The Changing Landscape of the Dark Fiber Market
In recent discussions with carriers there is a growing trend towards limiting the sale of dark fiber. The carriers, as mentioned in earlier posts, view fiber as a core asset not to be given away. The reasons for limiting the sale of dark fiber are numerous and tend to focus on money. If a carrier gives a customer the ability to scale their own bandwidth it limits the amount of money that they can make over the life of the contract. There are no upgrades or additional revenue streams.
The first wave of restrictions have been put in place to stop the sale of dark fiber to competitive carriers. Why enable your competitors? It is rumored that both Level 3 and Abovenet have plans on the table to stop selling or severely limit the sale of dark fiber to competitive carriers in 2007. If I was the owner of the network I would most likely feel the same way.
The second wave of restrictions seems to be centered around limiting the sale of dark fiber on shorter metro routes. Especially in areas that do not have a variety of available fiber providers. These restriction are more vague and tend to be in the form of large price increases. The carriers will try and take as much money as they can for the fiber to offset the loss of revenue for bandwidth upgrades over the term of the contract. It is rumored that Level 3 will restrict the sale of dark fiber on legacy Telcove and Progress Telecom metro routes and only offer "non-strategic" assets in 2007. Leasing long haul fiber is still in question. Other carriers are looking at across the board rate hikes on metro fiber in 2007.
All that being said, if you’re in the market to buy fiber now is the time. The days of carriers selling off infrastructure to meet revenue objects seems to be headed for the rearview mirror.