A few years ago, we took a look at Bluebird Network via an Industry Spotlight with CEO Michael Morey where we focused on the company’s Underground Data Center in Springfield, Missouri. A lot has happened since then, both for Bluebird and everyone else. Michael now joins us for a return visit, a couple of M&A moves later and with a significantly larger footprint. Bluebird Network is based in Missouri and Illinois with connectivity into all surrounding states and operates two data centers.
TR: It has been several years since our last interview with you. How has Bluebird’s infrastructure evolved since then?
MM: Bluebird now operates a 10,000 mile plus fiber network in the Midwest, spanning 11 states: Missouri, Illinois, Kansas, Nebraska, Iowa, Wisconsin, Indiana, Kentucky, Tennessee, Arkansas, and Oklahoma. We have two data centers, one in Springfield, Missouri, and one in the Quad Cities area of Davenport and Bettendorf, Iowa, and Rock Island and Moline, Illinois. Since the last time we talked, the company was sold to Macquarie Infrastructure, which also bought Uniti Fiber’s Midwestern fiber assets and merged them with Bluebird while keeping me on as CEO. After that we purchased Illinois Network Alliance, which we were already managing and a minority owner of. Then to start 2021 we purchased the ColoHub Data Center and renamed it as the Bluebird Quad Cities Data Center. We’re also building about 500 miles of fiber a year, and I expect that by the end of next year we’ll be at 11,000 route miles.
TR: How does the new Quad Cities data center fit into your plans?
MM: It really is a great augment to Bluebird. I like to define the edge as 20 milliseconds or less from any place where you’re going to store your information. By having a data center in the Quad Cities and a data center in Springfield, Missouri, you can get to any place on our network in less than 20 milliseconds. So that kind of completes a really nice layout for Bluebird. It’s been highly successful.
TR: Where are you focusing your resources right now?
MM: We are focusing on four things, the same four things that we’ve been doing for a long time and that we’re really good at. The first is fiber connectivity, whether it’s cell towers for carriers or banks, hospitals, schools and businesses. The second is to have places for people to locate their critical infrastructure in our data centers. The third is connecting our data centers and our fiber network to the cloud service providers, like Google, Amazon, Microsoft, etc. And the fourth is to provide internet access across all those locations.
TR: Are there other products or services you might add to that list of core areas in the future?
MM: Only if we purchase a company that’s already doing it. For instance, some people ask about voice services. We are just fine not doing that right now, but if we were to purchase a company that had voice services, we could roll that product out across the entire network. But the focus is to be really good at what you do, it’s hard to add whole new areas of your business when you have to learn them.
TR: What about residential fiber services? I’ve seen many operators starting to delve into that area over the past year or two.
MM: I think it’s a great business for the people who are focused on it, but for Bluebird it would be a distraction. Some of the companies that are going into that business are huge customers of mine, and I am very supportive of helping people grow in the fiber-to-the-home business. I think that Bluebird has an important part to play in that. For instance, over the last three years we’ve announced over 30 fiber densification markets where we’re building small cells or 5G networks for some of the carriers. When we do that, we build fiber. For instance, in Columbia, Missouri we are completing the biggest fiber build ever in the city. There are a lot of companies that are considering doing fiber to the home in that market, and Bluebird has fiber into all the neighborhoods because that’s where we had to go to deploy small cell connectivity. We are happy to provide that dark fiber to people who want to do FTTH so that they can spend their money on the fiber to the home part of the business.
TR: How much demand have you seen from the ongoing 5G rollout so far?
MM: Three years ago, it was not really a massive thing in the Midwest, because they were starting on the coasts. Now all of the major carriers are rolling out 5G deployment. We’ve seen huge demand from the carrier side of our business and have been well-equipped to handle it. The way our network architecture is built, we have the bandwidth to serve these demands and can do it on-demand. It put Bluebird in a great position.
TR: Why do you think some have slowed 5G infrastructure deployments a bit?
