Yesterday Centurylink announced that they will be deploying a 1Gbps fiber service to certain areas of Las Vegas. At a press conference yesterday Nevada Governor Brian Sandoval stated that Centurylink will invest $200mm in this project which will connect thousands this year and tens of thousands next year. Last month Calix announced that their electronics were chosen by Centurylink for their 1Gbps pilot deployment in Omaha Nebraska.
These announcements are interesting because it shows that Centurylink, who has a tremendously large copper plant and has done little in the way of residential FTTH deployments, is coming under competitive pressure in certain areas to deploy not only fiber but gigabit fiber. Google's 1Gbps thrust as well as gigabit deployments by certain municipalities have caused Centurylink and AT&T to start deploying residential fiber. Its hard to say what Centurylink's longer term FTTH plans are but for now it looks like they are at least willing to deploy fiber to protect their customer base from competitive threats as they arise.
While we don't know officially if CLFD is involved in some way here with Centurylink, we do know CLFD has a tremendous amount of experience with 1Gbps fiber deployments. And long before anyone heard of Google Fiber. We know CLFD's product portfolio is cost optimized to make these networks cheaper to deploy than their competition. We know Centurylink is a customer. We also know Calix is a customer. I would not bet against CLFD being involved in a meaningful way with Centurylink's residential fiber initiatives however localized or wide ranging they may end up being.
Yes, Clearfield's products compliment Calix products rather than compete with them. I believe Calix sources Clearfield for several products including their outdoor cabinets which are re-branded under the Calix name. Calix also sources Clearfield for patch cords, cassettes etc. for their terminations in their various cabinets and boxes. Adtran has also used Clearfield for its terminations in the past and may also be a current customer. I do not know if the Clearfield/Calix relationship is an exclusive one but I believe the two have a very close relationship.
Clearfield cassettes handle both AE and G-PON architectures elegantly. Clearfield cassettes can be used at different points in the network, either in the C/O or in an outdoor cabinet (or anywhere else) to terminate fiber in either of those two architectures . In fact, Clearfield is the only FM supplier which allows customers to use one standard product to terminate fiber anywhere throughout their entire network.
The amount of $ Clearfield makes from any given deployment depends on many factors. One factor is the number of premises passed and connected with fiber. Another is the amount/type of equipment Clearfield is supplying into the build. The Nevada Governor talked about fiber being available to "tens of thousands" of premises next year in Vegas with this project. On average Clearfield revenues are between $20 and $100 per home passed with fiber and an additional $50-$100 for every home connected with fiber (assuming they are supplying the gear to connect the home). Assuming a minimum of 20K premises are passed next year that would equate to, on average, $1.2mm in Clearfield revenue. If 20% of those premises sign up for fiber service in 2014 and Clearfield is supplying the gear to connect those homes they would see an additional $300K in revenue. These numbers could move up or down depending on the variables I mentioned as well as others. The above is just a general template for generating a ball park figure