Connexion Technologies takes fiber to the home
CARY, NC--Back in 1997, Cary, NC, which is close to the state’s Research Triangle Park, wanted high speed Internet delivered throughout the town. But service providers balked, saying it would take three years. After leaving office, then Cary Mayor Glen Lang saw an opportunity in providing state-of-the-art Internet, TV, phone, and security services to new developments.
“I read the report the city commissioned. The utilities were unhappy, the developers were unhappy. Residents were unhappy. I thought, maybe there’s a better way,” Lang, founder and CEO of Connexion Technologies says. His experience as mayor, even prior to that, had shown that getting state-of-the-art services installed in new developments often posed numerous difficulties.
Developers naturally want services turned on when they begin to sell homes or condos, but Time-Warner or the phone company may not be able to schedule connections as soon as desired. Residents moving into a new home in the past often had to schedule phone hookups, Internet hookups, cable TV and security, then wait for installation by service providers.
Second largest
Connexion Technologies, which Long founded in 2002, solves those problems. The company initially raised $700,000 from angel investors and later several million more, also from individual angel investors. It also has substantial debt funding from an LLC with which SAS founder and chair Jim Goodnight is associated, Lang says.
The 300-employee company installs fiber optic infrastructure for new residential communities nationally since last year, although it began with a focus on the Southeast. The company quickly grew to the second largest provider of fiber-to-home services for new developments, behind only Verizon.
The company made two acquisitions this year, both of companies Lang says could have developed into competitors. It has between 130,000 and 140,000 units under contract and somewhere “north of 170 live developments,” says Lang.
Tremendous advantages
Delivering fiber optic wiring directly to individual homes has tremendous advantages to both the developers and the homeowner, explains Lang. “The developer sees a huge increase in lot values.”
A study by Connexion partner Corning shows that a development with fiber optic infrastructure rather than traditional copper is worth $3,000 to $6,000 more per lot. “Since we put up the capital to put the fiber in, the developer gains 5 to 10 percent per lot without investing more capital.” A typical lot in areas where Connexion is selling goes for from $50,000 to $60,000.
One of the things Connexions has to do, says Lang, is make sure developers market the fiber optics as an amenity. “From the developer standpoint, it makes houses and lots more marketable,” he adds. That includes having the bandwidth to supply high-end phone systems and specialized TV channels to developments such as Florida’s Ginn Resorts. Because they had a lot of European and foreign channels and sports channels covering events they sponsor such as PGA tournaments and NASCAR races.
More speed, more channels, no bill
For the new home or condo buyer, it offers equally impressive advantages. “We light the fiber before they move in,” says Lang. No scheduling hassles, no waiting for service. They move in and the phone, cable TV, Internet and security systems are on.
Not only that, the fiber provides up to 15 times the speed of commercial products and at a discount of as much as a third off retail because they pay through a condo or homeowners’ association.
“And they don’t get a bill,” says Lang, “it’s part of their condo or homeowner association fee.”
On top of all of that, the fiber optic system has safety advantages over copper or traditional phone lines. No one backs over phone company or service boxes. All the fiber is installed underground with no surface bumps or boxes. And no one has to turn off everything when a lightening storm strikes.
Copper conducts electricity extremely well. “In Florida,” Lang notes, “70 percent of homes have had lightening strikes rolled up into the house. It’s 50 percent up here.” Fiber, however, “doesn’t transmit electricity. Lightening strikes the ground, nothing happens,” Lang says.
Lang says Connexions is moving toward “a liquidity event” in the next 18 months to two years, whether via IPO, private equity, or sale.
On the Web: www.cnxntech.com