Lumen Technologies is bullish on its fiber-based broadband prospects. In December, the telco announced it would expand Quantum Fiber to more than 30 cities and metro areas in the U.S. Quantum Fiber offers multi-gigabit speeds and new, multi-gig rates in select locations.
Local Quantum Fiber teams are working on expansions in several cities and surrounding metro areas throughout the South (Florida), Midwest (Minnesota) and the West (Arizona, Idaho, Iowa, New Mexico, Montana, Colorado, Wyoming, Nebraska, Nevada, Oregon, Utah and Washington).
Scott DavisScott Davis, vice president and general manager for mass markets fiber at Lumen, says the company sees an opportunity to offer connectivity where options traditionally were limited. “When you think about the Infrastructure Investment and Jobs Act [IIJA], which is aimed at bridging the digital divide, there’s the opportunity to bring fiber to more consumer and business locations traditionally underserved,” he says. He adds that one byproduct of the network build is that Lumen is “adding and creating new jobs across the markets.”
Lumen has an aggressive, broad target for its fiber expansion. The company plans to enable fiber in 12 million locations across its remaining multistate footprint. At the end of 2022, it had reached 3 million sites. “We ramped up the build significantly, and we’ll continue to do that in 2023,” Davis says.
Scale is only one part of the Quantum Fiber expansion equation. Lumen will combine offering multi-gigabit speeds with fostering good customer relationships. “We’re trying to differentiate with Quantum Fiber,” Davis says. “CenturyLink, which was the name of the company before it rebranded itself as Lumen Technologies, traditionally would just bring out faster speeds. But as Quantum Fiber, we’ve introduced a new experience backed by a digital online platform and 24x7 customer support with no data caps and contracts.”
Overcoming Industry Headwinds
Similar to other providers, Lumen is not immune to supply-chain, permitting and workforce headwinds. Despite challenges, the company maintains it is on track to get as many fiber locations as possible.
Davis says the company’s efforts allowed it to overcome any issues. “We are up against the same headwinds that all providers are up against,” he says. “We’ve been exploiting partnerships and been proactive in our enablement efforts, which helped us get in front of those challenges, but there’s nothing unique to our company.”
Lumen’s fiber expansion comes as it completes the sale of its ILEC operations in 20 states in the Midwest and Southeast to Apollo Funds. Lumen retained large enterprises and its ILEC business in 16 states. Nevertheless, the service provider’s overall fiber broadband growth wasn’t as fast as analysts had expected.
“Supply-chain, labor and permitting hurdles have all weighed on enablements,” MoffettNathanson, a division of SVB Securities, wrote in a note to investors after Lumen released its third-quarter results.
Chris StansburyChris Stansbury, executive vice president and CFO of Lumen, told investors during the UBS Warburg TMT Global Conference that though external issues such as labor shortages and permitting have an impact, its slower-than-expected buildout rate was a result of the company’s realigning its focus.
Stansbury, who came on as CFO in April, said the new strategy would set Lumen on a path of new fiber growth in two to three quarters. “I wanted to ensure our investments were in the right markets,” he said. “When we go into a market, we want to cover it well, but we want to make sure that long-term, we’ll get a return on that, so we paused and made some adjustments.”
He added that though this process slowed the building process, it enables a grander scale. “When you have scale, it’s easier to navigate permitting delays, and it allows you to redirect labor into another market,” Stansbury said. “If you’re not at scale, it makes it tougher to make a labor commitment up front.”
But scale is about more than just reallocating resources. It can also help large providers such as Lumen enhance their marketing outreach. Despite doing little marketing, Quantum Fiber has recieved good NPI scores.
“Scale is also important for us to do effective marketing,” Stansbury said. “We have not done much marketing, and we’re getting good penetration. So, as scale grows and our ability to invest in marketing grows, I think there will be improvement.”
Battling Copper Losses, Ramping Up Fiber Subs
Lumen’s Quantum Fiber customer base continues to rise, a trend that continued into the fourth quarter of 2022. As the provider shifted to a market-based approach and adjusted its go-to-market strategy, it added 19,000 Quantum Fiber customers, up from the previous quarter. This brings the total Quantum Fiber subscribers to 832,000.
