Transcript: Community Broadband Bits Episode 104

Thanks to Jeff Hoel for providing the transcript for episode 104 of the Community Broadband Bits podcast with Hunter Newby on fiber as real estate with Allied Fiber. Listen to this episode.

 

00:15:

Hunter Newby:  If you don't have that underlying asset, in your state or in your country, they you're at a significant disadvantage, because you're going to have to figure out how to fund it.

00:23:

Lisa Gonzalez:  Hi there.  And welcome again to the Community Broadband Bits Podcast, brought to you by the Institute for Local Self-Reliance.  This is Lisa Gonzalez.

Hunter Newby, founder and CEO of Allied Fiber, speaks with Chris this week.  Allied Fiber describes itself as a network-neutral dark fiber colocation and interconnection provider.  Allied is in the process of deploying dark fiber infrastructure across the continental United States.  The company is connecting the four corners of the lower forty-eight, linking up their network to international subsea cables.  To facilitate connections to its network, Allied is also installing colocation facilities at various points on the network.  Any customer who needs access to dark fiber can connect at these meet-me rooms.  In the interview, Hunter and Chris talk about Allied Fiber's approach, and the plan to use dark fiber to connect schools, hospitals, municipalities, private carriers, wireless towers, and a range of others.  We also encourage you to check out alliedfiber.com for more detail on the company, its progress, and its model.  Now let's hear from Chris and Hunter.

01:29:

Chris Mitchell:  Welcome to another episode of the Community Broadband Bits Podcast.  I'm Chris Mitchell.  And today, I'm speaking with the founder and CEO of Allied Fiber, Hunter Newby.

01:40:

Hunter Newby:  Thanks, Chris.  Great to be on the show.

01:57:

Chris:  We met at the Mountain Connect Conference.  It was a great event, out there in Colorado.  Talking about rural networks.  And I had already been familiar with Allied Fiber, although I thought of it as just another long-haul, kind of tower-connecting project.  But it seems to be -- it's more interesting than that.  So why don't you tell us what you're doing?

02:17:

Hunter:  Well, first and foremost, we're not a carrier.  So we don't sell any lit services.  We treat network infrastructure as real estate.  So you can think of us as a landlord.  And the way that we view our customers, which we refer to, sort of loosely, as tenants, you know, we view them as network operators within our physical infrastructure.  And although the name of the company is Allied Fiber, we're really in the neutral -- network-neutral -- colocation business.  We're here to facilitate physical Internet interconnections.

So, that's at a high level.  And then we have a unique design of our physical infrastructure that really accommodates the needs of today, such as wireless backhaul and things like that.  And then, of course, within our environment, given that this is a long-haul system, with a short-haul design, which is more akin to metro type of access, we have our own neutral colocation facilities on the route, which are spaced every 60 miles.  And at those points, where our colocation points exist, is where all of the optical amplification and in-line amplification and regeneration equipment on the long-haul side will be placed -- by those network operators that are buying fibers from us.  And those are neutral, third-party, multi-tenant meet-me rooms.  We don't have to build some gigantic facility.  We build, essentially a 1200 square foot building.  But then we open that up, on the local side, for municipal networks and cable companies and LECs and wireless backhaul providers and schools and hospitals and you name it.  And they can all build in to us laterally, either through one of our access points, which are the handholes, as they're referred to, the short-haul.  And there's -- in Florida, they're spaced every 5000 feet.  And then, everything north of Jacksonville will be every 3000 feet.  And they can either come in through that or they can come in to one of our colo facilities directly, to interconnect to each other and the long-haul systems.

04:19:

Chris:  So what you're saying is that -- other long-haul networks, they may run through town, but there's no opportunity for anyone in the town to interconnect.  You design the network so there's a lot of opportunities to connect.

04:33:

Hunter:  Correct.  We are a physically-distributed meet-me room.  That's what we are.  We are in the real estate business.  We are here to facilitate interconnections.  So think of all these networks, particularly the rural guys, as islands.  And think of us as the bridge.  And we have, you know, on-ramps and off-ramps to this bridge.  And it's all physical layer.  So we're not selling lit services or the bandwidth or capacity.  That's what our tenants do.  So they build into us, into this superstructure, which is what we refer to it as.  And the superstructure, by the way, that Allied Fiber is building is specifically meant to connect the cable -- summary ** landing regions in the United States.  So at a macro level, we're connecting continents to the US.  And we're building the physical platform, the basis for thoroughfare, which is the basis for commerce today -- you know, digital commerce, which is practically everything.  But it's with this incremental access design, using the handholes and using the colo facilities every 60 miles.

