C&W signs 20-year lease for AFS dark fiber

(Telephony) Cable & Wireless has signed a 20-year lease with American Fiber Systems for 24 strands of metropolitan dark fiber in several mid-level U.S. cities.

Neither terms of the deal, nor the affected cities, were announced. However, C&W has begun deploying the strands--residing on AFS dark-fiber rings ranging from 50 to 75 miles in length--and expects deployment to be completed this year, according to AFS. The lease agreement is part of a $3.5 billion program designed to extend C&W’s IP network across the U.S., Europe and Asia-Pacific.

AFS sees the deal as validation of the company’s concept, which calls for AFS to serve as a third-party provider of dark fiber to organizations unable to finance their own buildouts, or unwilling to lease fiber from a competitor.

“We’re finding that companies are coming to us because the other options available to them are less than palatable,” said a company spokesman. “Leasing from a competitor isn’t a very good way of building capacity. And building is out of the question, given the capital constraints. So, we’ve become a very fine third alternative.”

Adding C&W to its roster of clients will give AFS--completing its first year of operation--a credibility boost, the spokesman said.

“C&W being our first customer of any size gives us credibility in the marketplace that, even though we’re young, we’re real,” he said.

Nancee Ruzicka, analyst with The Yankee Group, says C&W may be leasing the fiber because its buildout is not progressing as quickly as hoped but more likely because business is good.

“It’s a guessing game around ‘How much inventory do I need, how much do I have, and how much am I going to need down the road so I can be ready for when the customer needs it?’” she explained. “Part of it could be to build up backup inventory, [because] they’ve had a pretty good year so far, and they have customers coming on, or they have customers adding multiple circuits.”