The service provider also continued to connect more customers with fiber. During the fourth quarter, it connected about 100,000 customers with fiber, bringing the total enabled locations in those states to 3.1 million. However, the telco suffered broadband losses due to declines in its copper-based DSL subscriber base. It lost 89,000 customers in the fourth quarter.
Open to P3s
Public-private partnerships (P3s) have emerged as communities have looked to get broadband into their towns and cities. P3s have become more commonplace in communities not previously of interest to private providers. Traditionally, most of the capital went to build networks in markets that could produce high returns.
Through a P3, capital is driven into unserved markets where private investment has not materialized because of higher per-customer construction costs and lower revenue expectations.
“We’re always open to the right partnerships,” Davis says, adding that though Lumen is not opposed to developing further P3s, “what makes the most sense for us is to go direct to market.”
However, the telco is not ruling out such agreements. One notable Quantum Fiber P3 effort is in Springfield, Missouri, the home of Springfield City Utilities, which provides electricity, water and gas in Springfield and surrounding areas. Springfield City Utilities first built fiber in the 1980s for internal use and municipal facilities. In 1997, its network, SpringNet, began providing fiber connections to businesses.
SpringNet has 700 route miles of fiber deployed throughout the community and provides an Ethernet interface of up to 40 Gbps to more than 600 customers, including businesses, multifamily properties, schools and hospitals. Several carriers provide internet connectivity to the network. SpringNet also offers business LAN services and small-cell antenna attachments.
“We’re not opposed to P3 relationships,” Davis says. “Before the divestiture of assets in other states, we had entered into a unique relationship with Springfield.”
Though Springfield is one of Lumen’s announced P3 broadband partners, the provider is talking to others about similar agreements. It is also happy to help local communities leverage new Broadband Equity, Access and Deployment (BEAD) Program broadband funding.
“We are in many active discussions with municipalities and broadband action committees,” Davis says. “We want to do our part to help all these entities get up to speed to prepare for the IIJA and BEAD Program, which will offer subsidies for municipalities to take advantage of for broadband.”
But every community differs in its approach. “Some municipalities will do it in partnership fashion, and others want providers to build networks,” Davis says. “We want to be flexible and open to the various possibilities related to those opportunities.”
Enabling Communities with BEAD
As the federal government doles out BEAD Program funding, many states have opened new broadband offices to manage the funds. According to a Pew Research report, more than half of all states operated broadband offices, but only one or two employees staffed most. Now, every state and territory has a broadband office or agency serving as the central broadband entity coordinating broadband expansion efforts.
The research firm’s broadband access initiative has tracked public job postings for state and territory broadband offices and identified 68 posts across 29 states from September 2021 through September 2022.
Lumen, which looks at each state individually, will be on hand to help if it is requested. Though the service provider won’t get in the way if a community is already down a specific path, it has decided to be proactive as states ramp up deployments. “We are seeing this variable level of expertise across the markets and engagement,” Davis says. “We’re taking each market, addressing it individually, and helping folks by being flexible in our approach.”
Beefing up Business Fiber
Though building out fiber to more consumers is Lumen’s priority, the service provider is just as keen on enhancing its business services. In December, Lumen announced that it would invest an additional 6 million fiber miles in meeting the continuing demand for fiber, which is expected to be installed by 2026. Once complete, Lumen’s U.S. intercity investment will reach nearly 12 million fiber miles, creating diverse routes to more than 50 major cities across the country. To set this network apart from others, Lumen continues upgrading its infrastructure using a multiconduit system, allowing for the quick deployment of the latest fiber technology. Lumen continues using Corning’s SMF-28 ULL fiber and SMF-28 Ultra fiber to upgrade its intercity infrastructure and add capacity to its network. This is the latest in optical technology.
Lumen upgraded more than 24,000 route miles across its U.S. intercity network. This enhances network performance levels and supports the deployment of its Next-Generation Optical platform, which was specifically designed to handle increasing network traffic. This fiber technology can now help customers with wavelength services up to 400G and increase customer speeds in the future.
Unearthing FCC Maps
Another critical element for Lumen and communities is the FCC’s release of new maps.
