MOX Networks (“MOX”) is one of the few companies out there actively building new fiber infrastructure. Privately owned and a part of the Nantworks company portfolio, MOX has a unique position within the market with its plans for the buildout of hyperscale infrastructure and the forthcoming healthcare data wave. Over the past year, they have been actively putting fiber in the ground in the Pacific Northwest and developing unique routes in the eastern US as well. With us today is Allen Meeks, President and COO of MOX Networks, whom we talked to last April.
TR: Let’s pick up where we left off. How is the fiber buildout between Portland and Seattle going?
AM: We are on track to complete the route this summer. The MOX team will have everything spliced sometime between July and August at the latest. All of the old fiber has been removed from the old duct and 3/4 of the new fiber is now installed. There are a couple of sections in the middle that we’re actively working on to finish. We are placing newer, ultra-low loss fiber with just two re-gens, as opposed to the three that other networks built along this route between 1998-2003. MOX is also installing Telescent automated cross-connect boxes, which allow us to monitor, diagnose and react to activity with the outside plant in real time. More specifically, with these new boxes, MOX will be able to rapidly test, turn up, and reconfigure the fiber along any segment as needed. We have seen a lot of intelligence, originating in the application layers, creep down into the network and routing layers, and now with capabilities like this, to the actual physical asset in real time. These new technologies will drastically reduce network outage times, costs surrounding both identifying problems and deploying labor for repairs and offer intelligence for proactive network maintenance.
TR: What were the most difficult tasks along the way?
AM: One tough part was coming from Portland, north under the Columbia River, because we had to do it twice via a small island. It’s a great deal of work in extensive mud, finding handholds that are buried very deep and they haven’t been touched since 1998. All of this has been completed. Another tough part was getting out of Seattle, and really that came down to permitting, traffic control, and coordinating all of that in conjunction with capital and labor deployment.
TR: Is this OSP-level automation something you expect to make available to your infrastructure customers as well?
AM: So far we’re using this internally for our own network, but there absolutely could be a strong potential to create avenues for products that are adjacent to the telco space for the intelligent management of outside plant fiber. These boxes were built and took hold in DCIM, on-campus environments, and for 5G. If you have a lot of servers and need to reconfigure down to the port level between different buildings and campuses, this technology is very useful in creating a matrix of physical fiber usage. To date, no one’s done it from the long-haul perspective. It is a large up-front investment, but I believe that when we look at the cost savings over time, the operation and maintenance savings will be well worth it. A lot of the physical network assets were put in the ground in the late 1990s and early 2000s, and it’s not uncommon that they were not well taken care of over time. No one had a reason to touch them until an IRU order or repair came through 18 years later. Once these are turned up, it is common to discover that the assets are in bad shape. Being able to actively monitor the health of your physical asset is, sadly, a unique and uncommon thing in the long-haul business.
TR: The other piece of this buildout is your partnership with Toptana Technologies, building a fiber backhaul route over to their new cable landing station on the southwestern coast of Washington. At what stage is that project?
AM: We are so thrilled to have been selected to be the network infrastructure partner in Toptana’s greater plan to build, own and operate their own CLS along Ocean Shores, WA. Toptana has an amazing long-term vision of bringing financial opportunity and connectivity to their currently highly underserved region. We look forward to bringing our expertise in backhaul construction to build fiber from their new CLS, westward across the state, connecting to our newly built north-south fiber route from Hillsboro to Portland, and on to Seattle. There is a high-level design, engineering, and permitting process that is currently underway. Several rivers along our planned route will have to be bored, and two in particular are very large. The initial permitting phase with the Army Corps of Engineers in these regions takes time. We are estimating a construction start date early next summer.
TR: What other network projects are you working on this year?
AM: We’ve just announced a new deal with Ciena that will bring new 100G and 400G wavelength opportunities to our customers. We will be deploying new DWDM gear along all of our dark fiber routes, including Ashburn to Atlanta, Columbus to Ashburn, and Hillsboro to Portland to Seattle. We will be interfacing that with all our existing systems, and ROADM to ROADM interconnect level that we have with a number of different carriers, in order to extend our reach at the 100G level around the country.
TR: What other potential new fiber routes do you find interesting in today’s market?
AM: Continuing from the Portland area down to the Bay area and LA is interesting. There is a lot of demand for a new route that’s diverse from the legacy assets, which are fairly tapped out on those routes. Customers that want redundancy can’t get it because there’s only one cable available for anyone to light. The other rights-of-way are more traditional telco options, where there’s a typical wholesale set of products. Network engineers are aware of these vulnerabilities, and I think we’re getting to a point where there is enough interest to move forward with planning. MOX certainly has a lot of irons in the fire with respect to doing these types of builds. We are keeping our options open for when interest evolves into a real, executable deal. We believe that we’re the right neutral partner who can act as a ‘Switzerland’ and execute on the fiber construction. There are a lot of potential customers and partners that desire this route, but they don’t necessarily play nice in the same sandbox or they may not have the underlying construction resources on staff to execute on a build of this magnitude.