So, imagine a ring -- a giant, physical ring -- from Miami, up to Atlanta, to New York, to Chicago, to Seattle, to LA, to Dallas, and back to Atlanta.  So, that opens up the whole country.

05:42:

Chris:  All right.  You've been talking about meet-me rooms.  And I know that you have a background in them.  What exactly is a meet-me room?

05:50:

Hunter:  Sure.  A meet-me room is a term that was sort of created in the industry, around about the late '90s, right when I was, you know, part of a group that started a company called Telex.  And we started that at 60 Hudson Street in New York.  And it was born out of necessity.  And, you know, we ourselves were a carrier at that time.  Telex started originally as an international wholesale voice arbitrage 214.  So we were buying and selling origination and termination, trying to get interconnected to other networks, other IXCs, to 60 Hudson Street.  And it was impossible, because we had to use LECs to get around the building -- zero-mile loops between two floors in the same building.

06:31:

Chris:  And by the "LECs," you mean phone companies, right?

06:35:

Hunter:  A LEC is a local exchange carrier.  So it's sort of a non-voice-related transport provider.  Now, that would be referred to as a metro provider.  And back then, we were buying TDM, T1s and DS3s in the building, zero-mile loops.  Clear Channel.  Today, it's, you know, it's mostly Ethernet -- or wavelength.  But in any case, just to get a circuit turned up between two voice switches in the same building took months if not more than a year, and cost thousands of dollars.  And typically, any deal that you did, you know, on the wholesale ** side was totally priced out of the market by the time the circuit actually got delivered on the loop side.  I thought that was ridiculous.  And it certainly impeded our ability to grow our business.  So I decided to eliminate that.  And I went to a couple of the IXCs that we bought a lot of traffic from for termination, and basically told them that if they wanted to continue to sell us traffic, that they had to build into our room directly.  And we would cut out that local exchange -- that local loop of Ts**.  So I facilitated the direct interconnect with Qwest, in the late '90s, at 60 Hudson.  And they built fiber into our facility and dropped off a multiplexer, in our room, so I could directly connect my switch to their extended demarc, which is then tied directly into their DMS500, which is only a few floors away.  And I could turn up DS3s in a day instead of a year.

And that is where the epiphany occurred, that there needs to be a room within the carrier hotel -- within the building -- where all the networks already reside, but they're all in different suites on different floors.  And they had no one central point of interconnection at the physical layer to facilitate those connections.  And I saw great value in that, because there was great value for me in doing it.  I could turn services up quickly and much more inexpensively.  I completely cut out the local loop.

So I leveraged that concept and started adding more long-haul carriers, more IXCs to our roster.  And that is what developed into the basis of the current Telex business, which is a meet-me room business.  And the meet-me room is just a term.  Meet-me room:  meet me in the room where all the other networks have a demarc presence.

You know, a lot of these guys have their own suites, have their own rooms.  Of course, every carrier having to build into every other carrier's room in the building, you know, is just completely impractical.  And it's best served and most successful -- and sometimes the delineation between success and failure -- is created based on the fact that that room is neutral, meaning that that room is not owned by a carrier itself.  The carrier is not going to treat another carrier fairly.

09:17:

Chris:  And this is why you describe your business as real estate.

09:20:

Hunter:  Correct.

09:20:

Chris:  You're not actually providing a carrier service.  You're providing a space for carriers, without actually putting your thumb on the scales, or picking one over the other.

09:31:

Hunter:  What we did at Telex, by creating that central point -- that neutral, central point of physical interconnection -- in building that was a million square feet, OK -- that housed every major network, and all the subsea and everything else -- I got all the trans-Atlantic submarine cables in the north Atlantic to become my tenants.  I got all the New York City metro networks, all the regional networks, the long-haul networks, most of the European networks -- you know, all the significant ones, the major ones -- the Latin American, all the Canadian incumbent networks, over the course of several years.  The significance of that, the gravitational pull of that is so massive that -- first of all, it's a necessity to have a place where there's an entity that manages the physical layer to the port.  And we kept an inventory of every port on every panel of every network.  So, at best, every network operator is only going to know what it has in its own inventory.  It will never know what all the other networks in the room have.  And that was our job.  To manage the process, to create a set of rules that were fair and equal.  In the context of the Allied Fiber system, that room is our building that's every 60 miles.  So we distribute -- physically distribute -- the meet-me room around the United States.  But this time, we are connecting those meet-me rooms with our own dark fiber.

