Dark fiber is a growing business for both private and publicly owned networks. Data transport, data centers, ILECs, and CLECs are some of the most common users. Increasingly, wireless providers are turning to dark fiber for backhaul.
A May Fierce Telecom article reports that 14 percent of Zayo’s wireless backhaul services are dark fiber solutions:
“We’re seeing a shift with wireless backhaul contracts to dark fiber to the tower and we’re starting to see that show up as the trend over the last couple of quarters,” [Chairman and CEO Dan] Caruso said … “And you see it more pronounced in the current quarter where 14 percent of our product mix for fiber to the tower is dark fiber to the tower and you see that’s grown and taken on a bigger piece of the pie.”
Dark fiber leases have played an important role in developing revenue for municipalities that have invested in fiber infrastructure. Dark fiber leasing can be the only option in places where state barriers limit local options.
Santa Monica, Columbia in Missouri, and Maryland’s Howard County, are only a few communities that lease dark fiber to ISPs and other commercial customers. A few networks, including Metronet Zing in Indiana, offer only dark fiber services. It is worth noting that, as Santa Monica discovered, the vast majority of businesses and residents prefer and easy, affordable, and reliable lit service rather than dark fiber. But the dark fiber niche is growing.
As more customers look for the service, negotiating leases and pricing models can be challenging. Municipal networks seeking guidance can start with a 2012 report from CTC Technology & Energy, Dark Fiber Lease Considerations [PDF].
The report covers pricing models, various methods for pricing dark fiber, and offers some examples. CTC also helps identify potential customers and makes general recommendations. It is always advisable to seek out the advice of professionals with significant experience in negotiating dark fiber leases, but the CTC report can provide a foundation to begin exploring options and weighing risks.
From the report summary:
This memorandum presents a brief framework for pricing and marketing of dark fiber. With the obvious caveat that a detailed analysis requires an in-depth evaluation of a given project or market, this general overview may help you in determining such matters as how to price your dark fiber—for example, to balance encouragement of use (and opening up of the dark fiber market) and rationing of strands, while maximizing potential dark fiber net revenues.
This article is apart of MuniNetworks. The original piece can be found here