New York City has long been one of the most complex and interesting fiber markets in the world. This past winter we saw some new players enter the market, reversing a long trend of consolidation. One of those players is Axiom Fiber Networks which has spent the last few months building a green field dark fiber network in Manhattan. With us today is Axiom's CEO, Felipe J. Alvarez, to tell us what the company is up to and where it is going.
TR: Axiom formally launched just this past winter. Can you give us an update on your current build-out status?
FA: We've been busy. Last month we completed what we call the carrier ring, which ties together 5 major carrier hotels in the area. This is part of the 20-mile core backbone network we are deploying, which is a number of rings interconnected for redundancy, initially focused in Manhattan. The buildings are what one might call the 'usual suspect' locations, those that if you want to be in the telecom business in New York you really have to be able to provide services from, 60 Hudson, 325 Hudson, 111 8th Avenue, 32 Avenue of the Americas, 375 Pearl Street. It's an 864-count cable, which gives us a strong base from which we can do business, and we've been getting quite a few requests for quotes between those buildings. Plus it's a good jumping off point from which we can head south toward the financial services district, and north toward midtown with coverage of points in between, both of which we are doing now.
TR: So what are your next steps in building out your infrastructure?
FA:. The one thing I'd rather have had is the carrier hotels up and running already concurrent with the fiber ring being installed. But what we've found is that to get a long-lived and strong network infrastructure in place, we need to take the time to insure we have the right infrastructure in place to service these locations. We are focused on getting as much control as possible over our access and not taking shortcuts, for example leasing fiber into the buildings,. We're putting in dual entrances with dual risers to our hub location within each building. We want to control our destiny as much as possible and build the business for the long term. These locations can be difficult to build into because of the density of existing builds; there are only so many points where you can put another access point to the foundation. New York is a great place to do business in, but it's not for the faint of heart. Our current schedule is to have the carrier hotels operational in stages starting in April and finishing in June. And in line with the demand that we have seen, we are continuing to build our core rings south and north of the carrier ring.
TR: What's the toughest challenge you face building fiber in Manhattan?
FA: It's hard to rank. My team and I, and the contractors and companies we work with have done this before - we don't look at building the network itself as being hard. We just look at it as time and money. What used to be the most difficult part, which was getting a New York City franchise, has made the most progress in terms of streamlining the process. The current process the City has in place is very straightforward and uniform, and that worked out better than I expected. But the remaining challenge there is the economics of the franchise are not necessarily conducive to deployment of large amounts of network.
TR: Why is the current NYC franchise not conducive to large network deployments?
FA: It's based on linear footage, so it scales up linearly with the network. If you deploy 1000 feet of fiber or 100,000 feet of fiber, you pay the same base rate per foot per quarter. Axiom’s plan is to create a very dense fiber network and the economics of building to smaller buildings starts to get challenging because the overall demand set is limited. Maximizing the economics of a fiber build drives everyone into the tall shiny buildings, which we all chase, but overall the math at some point gets out of kilter when you want to deploy deeper, denser networks, which seems like something the city would want to incent. Its one area that, as an industry we should go to the City and figure out if there's a better way of incenting large scale deployments for new entrants.
TR: Why did you choose the New York metro area to start a new dark fiber business in?
FA: We looked at the market a few different ways. First, the demand set doesn't seem to have diminished for dark fiber, if anything, the thirst for owning fiber will increase, across multiple sectors. Certainly the trends in wireless distribution justify additional and more granular fiber builds that can better accommodate their specific needs. We also looked at who is in the market currently doing dark fiber, and potential gaps in their performance. There are two or three very large players, and they've been established for some time. But if you look at the psychology and evolution of large companies, at some point they get inflexible and slow down - It's almost impossible not to do when you get to a certain size. So we noticed from a customer demand perspective, there were quite a few companies looking to do business with companies that had a more dynamic, flexible and focused approach to dark fiber. So from that perspective it was an opportunity. We also believe that over the longer term, the current networks being used to deliver dark fiber in New York are aging - While the fiber still performs, any longstanding network tends to get chopped up quite a bit, and eventually the number and quality of the splice points degrade performance. So along with a fresh perspective and business approach, we offer fresh fiber.
TR: Will you be targeting the enterprise market as well as the wholesale market?
FA: Our network will target customers that are looking to control their network and connectivity to the greatest extent possible tied to “ownership economics” – we see these requirements across all sectors. For example, the carrier ring we have deployed will cover both wholesale and retail needs. Part of our plan is to also target Enterprise customers that need custom solutions or have very specific fiber networking requirements. We want to increase the awareness that you don't have to be a very large company to deploy and manage your own fiber. It's the ownership economics, not being tied to price variability usually associated with lit services. Once you have a fiber pipe, you control your destiny. Hardware platform vendors have made it much easier to manage a service end-to-end using dark fiber; it's not just the realm of service providers or large Enterprise companies anymore.
TR: Do you have plans to expand across the river into New Jersey as well?
FA: Our plan from the get-go has been to start with the core in Manhattan and develop that aggressively, but we also knew from the beginning that we would need to develop a plan to establish a foothold in New Jersey and then expand from there into key NJ locations. But we didn't expect that the demand for NY-NJ connectivity would happen as quickly as it has,. So we have accelerated our assessment process to access New Jersey. Interestingly, the ways to cross the Hudson, haven't really changed much in years, nor have the economics. It's a very short physical distance, and yet seems a very long distance at times. .
TR: Do you see much demand to the East, over in Long Island for example?
FA: Long Island not so much at this stage, but we do see some demand to bring fiber into Brooklyn. We've gotten a number of requests for fiber across the East River not only into downtown Brooklyn, but also along the shoreline to places like the Brooklyn Navy Yard. . We'd like to do everything at once, but we can't – focus is the key – and Manhattan will keep us busy for a bit as we increase the density of the network and look to increase fiber availability to smaller commercial buildings. So Manhattan first even as we assess our next expansion based on demand.
TR: Do you think there is more consolidation coming to the New York metro fiber market?
FA: I think the larger players are hunkering down, moving along with their business models. There are enough recent entrants into the space that we need to establish ourselves before the market swings back to see greater consolidation opportunities. That doesn't mean there won’t be smaller scale activity but larger size activity in New York City may be dormant for a little bit.
TR: Thank you for talking with Telecom Ramblings!
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