Building creativity

‘We look at the diversity of the tenants to ensure there are 25 or more, and we consider the proximity of the building [in relation to] our fiber rings.’
—Dave Schaeffer, Cogent

Fulfilling customer needs as efficiently as possible is especially critical to competitive local exchange carriers. And for those that need to extend connectivity into metropolitan areas and into large office buildings, the process can be cumbersome and time-intensive. As a result, some service providers are turning to other providers as a method of entering new buildings at a faster pace.

Although many wholesale agreements never are acknowledged outside of the involved companies, FiberNet Telecom Group, which provides metropolitan optical connectivity, is talking. Last week, FiberNet revealed that it inked a multiyear, $5 million agreement with Cogent Communications to give Cogent access to FiberNet-wired buildings. FiberNet also announced a similar deal with managed optical IP provider Yipes last week. That deal involves 70 office buildings initially.

Now that businesses are getting thirsty for big pipes, delivering connectivity to those potential customers in crowded metropolitan areas has become one of telecom's most recent quandaries. FiberNet's strategy is to make the process of getting to customers easier and faster by designing, building and operating “in-building networks” that its service provider customers can simply tap into.

“All we do is put a cabinet in the [building] basement and purchase a fiber lateral extending out from our ring,” said Dave Schaeffer, founder and CEO of Cogent, adding that his company then simply links to FiberNet's network.

Although Cogent typically goes directly to building owners, in cases where a lot of consolidated riser management is in place, it is more cost-effective to enter buildings with a provider such as FiberNet, Schaeffer said. “But we are really comfortable doing it either way,” he said.

Cogent, which delivers high-speed data connections for a flat monthly rate, typically looks at buildings where an existing customer needs connectivity. But once in a building, the company also will consider providing connectivity to other tenants.

“We analyze the size, which must be 150,000 square feet or more. We look at the diversity of the tenants to ensure there are 25 or more, and we consider the proximity of the building [in relation to] our fiber rings,” Schaeffer said.

Partially owned by Metromedia Fiber Network, FiberNet uses its metropolitan transport network to connect carrier hotels and office buildings. The company targets office buildings in New York, Chicago and Los Angeles that primarily meet that same criteria Schaeffer outlined.

But buildings such as the Empire State Building are a not a target, said Trey Farmer, executive vice president and chief operating officer of FiberNet.

“It is a nightmare because it has more than 500 tenants, each with an average size of 3000 square feet,” Farmer said. “We are going to places that need big, fat pipes.”

Similar to Cogent's single-product mindset, FiberNet concentrates only on Layer 1 transport in the delivery of those fat pipes. “We sell everyone the same dark fiber,” Farmer said.

That premise is intended to make service provider customers comfortable so that FiberNet will not turn around and solicit its customers' customers. In addition, building managers are more likely to work with one company to negotiate entry into a building.

“Service providers are a huge pain as far as landlords are concerned. They view all carriers as the enemy,” Farmer said, adding that FiberNet's service provider customers avoid headaches involved with delivering services to building tenants.

Yipes uses a variety of other methods to enter building properties, but deals with building LECs and others that are purely real estate-based, said Beth Little Tyebjee, vice president of customer experience and infrastructure development for Yipes. Like Cogent, Yipes is finding that tapping into another provider's facilities complements its existing facilities and is a great way to accelerate penetration in certain areas.

“It is very effective to find someone with aggregated properties to allow us to get to [the customers],” Tyebjee said.

Correction

A story in the Dec. 18 issue of Telephony (page 78) incorrectly stated that some analysts predicted that dark fiber prices had fallen 60% to 80% in Europe in the past year. In fact, the analysts were referring to bandwidth prices. Telephony regrets the error.