Fiber Optimists

Before the rise of fiber optic cable, copper was the signal-carrying material of choice; it was cheaper to buy and install than fiber, and it worked just fine for the simpler voice and data demands of the late 20th century. It’s a different story now. Copper just can’t handle the bandwidth required for today’s technology. Even in a troubled economy, the consumer need for speed remains high. So phone companies, cable companies, and other broadband providers—large and small—are updating and extending their networks with longer-lasting, more powerful fiber.

“Fiber management used to be the last thing anyone ever thought about,” says Clearfield COO Johnny Hill. “Ten years ago, we thought no one would ever need more than 72 fibers. We thought 72 would last 100 years. Now we’re putting in 864 fibers—all because of consumer thirst for bandwidth.”

Urban consumers aren’t the only ones demanding speed. According to Beranek, there are currently 200 million access lines for voice and data in the United States. Approximately 90 percent of them are controlled by Verizon, AT&T, and Qwest. Clearfield’s big competitors—Tyco, Corning, and Eden Prairie–based ADC—take care of the big three’s fiber management needs. What’s left is controlled by about 1,000 independent telecom providers, which on average serve 10,000 to 20,000 access lines. (AT&T has more than 60 million.)

“Our product line is designed for the independents and their unique needs,” Hill says. “We don’t design for the big boys, even though they would do very well with our products, if we chose to go after them, which we don’t. We like working with the right people—the people who appreciate what we do for them.”

The rural market—perhaps better described as the market where big telcos and their big suppliers don’t dominate—is “very stable,” says Robert Rosenberg, president of Insight Research, a New Jersey firm that specializes in telecommunications industry analysis. “It doesn’t have the growth, nor does it have the perturbations, of a big urban market, where new competitors will come in and shake things up, and pricing will change drastically.” (ADC, for one, knows how challenging supplying the large telecom providers can be. ADC blamed “slower customer spending” for the $443 million first-quarter loss it reported in March.)

“The thing that I’m most impressed by is [Clearfield] actually knows] what the marketplace needs, even before the marketplace has begun to ask for it,” says Don Hayward, president of Jordan-based metal-stamping company Engel Diversified Industries and a Clearfield board member. “They show up, introduce new things, and their customers say ‘Well, yeah, that’s what we need.’”