example, and they just want to manage traffic flow between them, then dark fiber is a great solution for them.  Our ability to deliver that at a great price wins the day.  We’re seeing more and more of that, particularly in some of the enterprise verticals that I thought would never get there.

TR: Now that you’ve lit the network, do you have plans to add additional products to your portfolio?  Perhaps cloud or voice services?

JDL: No, we don’t have any other products coming in the portfolio right now. Part of our strategy is to stick to our knitting, knowing what we do well and where we have a competitive advantage, and just do that.  So there’s nothing cloud or voice related coming.  We are a core infrastructure business.  We offer DIA, but even that’s not a primary driver for us.  We view that as an add-on to an infrastructure sale.  And the colocation/datacenter side of what we do is particularly interesting when integrated with our network capability.  Customers are increasingly purchasing those together, so you won’t see us drive the colo business independently.

TR: Where do you foresee the bulk of your network investment going in the next year or two, into building into new geographies or adding on-net depth in existing ones?

JDL: Both. We are active network builders.  If you look at our footprint in the CBDs and core metro areas of southern California where we have good density, we’re just increasing that density.  The more buildings passed that we can get, shortening new customer extensions and provisioning intervals is a real competitive advantage for us.  And on expanding breadth, there are pockets of southern California where wish we had more density and we are going for it.  For example, Culver City, which lies between downtown LA and Santa Monica, is a growing media/tech area that we’d like to explore.  And the San Fernando Valley is another area, as there is high business density and simply because of the geography there are fewer networks that extend into that area.

TR: How does southern California compare other metro fiber markets? 

JDL: My background is in the Northeast, which is the market I previously had the most experience in.  The competitive landscape in southern California is very favorable to the existing fiber operators.  From a dark fiber basis, we would stack our network up against anybody.  And of course Zayo and Sunesys are good competitors.  But in the second largest market in the US, I would have expected more competitors.  But honestly, the market is rational, and to my knowledge there are no startups or new active builders.  Additionally, from an ILEC/MSO perspective, southern California is a patchwork.  Unlike regions where AT&T or Verizon owns everything, you’ll find pockets of Verizon alongside AT&T territory.  On the MSO side it’s even more carved up.  That diminishes their incumbent capabilities, because on larger regional deals even they have to go off-net.

TR: Most people seem to think of doing business in California as somewhat more difficult, how have you found the overall environment? 

JDL: I find it to be very positive.  The regulatory burdens are no greater than other parts of the country, and when working with municipalities and even the large cities on rights-of-way and access they have been wonderfully accommodating.  They’re progressive in the sense that they understand that advances in communications infrastructure advances technology, which will advance economic growth.  They understand why what we’re doing is helpful to the greater good.  We haven’t asked for anything particularly noteworthy, we’re just playing by the rules.  But the rules are well defined and I wouldn’t consider them onerous in any way.

TR: Do you expect further consolidation in the metro fiber space?  If so, is Wilcon likely to play a part on either side of the table?

JDL:  Consolidation will continue.  There are a couple things we are looking at, but they are on the micro/nano side and more on the fiber or conduit side than colo.  But I’m a realist about what the future holds for Wilcon. We are really just beginning and our private equity partner, Pamlico Capital, is just fantastic and has a long term horizon.  But much as I love what I do and as I believe in the long term opportunity, we are a private-equity-backed regional competitor and history has been written for these types of companies.  Looking over the next 10 years, I would imagine that at some point someone will be interested in what we are doing. 

TR: Thank you for talking with Telecom Ramblings!

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Categories: Industry Spotlight · Metro fiber

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2 Comments So Far

  • Anonymous says:

    So in the last question and answer surrouding the private equity and regional fiber player did he just officiallu ( if it was not already) put the for sale sign up on Wilcon or justs stated the facts and history as he phrased it

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