For over a decade after the dotcom bubble the infrastructure sector undertook almost no new intercity fiber buildout projects, but in the last 5-10 years that has slowly changed. New players in the sector have driven that change, some very publicly and some very quietly. One of the quiet ones has been MOX Networks, which has flown largely under the radar since 2013. But at PTC and Metro Connect the company stepped out of the shadows and started telling people what they are up to. With us today to talk about MOX Networks’ approach to building fiber and give his views on the dark fiber business as a whole is President & COO, Justin Melnikoff.
TR: What are the origins of MOX Networks, and how did you get involved?
JM: After working with an amazing team to rapidly grow Sidera Networks and positioning it for the subsequent merger with Lightower, I found myself in a group of like-minded professionals that had many new ideas around long haul fiber. We quickly banded together post-merger and excitedly pursued funding for those ideas. An industry friend brokered a meeting with Dr. Patrick Soon-Shiong, Founder of NantWorks. He saw the enthusiasm, loved the ideas, and said if we could prove our business case then he certainly had needs internally that could be optimized as well. We immediately started designing network, we solidified our team, and he stayed true to his word.
TR: What types of infrastructure does MOX focus on?
JM: We focus on diverse new long-haul routes in North America and Japan, with the majority in the domestic United States. Our builds are geared toward supporting Dr. Soon-Shiong's portfolio of companies as well as any like-minded entities that require bandwidth or fiber where the traditional marketplace has not supported growing connectivity needs. Whether it's through what we're doing in the healthcare space or just strictly on a commercial basis, we’ve found ourselves with the unique opportunity of being able to offer capacity to deliver on the infinite possibilities for new paths, connections and performance for our customers.
TR: At what level of the network do you usually build these projects at? Conduit? Dark Fiber? Assembling leased assets?
JM: All of the above, depending on what the needs are internally as well as what others may require. At times, small local parties already offer fiber along a route and we have the opportunity to partner with those providers. Other times, there is no fiber available and we identify a great opportunity to offer something new to the market. In that instance, we have the ability and expertise to move swiftly, acquire rights of way, and begin construction.
TR: You recently announced a new route between Columbus and Ashburn, what is driving that project and what form will that new infrastructure take?
JM: We have been working on that for the better part of about three years. It’s an exclusive project building a net new route from southern Virginia, through West Virginia, and into downtown Columbus. The entire route through West Virginia and Ohio is all net new, and we have partnered with specific parties in Virginia (up to Ashburn) to ensure the success of this route. In West Virginia, our route includes both aerial and underground fiber, as there are certain areas where an underground solution was not economically viable. In Ohio we buried 100% of the fiber. We're really excited about the entire fiber route coming online in August of this year. As of today, we are working on the final 45 miles of conduit installation in Ohio.
TR: Will you be lighting that fiber as well, or will you just be selling dark fiber on it?
JM: Right now, anything lit will be for consumption internally, although that may change at a later time. As we have done on other routes in the United States, specifically Seattle-Minneapolis-Chicago and Ashburn-Philadelphia-Newark-NYC, should there be excess lit capacity beyond our internal network needs, MOX will consider selling that capacity on the open market with competitive pricing. Everything else will be available as dark fiber IRU’s or leases along with colocation. Like other routes we've done in the past, we view it as open access. If anyone is looking for fiber and we can help support their business, the MOX team can usually find a way to work collaboratively to deliver on their capacity needs.
TR: What other projects does MOX Networks have in the works?
JM: Similar types of long-haul builds. We are working with partners on a new pacific northwest dark fiber route that we look forward to discussing with you in more detail soon. Data center growth, both for our purposes and for others, has exploded in that area, and getting diversity in and out has been a problem. We see this region, and several others, as an opportunity to further support our initiatives, as well as what we know to be true for others in an ever growing marketplace.
TR: What makes a new route attractive to build on for MOX?
JM: One is diversity, of course. Second, we evaluate routes that have antiquated fiber, from the 1980s, 1990s, up to maybe 2000, on which we cannot extract all the benefits of the newest optical equipment. Knowing we're not the only ones out there going through the same thought process, there's typically a larger population having similar issues or we are all just making it work with less than optimal performance due to a lack of options. Additionally, there are other opportunities that come to light from discussions with customers. One of our specialties is being a true network partner for our customers, collaborating with them in order to solve complex network issues that they are experiencing. If they have conduit, we can suggest that we optimize that conduit together. That conduit may be for a subset of a longer route along which we can optimize further conduit or construct more to complete a solution. We say that MOX can build the capacity to deliver on infinite possibilities for customers because we truly enjoy and thrive on creating new network opportunities.
TR: Is it content, hyper-scale enterprise or carrier? Who is it that you typically work with?
JM: Right now, all of the above, as it has truly been across the board. Everyone is looking for the same thing, more available fiber built along new and diverse rights of way. Whether it's enterprise, carrier, content, hyper-scaler, wireless, or medical; each is looking to optimize their network and demand for tomorrow. I believe everyone is looking to implement new ideas that may have only previously been contemplated, as the new ways in which we work and play continue to change. Rather than putting out the network “fire” that is facing a department or company in the near term, we are seeing forward thinking companies plan for how we are going to be interacting in the years to come and what it will take to support that new normal.
TR: Do you see any interest in working in the metro as well? Or is it just-- is the long haul where you see the types of opportunities that interest you?
JM: We have had great success working with municipalities on designing, planning, building and operating open access networks. Our goal has been to assist in adding network in order to support and drive economic development and growth beyond just telecommunications. As a company, we really enjoy those projects and have the expertise in house to expand that area of our business in 2020 and 2021. We are actively working with several new municipalities on the development of their infrastructure for future economic and telecommunications developments. We look forward to discussing these with you as they become more public.
