There has been more and more attention paid to network infrastructure in smaller markets and rural areas in recent years. One fiber operator that has long focused on such opportunities is Fatbeam, which builds and operates metro and regional fiber networks across the Pacific Northwest and the Rocky Mountains. They started out mostly with e-Rate projects, but have steadily expanded their footprint both organically and inorganically. With us today to talk about Fatbeam’s experiences and current approach to the markets of this region is COO and CTO Jason Koenders, who joined the company in June of this year. We last talked with Fatbeam in 2014 with founder and then CEO Greg Green.
TR: What is your background and how did you arrive at your current position as CTO at Fatbeam?
JK: I spent four years of service in the United States Army, and that’s really where I broke into this world. When the military recruiter put in a video that said, “This position has heating in the winter and air conditioning in the summer,” for some reason, I said, “I’ll take that one.” So I spent a year and a half as an operator and then two years working in a central office. From there, I went to a small company that was a subsidiary of Pacific Telecom or PTI Communications as a central office tech. PTI was eventually bought by CenturyTel. In ’98, I was invited to join Integra as an engineer as employee #50, or right around there. Over time I continued to take on more responsibility. By the time I left the organization in 2016 I was responsible for all technology, engineering, IT, product development, and product management. I then spent a couple of years with Ciena. This all lead to Paul inviting me to join Fatbeam, and going through the process it appeared to be a great fit. This is the second time that I’ve been part of a smaller organization — we’re a little over 50 employees right now. I see an opportunity to take off like a rocket ship from the foundation we’re building. It’s a great time to be in the industry and Fatbeam has both tremendous potential and a great infrastructure.
TR: What does Fatbeam’s infrastructure look like today?
JK: Fatbeam has many unique assets throughout the West, operating fiber networks in eight states today: Washington, Oregon, Idaho, Montana, Wyoming, New Mexico, Nevada, and Arizona. Fatbeam offers a comprehensive list of services for the wholesale, education, government, and enterprise markets that include wavelength, ethernet, layer 3, DIA, and a broad range of security offerings.
TR: To what extent are E-Rate opportunities still where you focus your efforts?
JK: Fatbeam is still very much focused on the education market, which is where we got our start. From a strategic standpoint, schools and school districts are typically a great anchor tenant when going into a new market to support the other verticals and FTTH with fiber-based services. It also motivates every one of us in terms of purpose. Who doesn’t want to support teachers and students by improving connectivity and helping underserved communities access more opportunities?
We are also taking a more strategic approach to those education markets where we have existing network today. These markets offer us an opportunity to cost effectively expand our existing footprint both physically and with new customers or existing ones seeking to expand in the market. Our team has a strong book of business within the wholesale carrier market due to our unique assets, for example. One of our main areas of opportunity is growth within our sales team to expand our enterprise footprint, and we’re continually evolving our product offering to support those customers.
TR: What projects are you investing your resources in right now?
JK: Fatbeam’s focus is on Tier II, Tier III and rural markets throughout the west. One of the markets we are making significant investment in is southern Idaho, specifically the Boise, Idaho metro area. However it doesn’t stop there! Fatbeam is building networks in places where nobody else is, in particular several small communities in rural Idaho. We just turned up fiber to Idaho’s oldest two-room schoolhouse, which is about 111 years old and serves about 20 students in Ola – a community of 450 who came together to renovate the school. This reflects our passion for supporting these underserved communities – being able to provide fiber infrastructure to connect schools, businesses and people is a privilege. Similarly, we are making significant investments in typically underserved markets throughout Washington, Oregon, Arizona and Idaho to bring the appropriate bandwidth and best portfolio of services to these areas.
TR: More and more service providers with fiber footprints similar to yours are investing in FTTH. Is that something that could be in Fatbeam’s future also?
JK: Our first investments in FTTH originated through a Fatbeam acquisition approximately eight months ago as they had several active FTTH projects. Fatbeam has not only continued with those investments but are continuing to invest in additional fiber to the home projects delivering gigabit services to underserved customers. At the end of the day, it’s about delivering a reliable, fiber-based solution with the right bandwidth that allows us to serve more customers while maintaining the reliability and quality our networks are known for. For us, the residential market and MDU markets do make a lot of sense, especially in markets where we can make a difference.
