Broadband Start-Up Targets Small Markets

Published November 1, 2007

Smaller cities and municipalities need not fear being overlooked for broadband services. That’s the message sent by the quiet launch in late August of a new company offering fiber-based network services to telecom providers in smaller urban markets and nearby rural areas.

The company, Zayo Bandwidth, launched after acquiring the existing fiber networks of four smaller companies for a total of 8,400 route-miles of fiber–the critical pipeline for offering high-speed broadband services.

Through its holding company, Communications Infrastructure Investments, Zayo acquired PPL Telcom, a 4,600 fiber-route-mile network based in Allentown, Pennsylvania serving locations throughout the northeastern United States, and Memphis Networx, a 200 fiber-route-mile network serving the greater Memphis, Tennessee area.

Two additional acquisitions were expected to be finalized in the third and fourth quarters of this year. These are Indiana Fiber Works (IFW), based in Indianapolis, and Onvoy, Inc., in Minneapolis.

Capital Confidence

Leading venture capital firms provided $225 million to the start-up for these and other acquisitions, a sign of confidence in Zayo’s business model as well as in the growing appetite for broadband in smaller telecom markets.

With its acquired fiber networks, Zayo will supply high-speed bandwidth to telecom operators, including wireline, wireless, cable, and Internet service providers, and to government and educational institutions and businesses.

Of note is the acquisition of PPL Telcom, based in Pennsylvania, a state where the legislature voted to block municipal broadband networks in favor of private market investment.

Zayo is in discussions with other, undisclosed, regional fiber network operators. Its stated business strategy is to grow via acquisition. The company is headquartered in Louisville, Colorado.

Sharon J. Watson ([email protected]) writes from Sugar Land, Texas.