TR: So what separates you from more traditional network builders and operators?
JM: MOX is not a traditional telecom in the sense that we are bound by a specific ROI nor defined metrics in order for construction on a fiber route to move forward. We really think about our business differently and look at a long term infrastructure approach. Network is an investment strategy for our owner across the sphere of all his companies, as well as a way to empower those businesses with robust connectivity to ensure they get what they need to be successful. Similarly, it’s about how to define not only capacity, but also diversity for other like-minded enterprises that have significant connectivity requirements across various fiber routes. We want to collaborate with others in our industry and ecosystem, working hand in hand with them to design and build something unique that will serve current and future requirements.
TR: Are new technologies like 5G and AI starting to drive decisions in this space?
JM: I don't think we've seen 5G affecting long haul much as of today based on its limited roll outs and limited customer engagement. But, we do believe that it will absolutely create long-term demand from wireless providers as they need to effectively move increased amounts of traffic between metro markets. As of today we are certainly seeing the increased demand within the R&D and AI space, for example; within the medical space we are seeing exponential growth in file sizes and computational analysis. As radiology and bioinformatics develop new technologies and those are put to use across the country, the need for bandwidth will explode. Whether it’s AI, 5G or other R&D, it is all rolling into a big data problem that is only growing larger with the increased data sets we are able to accumulate. New fiber built by MOX and our contemporaries along new, intelligent rights-of-way, will permit the free flow of this data for how we use it today and what we can use it for tomorrow.
TR: Do you foresee building in other global geographies beyond your US and Japanese footprints?
JM: Not at this time. We have worked closely with subsea providers and hope to continue doing so in connectivity projects bringing subsea cables to land - Hillsboro is a great example. Our main focus will be continuing the growth of our Japanese and North American footprints because there are a lot of opportunities across these geographies.
TR: What’s the biggest challenge you see ahead of MOX?
JM: For almost six years, MOX was relatively unknown outside of the sophisticated customer set that we quietly collaborated with to solve connectivity issues. Now that we have launched our new MOX brand, we must keep momentum and that extends all the way through to delivery. While it has been great to step out from the shadows, we have seen the challenges in meeting internal and external market demand for new fiber construction. Knowing this is not a new issue in fiber construction, we plan to coordinate and strengthen partnerships with Federal, State, and Local governments to construct new fiber and create a collaborative approach. I believe there are ways for us to improve connectivity within vast areas of the country while offering new routes between key cities.
TR: Over the years, we have seen scale drive many new entrants in the fiber space to start small but then expand into regional, supra-regional, and eventually national footprints. Is that something MOX might aim for in the longer term as well?
JM: While I would welcome the opportunity to create a national footprint covering the four corners of the United States, that may not be practical for fulfilling MOX’s mission as it stands today. There are a number of contemporary companies out there that are either talking about building or are in the midst of construction on new fiber routes. Of these routes that I know about, we hope to be a part of them should our bandwidth needs require the connectivity. I would much rather work with a partner and work towards mutual success than attempt to build overtop on an area that may not even be able to support two routes. We can be competitive but at the same time have the work-together mentality that telecom is famous for. I'd rather foster those kinds of relationships then try to build everywhere and be everywhere.
TR: Does sticking to the dark fiber side of the business keep things streamlined at MOX, or do you expect a more vertically integrated approach eventually?
JM: Sticking to dark fiber does make it easier operationally, but it can make it harder in terms of a classical business case. While operating lit networks for the public sphere is a very difficult and expensive endeavor, we do have lit service available on several routes of our network based on excess capacity. I also believe it's a harder case for companies to make in today's environment because many large enterprise customers and the carrier community all want dark fiber. When we first started this business, dark fiber was still a “dirty” word in the industry, and it can still be very difficult to obtain dark fiber strands in certain parts of the country. Certainly that was part of the premise behind why we needed to go put shovels in the ground in certain areas: legacy telecommunications companies were not interested in selling dark fiber on the open market. I think it's important to look at dark fiber as an opportunity. Why let that cable of 144 strands sit idle with only six strands operational?
TR: Do you think that is coming into balance now? Is today’s market a healthy place for dark fiber, or are opinions still evolving on the subject?
JM: I think the opinion is still evolving, but it appears to be much healthier. When you look at connecting two cities in today’s market, you can often find someone willing to sell dark fiber connectivity. It may not be at an attractive price, it may be on 25 year old fiber, and there may not be diversity options available, but there is certainly more availability today than there has been in past years. I am not certain it has fully come into balance as of yet, but I believe we are getting better each year, and with more fiber projects on the horizon for MOX and others, I believe we are going to continue to improve availability.
TR: Has the new generation of intercity fiber builders changed the way established providers see their own dark fiber inventory?
JM: Absolutely. I think it took parties coming into the space saying, "We're not afraid to build a route and sell as much dark fiber as customers want", to make legacy providers realize they were losing out and needed to evolve. Now it’s come full circle and there are opportunities for established providers to sell current fiber inventory as well as overpull new fiber through older conduit, creating new offerings for all kinds of customers. It is a very exciting time to be in telecommunications for both established providers and the new generation of network builders.
TR: Consolidation has loomed large in this industry for more than a decade. Does growth via M&A attract a company like MOX Networks? Or do you foresee an organic path from here?
JM: I will say mostly organic. While our owner, Dr. Patrick Soon-Shiong, could decide to take a different approach, we are currently armed with plenty of projects to keep ourselves very busy for the foreseeable future. With our primary focus on organic growth, construction and partnerships, we plan to continue developing and delivering the infinite capacity our customers desire.
TR: Thank you for talking with Telecom Ramblings!
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