Special report: How fiber feeds AT&T, CenturyLink and Verizon

Compared to some of the new-fangled technologies, fiber is old-school, but it's the connective tissue for most of the new services and applications. Whether it's fiber-to-the-premise or home, long-haul fiber, metro fiber rings, fiber to a cell tower or small cell, the world's networks increasingly rely on fiber.

"Fiber leads all of the businesses that we have," said CenturyLink's Ed Morche, president of strategic enterprise and government markets. "Everything is driven around fiber investment and providing a better experience to our customer, and bringing as many facilities on (fiber) as possible."

RELATED: CenturyLink CEO Storey: Opportunity abounds for more on-net fiber buildings

While CenturyLink has transformed itself from a traditional, legacy telco into a company that is more focused on enterprise services and applications, its fiber roots run deep. CenturyLink can tap into the fiber conduit that previously belonged to firms such as Level 3, Qwest, Broadwing and WilTel, but the Level 3 deal in particular increased its fiber reach outside of its traditional footprint.

During an industry conference in January, CenturyLink CEO Jeff Storey said that his company is adding 4,500 to 5,000 on-net fiber buildings each quarter, and currently has 150,000 buildings on-net. By contrast, Level 3 used to add around 500 fiber buildings per quarter. While Storey didn't say what CenturyLink's ultimate goal was for on-net fiber buildings, he did say it was "north of 200,000."

Currently, CenturyLink has 450,000 global route miles of fiber across its network. Leveraging that fiber for new applications and services is one of CenturyLink's top priorities. Morche said CenturyLink is well positioned to capture some of the demand for fiber for the broader rollouts of 5G.

Ed Morche, CenturyLink

"We've always been a very large provider to the wireless carriers in this country," he said. "The density required to operate 5G, especially in an urban environment, is up to 10X the current 4G specs. And so they are really thirsty for fiber and there's only so much that the big guys can do on their own.

"Certainly they will do it in their own footprint where they operate a consumer network and have great density. But as they move out of their core legacy locations, they'll look to other providers like ourselves to go and build where we have greater density or where we have a bigger appetite to go invest."

During an investor conference earlier this month, CenturyLink CFO and EVP Neel Dev said CenturyLink takes a targeted approach for how it builds out its fiber.

"We're actually seeing very good returns with the approach that we're taking," Dev said on the Morgan Stanley 2020 Technology, Media & Telecom Conference. "We have a very micro-targeting approach. When we go into an area we are doing the analysis on a household level. We do a combination of your build cost and how quickly you can penetrate that asset.

"The first phase we're focusing on is high density areas, mostly aerial (fiber), but I think the economics make sense beyond that."

Wherever CenturyLink blows or pulls fiber through conduit, it makes sure it puts the maximum amount of strands in, according to Morche. For its metro markets, 1,728-count fiber is the highest CenturyLink uses.

Thanks in large part to Level 3, CenturyLink also has a robust dark fiber business. Level 3 was ahead of its time by putting in 12 conduits when its inter-city fiber network was built. While the dotcom bust waylaid Level 3's dark fiber aspirations a bit, the unused conduit has been in CenturyLink's back pocket ever since its $34 billion deal to buy Level 3 was announced three years ago.

Last year, CenturyLink announced it was bulking up its fiber network by adding 4.7 million miles of fiber across its inter-city networks in the U.S. and Europe. While fiber has seemingly been around forever in the telecommunications industry, CenturyLink is using Corning's low-loss fiber for its inter-city networks.

CenturyLink is also using its fiber to provision 106 edge locations across its U.S. network  to provide a range of managed services and hybrid cloud solutions to its customers. The edge compute services blend compute, storage and networking capabilities into one package.

CenturyLink's edge compute services includes 5 millisecond transport time from its existing locations to the edge, which is ideal for low latency applications such as virtual reality, augmented reality, machine learning, Internet of Things and artificial intelligence (AI.)

"Across those 106 edge locations, I think across the U.S. we can hit around 95% or 96% of all enterprises with 5 milliseconds or less," Morche said. "If you take that plus our local peering fabric that we operate, we can connect you faster to any of the cloud providers than anyone else can because we're closer to them, fewer hops. We can put that cloud capability into our facility and provide you essentially an on-net presence without you having to operate or manage it."

AT&T increases fiber penetration

Last year, AT&T surpassed the 12.5 million customer locations that the FCC required it to serve with fiber as a condition of the company's DirecTV acquisition. AT&T Fiber now passes more than 14 million locations and it has about 4 million fiber-to-the premise customers.  AT&T is leveraging its fiber to, among other things, provision its HBO Max and AT&T TV services. While AT&T's fiber build has slowed significantly since the middle of last year, AT&T Chief Financial Officer and EVP John Stephens said on a recent investor conference call that his company has a significant opportunity to grow penetration in its fiber footprint, both toward consumers and businesses.

RELATED: AT&T looks to fiber for revenue growth

"We talk about 14 million fiber-to-the premise (locations), but really there's 22 million business and consumer locations passed with fiber that we have the ability to sell into," Stephens said. "We're expecting to grow our fiber base."

As of its most recent fourth quarter, AT&T had 1.3 million fiber route miles globally. AT&T President and COO John Stankey said at an investor conference that fiber was much more efficient for launching HBO Max and AT&T TV versus building a new gigabit network.

"Ideally, that's probably something around another million of new fiber builds a year, maybe something closer to 1.5 million, in that range," Stankey said in regard to AT&T building out its fiber. "That's one of the things that the management team and I are looking at. As we get into the second part of this year, I'd really like to sort it out.

Verizon's One Fiber fuels network

Verizon also doesn't plan on resting on its fiber laurels. Verizon's One Fiber project, which has been ongoing for several years, combined all of the telco's fiber needs and planning into one project. It also allows Verizon to plot out its fiber uses cases and purchasing plans across all of its sectors.

In addition to densification of the wireless network and enabling wireline access, having fiber deep is key for supporting radio access networks (RANs), as well as provisioning an increasing number of small cells.

Fiber is also a key ingredient of Verizon's Intelligent Edge Network (IEN.) Verizon first announced IEN three years ago as a means to move away from its TDM networking to a more simplified Ethernet-based network. (Despite several attempts to find out, Verizon didn't say how many miles of fiber it has deployed.)

RELATED: Verizon CEO: Fiber build out is paying off for more than 5G

"So just a quick thing on One Fiber," Verizon CTO Kyle Malady said at yet another recent investor conference. "We've been at this for a few years now. I'm happy to report that we're on a really good ramp right now. We got this machine rolling. We've got it humming and we're to the point now that we feel we're at the scale we want to be at. We've done over 30,000 route miles at the end of last year.

"The One Fiber business case and IEN is really about some owner's economics. A majority of the small cells that we're putting up today are riding on this asset. We're leveraging it and there's more to come over time as we come up with new use cases that we can sell into our customers. Being able to engineer and build a network end-to-end and optimize it end to end, we think is going to be a game changer and differentiator for us going forward."

Verizon, CenturyLink and AT&T are all leveraging the economies of ownership for their fiber networks versus leasing lines from other providers. While cable operators largely install fiber in their own franchise footprints, telcos such as Verizon, AT&T and CenturyLink can pick where they want to go with their fiber deployments.

Morche also said that although CenturyLink competes with regional fiber providers, it has more experience installing fiber and a larger backbone to connect its new fiber to. He said regional fiber providers don't have the expertise that CenturyLink does when it comes to installing fiber.

"We know how to do the pre-engineering, the permitting, the construction work," he said. "For somebody else getting into that business, it's a pretty daunting task."