And why is that so valuable and unique?  Because the location of the building is determined based on the physics of light traveling in fiber.  And, of course, we're using railroad rights-of-way.  But then at that 60 miles, there is a building.  And that building is carrier-neutral, network-neutral, physical layer interconnection.  And the fiber that links those buildings is ours as well.  So we're providing the thoroughfare between buildings, and then we open the buildings up for access on the local side.  So all those third parties that come in and connect.  When they come in, they now have access to other local networks.  And, probably more importantly, they have access to the long-haul and even the global network infrastructure.  So they can buy transit from dozens of network operators.  They could buy transport from that point on submarine cable systems.  And go to other countries.  Whereas, in the past, they had only, basically, the incumbent -- whether it was a telco, you know, or cable company.

And that is, you know, -- that is a significant change in the U.S. infrastructure.  And the reason for that, Chris, is geography.  The United States has a significant disadvantage in the world, as it relates to the OECD list, and where we're ranked, and broadband speeds and penetrations, because of the geography and the population density of the United States.

And it could not have been more punctuated than when we were out at Mountain Connect.  For example, I met with this one lady.  She drove four hours to get to Vail, OK?  Which is two hours from Denver.  So that's six hours from Denver.  She drove from northwest Colorado.  She lives in a county in northwest Colorado that's the size of Connecticut -- just the county.  They have serious geography issues to deal with up there.

12:41:

Chris:  I've actually been making the claim that the beauty of area in which you live is inversely proportionally to how easy it is to get access to fiber.

12:51:

Hunter:  [laughs]  Yeah.  You know what, there's some truth to that.  She did talk about how beautiful that was, ...

Chris:  Yeah, I'll bet.

Hunter:  ... and how remote it is, and how their network infrastructure is lacking, and the speeds are slow, and the costs are high.  This is the approach, at least, the business model -- I guess you could say philosophy, but then -- practical, where we're actually putting it to work.  We've built it now, in the state of Florida.  We're heading up to Atlanta.  And when you open up the physical layer of network infrastructure, and treat it as real estate, and you have a real estate mindset about it.

Now, granted, I am a network guy.  That's where I came from.  I'm a carrier guy.  I came out of LDDS-WorldCom, you know, and the early days with UUNet.  And everything about the OSI model.  And all the layers.  And I get all that stuff.  And that's why I went down to the physical layer to create this platform -- to create this basis of fairness and equality and neutrality.  Because upon that all other service providers -- so, lit network operators -- can exist.  And coexist.  The only way, really, to figure out how to fund this platform, this system for making the United States a smaller place, from a geographic perspective, is to combine the demands of all the network operators -- as many as you possibly can.  The incumbents as well as the small, independent guys.  The subsea operators, the content providers, the gaming companies, you know, the cloud, the CDN, and all of the above -- wireless backhaul, the schools, the hospitals.  They can all participate in this, as long as the entity that operates that infrastructure is neutral.  And treats them fairly.  And is the steward of keeping the physical layer inventory, you know, supply plentiful, so that everyone can show up and continue to get access to fibers, and continue to get access to space and power, and continue to be able to cross-connect to each other, you know, without any impediments or obstructions or obstacles.  That's what's necessary.

And I will say this:  I have studied this globally.  And there are other countries that already have this in place, operating, very successful.  And I didn't know about it until after I started doing it here.  Then I started to research other countries and how they have done their implementations.  Granted, they're not the United States.  So, geographically speaking, none were as large.  And some of them have also, you know, quasi dark fiber but also lit service mode.  Because the smaller the country gets, the more reliant some of the network operators are.  The necessity for that exists.  But you could look at some of those countries almost as metros, as opposed to the size of the United States.  But it works.  It actually works, and it exists.  And countries that do not have this "open access" physical ** infrastructure -- they are not doing well economically.  And the countries that have it, their GDP is higher, and their growth is higher.  And that is now a proven fact.  There have been reports written just within the last couple of years that point to this.  People are really starting to understand the direct relationship between network infrastructure and GDP growth.