TR: The balance between cooperation and competition is always there in infrastructure. How does MOX approach such projects and remain a neutral middleman?
AM: I guess I would call it ‘coopetition’. But it really depends on what company we are referring to and the scenario. Other carriers are sometimes the most guarded, and especially the carrier that has the right-of-way that you are trying to re-exploit. We differentiate ourselves by getting deals done directly with gas and power companies in many cases. Once we control that part of the equation, the sledgehammer that a traditional telco might hold in the conversation is void. We are then able to bring parties together, including legacy carriers, who can view at the scenario as an opportunity to contribute some capital in order to end up with a share of cable. MOX resides on both sides as a carrier and a service provider for our own cloud and platform supporting healthcare. What you’ve really got to understand is what the motivations are for an interested party. For a legacy carrier, they’re locked into a lot of their ROWs but most likely aren’t getting out of them. They do not usually have an abundance of cash that their shareholders will let them spend on rebuilding old infrastructure. From an accounting perspective, those routes are some of the largest assets on the books, but are also some of the largest drags on the books. It’s a double-edged sword. They are smatterings of real estate contracts with public and private entities that require teams of real estate lawyers to track and maintain. These assets really need new cabling installed because their existing cable is aged, likely needs repairs and upgrades, and they need diversity. If you bring those factors to light for discussion, I believe that’s a conversation some of those legacy carriers are more than willing to have. Whether you think about it from a foundational content customer perspective, a hyper-scaler perspective, or a legacy carrier perspective, what they all desire is stability in the cost per bit over time. Everyone wants to be able to have enough fiber to sustain their usage without just increasing the operational spend and lighting money on fire every month.
TR: Are you ready to power the healthcare hyperscale infrastructure MOX’s parent company envisions?
AM: We have pinned up much of the backbone capacity and we have stabilized the underlying operational telecommunications costs for the various businesses within the portfolio, giving them plenty of runway for the future. They’re now working on their own BSS/OSS to put this whole thing together within a greater vision. We leave that to Dr. Patrick Soon-Shiong and his genius to coordinate those components. At any point in time, given the numerous partnerships that are constantly on the table in that world, there could be a need to scale things massively at 20X, 40X on certain projects. We stay poised for such an occasion.
TR: What macroeconomic trends are you tracking right now in relation to MOX’s outlook?
AM: As a business leader, it’s quite fascinating how much I’ve had to learn since 2020. We understood what a supply chain was, but with factors like the pandemic or the Russia/Ukraine war, it really shook the global manufacturing and transport world. Anyone spending a lot of money on high-tech gear that requires high-end semiconductors has had to learn about the complexity of international trade, the business, and security that it takes just to make a single semiconductor. So many countries have to participate, from the Dutch to the Japanese to the Koreans to the Americans to even the Chinese for the low end semiconductors. If one segment of that supply chain breaks, then the whole process breaks down and it doesn’t end with delivery of products. I think we’ve all been reminded how fragile global supply chains really are and how important peace and security is for everyone. For MOX, the biggest change has surrounded the acquisition of network construction materials and sourcing specialized labor in our areas with active construction.
TR: In what ways has labor become a challenge in today’s marketplace?
AM: The shortage of labor makes construction projects difficult. For example, there are not a lot of large national contractors, and there are just a handful of regional ones. In our projects, we’ve tied up one large national and one big regional company for the Pacific Northwest. But if right before we started this major infrastructure build someone else had hired those companies for a two-year project for build-outs, we would have been struggling — bringing in labor from other areas at higher costs.
One other trend is really baked into our country’s demographic math right now. The boomer generation and their capital makes up 70% of private equity retirement money, and that has been our free capital for the last 15 years. On average, this started leaving the system as of December of last year. I think we’re starting to see the effects of that from the capital availability side. That exact same math with the boomers on their way out of the workforce has created a 400,000 year-over-year job shortage this year that will escalate to about 900,000 by 2032. As a country we are going to see both a capital and labor shortage for the foreseeable future. That is indicative of future inflation, guaranteed. Regardless of what the Fed or anyone else does, math shows us that we’re going to experience those challenges across our US marketplace.
How do we plan these long-term, large construction builds when they require materials, capital, and labor, during the storm of negative factors that we’re experiencing? I think this is why you don’t see a lot of people building fiber right now, because it’s not an easy thing to do. It takes a large degree of expertise to pull these projects off.
From our perspective here at MOX, we look to future proof our network expansion projects by leveraging strategic partnerships in our ecosystem. Whether you’re in the business of creating new data centers, new cable landing stations, smart city technologies, or bringing broadband to underserved areas, everyone relies on underlying infrastructure at some level. MOX is the perfect infrastructure construction partner for such an endeavor. Partnering within our ecosystem to maintain and build new paths and connections will continue to be MOX’s core focus so that our customers realize infinite capacity for their business.
TR: Thank you for talking with Telecom Ramblings!
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