In November, the FCC unveiled the preproduction draft of its new broadband maps. They aim to provide the best picture of where broadband is available across the country.
The FCC’s previous maps faced criticism over the fact that they collected data at the census block level, meaning that if a single home was served in a census block, the whole block showed up as served on the maps.
In January, the National Telecommunications and Information Administration (NTIA) set a deadline for stakeholders to submit availability challenges to the first iteration of the FCC National Broadband Map, which will be used for allocations to states in the BEAD Program. At the end of June, NTIA plans to announce BEAD Program allocations using the latest version of the FCC maps as a guide.
According to a Fierce Telecom article, as of the middle of January, states had already submitted more than 300,000 location challenges since the FCC started to open itself to communities to request corrections to its new broadband map.
Lumen has been helping communities weigh several elements, including buildout costs and the pros and cons of access types. “Communities are ramping up quickly, especially with the release of the FCC maps,” Davis says. “We see acceleration across broadband action committees and municipalities to ensure they are ready and prepared.”
Though Lumen knows where its fiber network is in the markets it serves, the FCC maps can highlight a community’s challenges and areas of opportunity. “What’s great about the maps being public and widespread is multiple entities can look at [them] from the same lens and close the gaps where folks have limited or no access to competitive broadband,” Davis says.
MDU Instant Activation
Multiple-dwelling units (MDUs) remain a hot market for Quantum Fiber. In the new areas that Quantum Fiber is targeting, it can build off its customer base and embedded fiber reach.
Whether it’s a student housing development or residential property, the days of having to wait for a technician to install service are over. The service provider’s Instant Internet platform enables property owners to make broadband readily available. Pre-installed equipment and wiring mean residents can access service as soon as they move into a property.
“For the markets we announced, there’s a large density of MDUs,” Davis says. “We have the advantage of going to market with Instant Internet services, which gives the same benefits of Quantum Fiber and instant activation.”
Another benefit of the MDU service is that in addition to serving residents, it also serves businesses and the rental staff. “Residents and businesses of the MDUs, including the rental office, all get the benefit of instant delivery,” Davis says.
Though providing 1 Gbps has been a new speed standard that fiber-to-the-home providers are following, Quantum Fiber is set on preparing its network for upcoming speed surges.
“The way we’re looking at this is the demand for bandwidth will continue to grow,” Davis says. “With the metaverse and the fact that consumers have, on average, 20 connected devices in the home, we strongly believe that the future is multi-gig, and this is the next step in Lumen’s journey to deliver multi-gig service across our footprint over time.”
In August, the service provider launched an 8 Gbps tier to select residents and small businesses in cities near Denver, Minneapolis and Seattle.
Lumen is using XGS-PON technology to provide the 8 Gbps symmetric service. In addition, Lumen will install a permanent network interface and router at the premises that’s separate from the customer’s Wi-Fi, allowing for what it says is easy Wi-Fi activations and simple upgrades as technology evolves.
In addition to 1 Gbps fiber broadband service, Quantum Fiber customers can also access the telco’s 360 Wi-Fi service. For new customers, the number of pods provided (up to four) will be determined by a technician during professional installation. For existing customers, the number of pods (also up to four) for self-installation will be based on the square footage of the customer location.
“It’s not just about offering fast speeds but also things such as pricing,” Davis says. “It’s those service experiences we’re trying to wow customers with in addition to the ultra-fast speeds.”
SMB Effect
As Lumen’s Quantum Fiber rolls fiber into more neighborhoods, the service provider can regain and drive more share in the small-business market. Its network will continue to pass businesses and government sites that could also benefit from new services.
Quantum Fiber will reach more than 12 million locations over the next five years. It is passing businesses and public entities.
“We are already a dominant fiber player in the enterprise space, so we’re certainly going to take advantage of the opportunities from small and medium businesses [SMBs], enterprises and households we pass with fiber,” Davis says. He adds that the service provider offers its SMB services with straightforward pricing and packaging.
“The great thing about fiber is we are able to create a package tailored for small businesses that includes multi-gig speed broadband and security,” he says.
Sean BuckleySean Buckley is the editor-in-chief of Broadband Communities. You can contact him at sean@bbcmag.com.
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