Sluggish economy be damned: Unprecedented appetites for bandwidth are pushing infrastructure service providers to invest in their networks. But providers are profiting from those investments and will continue to do so if one venture capital firm’s predictions for 2010 come true: that the demand for faster connections, from businesses and from service providers, will continue to soar.
That’s the forecast from M/C Venture Partners in its recent report on the top 10 communications technology trends for next year. M/C predicts that operators will be forced to offer more powerful bandwidth thanks to wireless broadband on smartphones (the “iPhone effect”), ever-higher Internet transmission speeds and fiber-based data services.
While consumers will spur much of the forecasted upgrades, businesses are doing their part too. Indeed, the companies that specialize in infrastructure and transport for enterprises – think Zayo Group’s bandwidth division, RCN Metro and AboveNet – are among the providers reporting income growth during the recession, even as they fund the buildouts needed to slake the thirst for high-speed connectivity.
Zayo Group’s bandwidth unit, for example, said last week it will spend $65 million in 2010 to expand networks and service capabilities. That’s on top of the $45 million Zayo Bandwidth forked out in fiscal year 2009 to support customers’ bandwidth consumption.
“In the last year, we’ve added something like 1,000 buildings – mostly cell towers – to the network,” Matt Erickson, head of corporate development and strategy for Zayo Group, told VON in November. That’s because “bandwidth is doubling on our towers every year,” mostly thanks to smartphone use, Erickson said.
Zayo, RCN Metro and AboveNet all provision their services over fiber networks, like their bigger-name peers Level 3 Communications Inc. and Global Crossing Ltd. Zayo, though, tends to target smaller carriers, while RCN Metro and AboveNet focus on Tier 1 and 2 markets. These companies also serve international providers, a market where Level 3 and Global Crossing are especially prominent.
“We have a very healthy capital budget to build networks in places driving huge demands for bandwidth like cell towers and data centers,” Erickson added.
Despite the expansion costs, privately held Zayo says it operates in the black.
To read the full, in-depth article on our sister publication, VON, click here or on the source link below.
