An East Coast connector
T-Cubed’s profit margins have been growing the past five years, said Chip Meador, director strategic planning and current T-Cubed vice president.
“We sat on those assets in the ground for almost a decade, and now customers are coming back to us,” Meador said.
One pivotal deal in T-Cubed’s turnaround involved a lease agreement in mid-2009 with Ridgeland, Miss.-based Spread Networks. The private telecommunications company used T-Cubed conduit and NS rights of way as part of a high-speed fiber-optic cable network introduced in 2010 to connect Chicago and New York. The project, designed to offer faster communication links for Wall Street traders, is featured in the 2014 New York Times bestseller “Flash Boys.”
“That transaction was the first of many that reinvigorated T-Cubed,” Meador said.
After launch 15 years ago, T-Cubed installed conduits in areas of high projected demand, including from Washington, D.C., to Chicago, and from Chattanooga, Tenn., to Jacksonville, Fla. Made of PVC pipes, the conduits are buried at least 3½ feet underground.
“Now, we’re focusing on putting those assets to work instead of spending a lot of money on new conduits,” Meador said. “As long as you don’t disturb them, they’re in fine shape to be utilized.”
Where conduits have not been installed, customers, such as Spread Networks, can use NS’ rights of way to install their own conduits, also known as ducts. In its conduits between Chattanooga and Atlanta, T-Cubed owns and leases “dark” fiber-optic cable – an industry term to describe cable before it is activated by a telecom provider. However, T-Cubed does not offer telecommunication services.
“You’ll never get a dial tone from T-Cubed,” Friedmann said.
In 2014, Allied Fiber, a dark fiber provider, signed a contract with T-Cubed to lease conduits between Atlanta and Jacksonville, Fla. Based in New York, the six-year-old company aims to build a new open-access communications infrastructure across the nation, allowing any network operator to connect and enhance its network. That goal would be impossible without contiguous rights of way, said Jason Cohen, Allied Fiber’s chief operating officer.
“Allied Fiber has mapped out a plan for the entire East Coast utilizing Norfolk Southern and T-Cubed rights of way and duct,” Cohen said. “Allied Fiber will use the ducts to install a new fiber-optic cable system while building co-location facilities along the rail network. By using the NS right of way and the existing T-Cubed ducts, Allied Fiber will complete the approximately 390-mile network from Jacksonville to Atlanta by mid-2015.”
T-Cubed’s conduits offer Allied Fiber the most direct, secure path between Jacksonville and Atlanta, Cohen said.
“Because the T-Cubed ducts are already installed, it eliminates one of the largest construction risks for a long-haul fiber project,” he said. “Once the duct is in the ground, running the fiber-optic cable through it is fairly straight forward, and working with a single landlord for the entire route is priceless.”
Although T-Cubed’s fortunes are improving, Friedmann and Meador cautioned that the subsidiary is unlikely to be material to NS’ overall financial performance.
“The revenues T-Cubed brings in are an added benefit, but it’s a small business compared to the rest of NS’ business,” Friedmann said. “It’s not going to be a main driver of NS’ fortunes, but we’re glad to help.”