And sometimes, Chris, people say "broadband."  And I really don't like the term.  It's overused.  It's poorly defined -- almost to the point of its being meaningless.  And there are some folks who like to use that word, "broadband," because it's meaningless.  And you could say that, you know, in a legal sort of way and be covered.  But broadband is a perilous thing, I think, for a lot of municipalities to get into, because they're not in the business of operating network services.  There really in the infrastructure business.  And, more importantly, I think, the right-of-way business.  So, placing just dark fiber in the right-of-way, or having an independent neutral entity do that then turns around and leases or IRUs off dark fiber, to service providers.  That creates the foundation and the basis for competition at the higher layers.  Those systems would be appended to a system like Allied Fiber.  That then creates this thoroughfare at the physical layer, where everybody can get on and get off at these regions with basically the same set of terms and conditions and rates, you know, ubiquitously.

That is how it happens in some of these other countries that I've studied.  What I was doing there at that time, at 60 Hudson Street, was also happening at 1 Wiltshire in LA.  And I hadn't even met the guys yet.  And it was happening in Frankfurt, Germany.  And it was happening in London and the **.  And it took years for the industry to start to percolate and mature, for conferences to be created, where we would all travel to, and meet each other and find out how much we actually had in common.

17:22:

Chris:  Can you name some of those countries?

17:24:

Hunter:  Germany has the wonderful benefit of having a natural gas company called Gasline, that has gas pipeline -- natural gas pipeline -- right-of-way throughout the whole country.  They go to every city, right?  Because they're the natural gas, like, incumbent, so to speak.  The natural gas company built its own dark fiber network, to run the natural gas pipelines.  So, of course, they overbuilt the cable.  They had the right-of-way.  It was their right-of-way.  And they placed their own buildings along this route for the purposes of lighting the fiber.  They had to.  They created a subsidiary company called Gasline, which is the entity that manages the dark fiber and the colo.  And that company was created to lease off the excess fiber and space and power, and provide access.  This is a long time ago.  This is a small company, by the way, you know,  I'm not talking about more than, like, 20 people.  And they do phenomenally well, revenue-wise and ** evadel-wise.  Guess who they sell to.  They sell to every other network that comes into Germany, because Deutsche Telecom will not sell dark fiber, or allow anyone into their buildings, anywhere in the whole country.  Because they're the incumbent, and they're closed.  So Gasline sells and leases dark fiber and colo space on a neutral basis to everybody else.  You just go to Europe sometime.  And I go to Europe every year.  Just ask anybody over there about Gasline, and they'll go, yeah, yeah, it's fine, we love 'em and we use 'em all the time.  You don't realize that that is the national fiber asset of Germany.  That's thoroughfare.  Now, Germany as a country, comparatively speaking -- to the United States -- some of the western states in the U.S. are larger than Germany as a country.  So we could say Colorado, for example, is a county -- or it has the geographic issues that a country would have, in terms of trying to figure out how to build a network
infrastructure like that.

But, you know, you need the special sauce there.  You need the right-of-way, first and foremost.  And then you need to have this mentality that it's worth the investment, to spend the money.  The gas company needed to spend the money to build the asset so that they could run the gas business.  And the fact that their mobile networks are so robust in the country.  And that, you know, there are so many operators, and the speeds -- the high-speed mobile and the pricing -- that's because of the Gasline fiber network it exists.  And if that didn't exist because of the gas company -- if somebody else had to go build it -- individually, a single mobile network operator, it wouldn't happen.  Because the costs are too high.  If you don't have that underlying asset in your state or in your country, then you're at a significant disadvantage.  Because you're going to have to figure out how to fund it.

20:05:

Chris:  All right.  I want to invite you back and do another show, where we'll discuss how to do this at the municipal level, and what the challenges are.  The economics of our model and long-haul, they may actually be easier than at the local level.  And we'll see what you think about that in the next call.

20:20:

Hunter:  I think every municipality needs to incorporate the net-neutral real estate colocation business as a component of any municipal fiber network.  There's your anchor real estate deal.  There's your anchor revenue.  And that's what funds the whole operation.  And that's what keeps it fair and open, and brings in competition.  And there is a way to do it.

20:38:

Chris:  Great.  Well, we'll look forward to the next call, and thank you for coming on the show.

20:42:

Hunter:  Yeah, no problem, Chris.  Thanks a lot.

20:44:

Lisa:  We've been learning about the many uses for dark fiber for some time now.  Follow the tag at muninetworks.org to read about the increasing number of communities that are tapping into this resource, to provide connectivity for businesses, education, and municipal purposes.

Send us your ideas for the show.  E-mail us.  We are at podcast@muninetworks.org.  Follow us on Twitter.  Our handle is @communitynets.  We want to thank Waylon Thornton for the song, "Bronco Romp," licensed using Creative Commons.  And thank you for listening.

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