Use of ‘Dark Fiber’ Is Lighting Up Telecommunications
Away from the bright lights of the telecommunications revolution, a host of small, fast-growing companies is saving customers a fortune through “dark fiber”--that is, using spare capacity on international telecommunications networks.
The firms buy up capacity at wholesale rates and resell it in various ways to telecommunications users, undercutting international phone charges and grabbing customers. And their success is hastening the destruction of regulated international phone tariffs, although this will eventually destroy their own market, executives and analysts say.
The main players are USA Global Link, Executive TeleCard Ltd., Flash Telecommunications Inc. and International Discount Telecommunications (IDT). Customers can save 20 to 80% on overseas calls.
“These companies fill a niche provided by the high prices of the international call umbrella,” said analyst Philip Sirlin of broker Wertheim Schroder.
Fiber is dark when it is unlit by the blitz of laser light that makes up modern telecommunications traffic. So much cable has been laid, in anticipation of expected demand into the 21st Century, that much is now surplus.
“Some say as much as 80% of the fiber around the world is not lit up. We try to purchase that dark fiber,” said William Gruzynski, president of Flash Telecommunications Inc. “As the cost is in laying the cable, not the fiber, you may as well put in 10,000 strands as 10.”
Some firms are growing more than 10% a month. Only Executive TeleCard is publicly traded, although many are looking for investors.
Sprint, AT&T; and a large European carrier have courted USA Global Link, which is in the process of arranging a $10-million equity offering.
Executives admit that the business won’t survive the end of tariff regulation; when that happens, they plan to move into other spheres.
“As those markets are deregulated and liberalized, we can transfer our customer base to alternate means of call set-up transmission which are more cost effective and user friendly,” said Christopher Hartnett, chief executive of USA Global Link, which has 100,000 customers in 112 countries.
In any event, regulation over most of the world’s telecommunications market is still in place and may take a decade to be dismantled.
Tariffs in some European and Asian countries for calls to the United States can be six or seven times as high as rates going in the other direction. So, many U.S.-based resellers find ingenious ways to let their overseas customers get U.S. rates or lower.
Flash, IDT and USA Global Link offer call-back services, where customers call a U.S. toll-free number, hang-up and get called back. The company then makes the customer’s connection via the United States to wherever they like. It still works out cheaper than direct calling.
