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Fibertech growth gets boost from wireless backhaul

Rochester Business Journal
August 3, 2012

An increase in its wireless backhaul business has helped Fibertech Networks LLC boost revenue growth and its workforce this year.
The Brighton company, which installs and leases capacity on fiber-optic networks to businesses and telecommunications carriers, has added more than a dozen employees in 2012, said Michael Hurley, vice president of sales and marketing.
Fibertech now has 235 employees, roughly 145 of them in Rochester. He said the firm expects to add 10 more by year's end.
The employment growth comes on the heels of significant revenue growth for Fibertech. The company had revenue of $115 million in 2011, up 26 percent from 2010.
Hurley said the fastest-growing part of Fibertech's business is its wireless backhaul, which connects an end user to a node in a major network. That segment now accounts for 25 percent of revenue. Fibertech connects nearly 2,100 cell sites with its fiber-only network infrastructure.
"A lot of our capital has been invested into extending fiber out to cell towers and other sites for wireless companies," Hurley said. "They need as much bandwidth as they can get."
Earl Ipsaro, Fibertech vice president of engineering, said the company began looking at wireless backhaul in 2004. At that time it was a negligible part of Fibertech's business, he said.
"Back in 2004, there was definitely a need to get fiber out to cell towers," Ipsaro said. "Traditional telephone companies were using copper. As companies outgrew that and needed more bandwidth, we saw an opportunity to expand fiber out to those areas.
"Then, about three years ago," he added, "the need for bandwidth picked up even more as wireless companies needed to support the increasing number of smartphones."
Denver-based telecom analyst Donna Jaegers of D.A. Davidson & Co. said an increase in wireless backhaul business has been the norm for companies like Fibertech.
"For local fiber players, fiber to the towers is one of the newer growth drivers that these companies have been charging at aggressively over the last few years," she said. "Certainly we see wireless companies moving to 4G. You really need more fiber to the tower to have those kinds of speeds."
Fibertech has leveraged the demand for bandwidth to reach new markets. The company has spent the past few years expanding its networks into areas like New Jersey and Philadelphia.
It now has fiber networks in 23 midsize markets in the eastern United States. Hurley said the firm's biggest expansion has taken place in Upstate New York, Connecticut and New Jersey. Rochester accounts for 8.6 percent of total revenues.
Fibertech's biggest competitors are local telephone and cable companies such as Frontier Communications Corp. and Time Warner Cable Inc. Windstream Corp. also is a competitor, said Dan Clifton, senior director of marketing and communications for Fibertech.
Hurley said the company projects revenue growth of 18 percent to 20 percent this year. Over time, he added, that number likely will settle somewhere in the mid-teens.
"The demand for bandwidth keeps growing, and that's not going to stop anytime soon," Hurley said. "We've been fortunate. We're in a marketplace that has really good growth characteristics about it, and I think we've done a good job at executing within that business model of delivering good services, so people continue to turn to us."
One potential growth area Fibertech has examined but not yet pursued is data storage. Meanwhile, other telecommunications companies have invested heavily in it.
Victor-based Finger Lakes Technology Group Inc. has prospered over the past few years, expanding its services to include data center solutions. Likewise, XO Communications Services Inc., which is headquartered in Virginia and opened an office in Fairport in 2009, now offers cloud computing and IT services.
"For us, picking that right time to invest in data storage and some other things will be about strategy," Hurley said. "It's something we've certainly looked at. For now, given the capital we have to work with, we can still continue to grow the company just based on transport.
"We continued to invest in building more fiber network out there," he added. "There are still on a metropolitan basis too many buildings that don't have a fiber network built into them."
Jaegers agreed there is risk in data storage and said Fibertech does not necessarily have to venture into that area because it operates in mid-level metro regions.
"The risk in getting into data storage (is) it's a very capital-intensive business," Jaegers said. "A lot of the fiber companies in the past have ended up exiting the data-center part of the business because they couldn't fund both fiber and data storage.
"Also, the growth in data center has come in the major markets like New York City, Dallas and Chicago. Fibertech is in secondary East Coast markets, where data center growth has been much slower."

8/3/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email

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