Small fiber-optic firm to compete with big telecoms, cable companies

Is there a place for small, local company in a high-speed internet market dominated by telecommunications giants such as AT&T, Verizon and Comcast?

Ezee Fiber is betting yes. Since launching in July, the Houston company has begun to build out its 2,000-mile fiber optic network from Galveston to Huntsville, extending fiber to homes and businesses and promising speeds many times faster than those of cable internet providers. Ezee Fiber is relying on the same proven strategy employed by other small firms taking on dominant players: offer competitive rates coupled with more personal customer service.

“We just provide a different level of service than other incumbents like AT&T or Comcast,” said CEO Scott Widham. “Because of that, we can punch above our weight.”

Widham, a 40-year veteran of the telecom industry, founded Ezee Fiber with $550 million in financing from I Squared Capital, a Miami private equity firm with $13 billion of assets under management. With the investors’ backing, Widham purchased ICTX WaveMedia, which over the past three decades had built an extensive fiber network, largely to connect government agencies, schools and hospitals with one another.

The network travels through Houston’s downtown as well as the Texas Medical Center.

The ICTX system was designed as a so-called dark-fiber network, meaning that the company did not provide internet services itself, but rather sold the capacity to customers that wanted to create private networks to connect scattered facilities. The dark-fiber customers, however, use only a small fraction of the fiber-optic trunk’s capacity, offering Ezee Fiber the opportunity to sell high-speed internet services to households and businesses.

Ezee Fiber which operates across Harris, Montgomery, Brazoria, Fort Bend, Waller, Liberty and Polk counties, aims to land 15,000 customers by the end of 2022. Matt Asmus, Ezee Fiber’s president and chief operating officer, estimates the company will generate between $10 million and $20 million in revenues this year, and double them in 2022.

“We’re on quite a growth trajectory,” he said.

Rapid industry growth

The fiber-optics industry is growing rapidly across the world, as global internet usage continues to expand. An analysis by the Canadian consultancy Emergen Research predicted that the global fiber-optics market would expand at a compound annual growth rate of almost 10 percent, more than doubling to $9.5 billion in 2028 from $4.5 billion in 2020.

In the United States, bipartisan legislation passed by Congress in response to the economic dislocations caused by the pandemic provides nearly $28 billion to expand broadband networks and access. COVID-19 drove much of the economy online as companies relied on remote workforces and consumers accelerated their shift to ecommerce, underscoring the importance of broadband connections and high-speed internet in 21st century society.

Stimulus programs and other legislation approved by Congress have earmarked billions of dollars for broadband expansion programs, according to the Brookings Institution, a Washington think tank. Experts predict that because of their superior speed, reliability and transmission capacity, fiber-optic lines will replace conventional coaxial cables in the construction of new communications networks.

Fiber-optic lines are created by bundling hair-like strands of glass fibers. Data is transmitted via blinks of light rather than the electronic pulses on coaxial cables. This technology uses the different colors of light on the spectrum to transmit data packages simultaneously along the same fiber strand, a process called dense-wave division multiplexing, which allows massive volumes of data to be transmitted.

The data transmission rate of optical fiber is 1,000 times greater than that of cable, said Ali Golbazi, chair of the electrical and computer engineering department at the University of New Haven. Optical fiber can be stretched hundreds of miles further than copper wire, and is far more durable, he added, making it all but certain that data transmission networks built in the future will rely on fiber optics.

“It’s inevitable,” Golbazi said. “Nobody is going to put a backbone of communication systems on a cable.”

Focus on residential growth

Widham said Ezee Fiber plans to grow in three areas: residential, commercial and institutional — ICTX’s legacy business of government, education and medical facilities.

In its residential business, the company will focus on marketing services to existing homes as well as extending its network and services to new subdivisions. The company plans to extend its fiber network to 12,000 homes scattered across its seven-county coverage area this year.

Ezee Fiber offers internet service with upload speeds up to 77 times faster than cable internet. It offers four levels of pricing for basic internet-fiber service: $59 per month for data transfer speed of 500 megabits per second (Mbps); $70 for 1-gigabit speed; $109 for 2-gig speed; and $249, plus installation, for 10-gig speed.

The 10-gig service level is aimed at high-usage customers who need to transmit large data files, such as videos. The service is provided without data caps, contracts or hidden fees.

“Our value proposition is we’re easy to do business with. Let’s say you buy our service, and you call us up and you say your service is out,” Widham said. “If we can’t diagnose it over the phone, we’re rolling a truck.”

Ezee Fiber is small enough to provide live, person-to-person service to customers, said Asmus. The website even lists his phone number and email for customers who want to speak directly with the company president.

“There are no automated attendants,” Asmus said. “We’re never going to ask a customer to press one for this or two for that. Our services are here in the greater Houston area. That’s where our call center is. Our technical support is here as well.”

Mark Lutkowitz, a data communications analyst firm fibeReality, a consulting firm in McLean, Va., said the market for fiber-optic networks is so large that small companies like Ezee Fiber can carve out a niche even as they compete with telecommunication and cable giants.

“There’s room for the small companies, although it’s certainly not without risk,” he said. “There are maybe hundreds of these kinds of firms across the country.”

Fertile ground

The Houston area and Texas in general could prove fertile ground for smaller fiber companies as big telecom companies have largely focused on building out fiber networks in the densely packed cities in the Northeast. In Texas, however, large cities are spread across the state, creating opportunities for regional fiber networks.

In addition, the number of businesses moving into Texas is increasing substantially as companies seek lower taxes and business-friendly climates, said Lutkowitz, adding to the demand for high-speed internet access. Recent transplants include the electric car maker, Tesla, which moved its headquarters to Austin from Silicon Valley.

In December 2020, Hewlett Packard Enterprise said it would relocate its global headquarters to Spring from San Jose, Calif. The same month, business software and services company Oracle said it would relocate its corporate headquarters to Austin from Silicon Valley.

Since Ezee Fiber has a customer base of governmental, educational and medical entities, Lutkowitz said, “the (business) market would be the next logical step for them.”

Widham said Ezee Fiber is poised to tap into that growth. The Houston area, he said, offers a market to which both businesses and people are moving, offering opportunities to expand the network and Ezee Fiber’s services.

“If Houston was a state, it would be the 18th largest state,” Widham said. “We look forward to putting a lot of money into Houston, creating a lot of jobs and building our business.”

Nigarai M Grusio

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