MM: Well, they aren’t done. I think that in the communications industry we’re always reevaluating what we do. It takes a lot of energy to deploy a much denser network, so as you deploy it, you find things that work and find things that don’t work. So, then you slightly revamp your model. Another thing might be that maybe you’re merging two companies and just have a lot on your plate. Or you might initially have had to deploy a lot quickly, so you don’t lose your spectrum.
TR: In Springfield you operate an underground data center. How has that facility evolved over the last few years?
MM: Since we last talked three years ago, we’ve added another 14,000 square feet of raised floor space. That space is going to keep growing. We’ll build more and sell more, then build more and sell more. When I think about data centers, I think about three distinct kinds. There are hyperscale data centers with hundreds of thousands of square feet. And there are data centers where people deploy lots of servers to be a cloud service provider. We can handle such requests, but at our core, that is not who we are. We are an edge data center where businesses are trying to store their critical information in a place that has good power, good cooling, good access to the communication networks, a very survivable amount of infrastructure, and backup via other locations. The people who move into those are located within 250 miles of a data center, and probably 70% of our business is located within that radius. That market goes hand in hand with our target market for the other services that we sell: fiber connectivity, cloud service connectivity, and internet access. Our customers are the managed service providers, the financial organizations, the banks, the schools, the universities, the hospitals, and the government agencies.
TR: Do you have any interest in further acquisitions within or adjacent to your current footprint, whether fiber or data center?
MM: Right now, our two data centers are perfectly located for the edge, i.e., within the 20 milliseconds of any place in our network, okay? If I’m in one of those two data centers, no more than 20 milliseconds, I can get to the end of our network on the other end. So, there aren’t any places that I need or want to complete a great layout of our network. But would I be opportunistic and purchase other fiber or data centers inside my 11-state target area? Yes, if the right opportunity came up. One of the things that you find right now is that the valuations for fiber networks are relatively high. Every day we make a choice. Do we spend more money building fiber, or do we spend more money buying another fiber network? I have a list of fiber companies and another list of data centers that I think would be great acquisitions for Bluebird and we are always continually evaluating them. If one of them makes sense for us, we will pull the trigger.
TR: How do you choose where to invest in new infrastructure?
MM: When we go out and densify a network or establish a new market, we want an anchor tenant. One type of anchor tenant could be a small cell contract from one of the carriers, and we have received quite a few of those. Others could be a government network, a school district network, a hospital network, or a bank network. When we want to edge out, it’s customer driven. For instance, if there’s a big hospital five miles off my network that needs 100G connections to two locations, we do that kind of thing every day simply because there’s enough money in that contract to justify it.
TR: Have the various government stimulus and infrastructure efforts given you any additional resources to expand with?
MM: No, but also yes. Every single one of those programs has been tied to residential. So, if you were not doing residential, you weren’t getting the money. From that direct perspective, we weren’t in the driver’s seat. But from an indirect perspective, because the companies that do residential connectivity are our customers, we are winning business to help those people connect into their markets. We are uniquely positioned to be able to help enable RDOF award winners. Also, there was a late addition targeting middle-mile fiber support, which we are taking advantage of.
TR: How has the pandemic affected Bluebird?
MM: There’s really three ways that I look at the pandemic: the impact on demand, the impact on our employees, and the impact on our supply chain. Demand went up. Initially it was the carrier side that went up because traffic shifted from offices to residential. There was a little bit of a delay on the enterprise side of probably three to six months, but that has come back with a vengeance. In terms of our employees, each person and each company has had to decide what’s right for them in a difficult environment. Bluebird has a remarkably high internal vaccination rate. We are incredibly supportive and encouraging of all of our employees if they find that it’s the right thing for them to get vaccinated, and we actually pay our employees a little stipend if they do get vaccinated and turn in their vaccination card so we can keep track of it. Everybody wears a mask when they’re in our offices when not at their desk. So far, we have had less than 10 people get COVID. In terms of the supply chain, early on we identified concerns about supply chain, and we increased our inventory and stock before we started seeing supply chain issues. To date, we have not been impacted. I am worried that as the supply chain issues continue whether it will begin to impact us because you can only stock so much. But we are trying to keep ahead of it.
TR: Thank you for talking with Telecom Ramblings!
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