Building Fiber a Mile at a Time

Today I want to highlight another fiber business plan. The company is Hagerstown Fiber, operating out of Hagerstown, Maryland. I have an automatic soft spot for this company because that’s the town where I went to high school. Hagerstown is one of the many rust-belt cities that run the length of Appalachia and which have lost the majority of their former manufacturing base over the last fifty years.

Hagerstown Fiber is owned and operated by Clint Wiley. He’s been in business in Hagerstown since launching a dial-up ISP in 1996. Since then the business has reinvented itself several times – first by collocating and selling DSL over Verizon copper and then migrating to faster DSL that bonds two copper pairs. As I travel across the country I’m surprised by the number of former dial-up companies who are still quietly pushing ISP products in single markets.

Like anybody who uses telco copper, Clint sees the writing on the wall and can foresee the end of copper. He’s already seen his customer base dwindle as customers have been moving to the faster speeds offered by the cable company – in this case Antietam Cable, a small regional cable operator. He’s also seeing a shrinking copper inventory as Verizon is quietly phasing out older copper.

So he decided a few years ago to tackle fiber-to-the home and become a facility-based ISP for the first time. That’s a big change for his business because he used to be able to advertise and sell to the whole market and he’s had to shift to advertising only where he has fiber. The shift in marketing focus was probably the hardest part of the transition because it means selling and developing relationships with homes near to his fiber – his focus is now truly local, block-by-block.

Like most small regional ISPs, he’s made a decent living over the years and built up a loyal customer base. But the UNE business plan does not create a strong balance sheet, and so the transition to building fiber immediately meant creating a banking relationship. Building fiber is expensive and small ISPs can’t build fiber without loans.

Clint was successful in establishing a line of credit, This allows him to borrow money to build a new stretch of fiber. He then adds new customers to pay down the line of credit until there is enough borrowing capacity to borrow and build again. This business plan is familiar to any small ISP who has tackled the fiber business. With each new fiber build the fiber company grows their balance sheet and customer base and over time increases the value of the business. By the end of this summer the company will have built 16 miles of last-mile-fiber in the city. Clint’s original vision was to grow to 100 miles of fiber, but like everybody who gets into this business he now hopes for something bigger.

From a technology perspective the transition was easy since the company had been using Zhone access concentrators for voice and DSL, and the vendor has an add-on migration path to use the same chassis to handle FTTH. Small telcos are all familiar with this mixed-technology and there are several equipment vendors with platforms to allow a smooth transition from DSL to FTTH.

His new fiber venture has stiff competition since the local cable company has decided to build FTTH rather than take the DOCSIS 3.1 upgrade path. Over time, Hagerstown and the surrounding markets might enjoy that rare circumstance – competition between two fiber network operators. While most of America is now hoping for one fiber network, Hagerstown will have competing fiber providers.

Clint believes that his personalized customer service will always give him an edge over his bigger competitor, but he obviously has a harder path to success than somebody competing with a more traditional cable company. His marketing effort is centered on the slogan “Now you have a choice”. He still has a way to go before becoming fully self-sufficient with his fiber network, but every day the business gets a little stronger as he adds customers. He’s showing that there is a path forward for the small company willing to build fiber a mile at a time.