TR: Are you looking to expand into adjacent territories or geographies?
JK: Today we are focused on density in the markets that we’re in. We have a lot of areas that we could expand into, but once you start expanding nationwide you add additional complexity. So we’ll focus on densification right now: bringing on new customers and new buildings, first leveraging those fiber assets we have, and then edging out. Again, our customers really appreciate the quality, reliability, and consistency of our services, so building on that momentum in existing markets is our primary focus.
TR: In what ways is the fiber business different in these less-traveled parts of the Pacific Northwest and Rocky Mountain? And what attracts Fatbeam to them?
JK: Well, personally I love this area and these communities because they are home to me. When you look at our footprint, we are in tier 2, tier 3, and rural areas where other carriers frankly aren’t focusing as much – which is attractive because competition is less and supporting underserved markets is part of who we are as a company. Customers certainly appreciate fiber-based services and transport services as much as anyone, yet we are continually evaluating the types of products and services that are most compelling and valuable to these communities from an education and economic standpoint. Ultimately we’re out here to help the greater good by connecting schools and helping teachers and staff educate the next generation of America with the same access of other connected communities across America.
TR: Is it harder or easier to build out in these markets than in more densely competitive markets?
JK: Construction is complicated no matter where you do it. That’s what makes the barriers to entry in this business so complex. It’s not any easier in, say, Coeur d’Alene than it is in a tier one market. Generally, fiber construction does get easier when you are serving the more rural areas but it’s ultimately based on the municipalities, the permitting entities, and so on. In tier 1 markets, it can get really expensive when you run into challenges like street moratoriums, where you have to pave the whole street if you’re going to do a construction down it. These types of hurdles are less prevalent in rural markets as there’s not that much construction going on and they are fully aligned with what we’re trying to accomplish. They see the value we can provide with fiber solutions. Generally we can move faster in these communities, which is a win for everyone involved.
TR: What else did the Tek-Hut purchase bring to Fatbeam?
JK: We added a great customer base and great new employees when Tek-Hut joined Fatbeam. From a technology standpoint, they also brought us wireless infrastructure in southern Idaho where it didn’t make sense to build fiber. They used it for both point-to-multipoint for residential customers and fixed wireless for the business customers and backhaul. This expertise gives us yet another option to consider for communities we want to serve which have been typically overlooked.
TR: How do you view further M&A in today’s market as a means to growth?
JK: We are looking both organically and inorganically. We’ll look at M&A where it makes sense. The multiples we are currently seeing companies being sold for are fairly high, but there are smaller service providers out there driving lower multiples. I think over the course of the next couple of years, we’re definitely going to see a lot of consolidation in the industry. You would think that it’s got to cool down, though, at some point.
TR: How have the government’s stimulus and infrastructure efforts impacted you?
JK: We are working with both local and state municipalities on funding that they’re receiving, and we’ve been one of the partners in some of that stimulus funding. We have not received any of it yet, but there’s some that we’ll see coming down the road. Most importantly, all levels of government see the value in getting fiber and better connectivity to underserved communities. For us, it’s just determining how we approach these opportunities and meet the needs of our end customers while working with these state and local partners to help achieve their vision.
TR: What’s the biggest challenge ahead for Fatbeam and service providers like you?
JK: My focus is on how we serve these underserved areas better and more quickly which translates into how do we build faster and more economically? Nobody’s figured this game out yet perfectly. I encourage our team to approach this with a “start with zero” mentality. This means asking why we are doing things the way we’re doing them. Is there a better way? We should always be asking questions, always drilling in on how we can continue to get better. At the end of the day, what do our customers want and what do they need – as there can certainly be a difference. We need to be their advocate and expert resource. There are also opportunities for improvement through the whole construction lifecycle. How do we continue to work better with the municipalities and the permitting entities? How do we continue to work with manufacturers? How do we build faster and more efficiently? How do we then operate the network more efficiently? It’s a theme throughout the industry. We are all solving all of the same things, but trying to hopefully solve them in newer, better ways. For us, that focus is on the end goal of providing underserved communities with all of the opportunities that fiber solutions and connectivity can offer.
TR: Thank you for talking with Telecom Ramblings!
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