OnFiber: Bottoms Up!

OnFiber Communications Inc., a startup provider of last-mile fiber services, is finally coming out of stealth mode this week after more than 18 months of strange goings-on.

The strangeness includes no fewer than three changes of CEO, the latest incumbent being Danny Bottoms, who took over a week ago. It also includes two of OnFiber’s founders -- Jagdeep Singh and Drew Perkins -- going off and setting up an equipment startup, Zepton Networks Inc. (see Zepton: Take Me to Your Leaders).

Jagdeep and Perkins originally founded Lightera, the startup that was acquired by Ciena Corp. (Nasdaq: CIEN) and developed what is now Ciena's CoreDirector switch.

The machinations have the paw marks of Vinod Khosla of Kleiner Perkins Caufield & Byers (KPCB) all over them. Khosla played a key role in financing OnFiber and Zepton. And that’s encouraged conspiracy theories.

Khosla's involvement has also encouraged comparisons between OnFiber and two other Khosla ventures into the service provider market -- BroadBand Office (BBO) and Zephion Networks -- both of which met untimely ends earlier this year (see BBO Files for Bankruptcy Protection and Zephion: Anatomy of a Debacle).

OnFiber’s decision to tell the world what it’s up to might be an effort to demonstrate that it isn’t another BBO or Zephion.

Bottoms says that OnFiber is offering a replacement for the access networks offered by ILECs (incumbent local exchange carriers). It plans to do this in 26 major metropolitan areas and is already operational in Dallas, Houston, Philadelphia, Seattle, and the San Francisco Bay Area.

Bottoms likens OnFiber's network hubs to the phone company's central offices. Just as copper phone lines emanate from a phone company's central office, singlemode fiber will run from OnFiber's hubs to its customers. "Everyone that's served out of our hubs can get dedicated glass," Bottoms says. OnFiber's network architecture will allow it to turn up services more quickly and at a lower cost than can be done on existing Sonet rings. "If a customer has a DS3 [45 Mbit/s] connection and he wants to upgrade, then we just change the interface at the customer premises and I'm not burdened with having to upgrade an OC3 [155 Mbit/s] ring to OC12 [622 Mbit/s], or anything like that."

The company plans to sell Sonet, Ethernet, and wavelength services to other carriers, Internet service providers (ISPs), and businesses. It will help service providers connect their points of presence within a local market and provide access connections between service providers and their business customers. The company will also offer medium and large businesses connectivity among their corporate campuses within a metro area network.

OnFiber's customers already include Microsoft Corp. (Nasdaq: MSFT), Yahoo!, Qwest Communications International Corp. (NYSE: Q), and Phoenix Internet.

OnFiber's network includes gear from Extreme Networks Inc. (Nasdaq: EXTR), ONI Systems Inc. (Nasdaq: ONIS), and Cisco Systems Inc. (Nasdaq: CSCO). It says it has spent about $11 million on equipment so far and has some "very modest" vendor financing help from Cisco and through ONI via a third-party lender.

The company's had two rounds of funding totalling $136 million. Its most recent round closed in August 2000. Bottoms says the company will seek further financing during the first or second quarter of 2002.

OnFiber was founded in December 1999 by Singh and Perkins along with two other industry veterans -- Steve O’Hara, previously with Nortel Networks Corp. (NYSE/Toronto: NT) and Micron Technology Inc.; and Michael Guess, previously with Broadwing Communications Inc. (NYSE: BRW).

Guess still serves as OnFiber's engineering and operations boss. O'Hara is its executive vice president of strategic alliances. Clark Osterhout is the company's sales boss, and Bill Metcalfe runs business development.

CEO Bottoms was the former president of MasTec Inc.'s network construction unit and the former vice president of construction for Qwest. As noted, the company has had three other CEOs. First there was Singh, who gave up the CEO role but continues to serve as OnFiber's chairman. Then there was Bernard Bianchino, who recently took a board seat at AirGate PCS Inc. "We had gone out for a Series C round earlier and... when that didn't occur, Bernie looked at everything and said, 'I want to be associated with a bigger company,' " Bottoms explains.

In between Bianchino and Bottoms was Douglas Pritt, a former executive with Sprint PCS. Pritt just resigned from his post this month. Neither Bianchino nor Pritt could be reached for comment.

OnFiber's backers include KPCB, Incepta, Bear Stearns & Co. Inc., Amerindo Investment Advisors Inc., Level 3 Communications Inc. (Nasdaq: LVLT), GE Capital, TeleSoft Partners, and others. The company employs 125 people.

- Phil Harvey, Senior Editor, Light Reading
noptera01 12/4/2012 | 8:01:00 PM
re: OnFiber: Bottoms Up! I wish them the best of luck, but when you upgrade from a DS 3 to an OC3, there is nothing free about the upgrade unless its a clear channel circuit.

IP access for an OC 3 circuit is a heckuvalot more expensive than the same service for a DS 3. There is no way OnFiber can get around those economics.

I dont see much of a business model for dark fiber or clear channel services.
bbeckett 12/4/2012 | 8:00:52 PM
re: OnFiber: Bottoms Up! I think you misunderstood the point. They are simply saying they deliver dark fiber all the way to the customer premise without using SONET rings. All fiber is direct from the CPE to their hub where it gets terminated. That does make upgrades much more simple becuase they only have to change the equipment at the CPE and hub, vs. having to make changes to several SONET nodes. They must have put a tremendous amount of fiber in the ground if they dedicate strands for each customer. Sounds expensive!
cfaller 12/4/2012 | 8:00:47 PM
re: OnFiber: Bottoms Up! Not using SONET can reduce some of the cost of providing/upgrading high bandwidth services, but there is still a large expense associated with buying/building fiber to each and every customer premise.

Doesn't anyone remember the metro ethernet providers complaining about huge construction costs? How is it different for OnFiber?
shomer 12/4/2012 | 8:00:44 PM
re: OnFiber: Bottoms Up! Bill? If that is you send me email to:

[email protected]

Sorry everyone for the intrusion...

stuartb 12/4/2012 | 7:59:57 PM
re: OnFiber: Bottoms Up! Does anyone know who OnFibers Metro suppliers are? Cisco? Redback? ONI? Someone else?

BrettNemeroff 12/4/2012 | 7:59:57 PM
re: OnFiber: Bottoms Up! I think the point has been lost. These guys are using the RBOC facilities and their own SONET gear. In doing so, when serving last mile customers you can either use RBOC fiber to light the last mile, or you could buy RBOC UNEs. This is a great price reduction in compairison to buying tarrifed circuits!!
25wattlightbulb 12/4/2012 | 7:59:51 PM
re: OnFiber: Bottoms Up! From what I know and from their press, OnFiber isn't using RBOC fiber. OnFiber, per their name, is laying their own glass throughout their metro's.
bear 12/4/2012 | 7:54:34 PM
re: OnFiber: Bottoms Up! I am amused by the reference in this article that says that the former OnFiber CEOs "resigned." Aside from Jagdeep Singh, who stepped down on his own accord to start Zepton, the word is that Bianchino and Pritt were forced out and that the employees choice was Bottoms. So you want to be a CEO at a Kleiner start-up these days? You have 30 days to prove yourself or you are history.
cfaller 12/4/2012 | 7:54:33 PM
re: OnFiber: Bottoms Up! Hey bear, when you were posting over at the Zepton article, you were disagreeing with me and saying great things were happening at OnFiber. What made you change your tune?
bear 12/4/2012 | 7:54:24 PM
re: OnFiber: Bottoms Up! Didn't know they plowed through four CEOs...
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