Scott Widham, CEO of Alpheus Communications, joins us to talk about the telecommunications business and the infrastructure that goes into keeping us communicating.
Please excuse any typos in this hasty transcript.
Matt Register: Hey guys, welcome back to Texas Business Radio. Go ahead and get your questions in. 844-814-8144 is our 24 hour call in line. 24 hour call in line, guys. That means call now. Call tomorrow, call at 3:00 o’clock in the morning. Really doesn’t matter to us. We’re going to get the experts on here to get those questions answered. So, if you missed any portion of this, Texasbusinessradio.com, you can get links to every one of our guests. You can see the entire thing in beautiful high definition video. And so we’ve gotten a wealth of information there. So, if you haven’t done it, you need to go there. I’m your host Matt Register. Jay Curry had to step out. He’s going to be back here in a minute. In the meantime, I don’t know about you but it seems like every single year, I have in my businesses have a bigger and bigger requirement for bandwidth. And, you know, there is an entire industry out there in supplying that Internet connection to your businesses, to your homes. And one of the big ones here in Texas, Alpheus Communications is some of these people, that is a company, that comes and they will lay the fiber optic line. They will provide an Internet connection into your company. It is a vital service. If you don’t have it, I promise you you’re going to notice the second that it goes down. And so, Scott Widham is the CEO of Alpheus Communications. Scott welcome to the show sir.
Scott Widham: Thanks Matt. Happy to be here.
Matt Register: So tell me a little bit about Alphaeus and what you do and who do you do it to.
Scott Widham: Sure. We’re a Texas based, actually Houston based, regional telecom company. We have a 6,000 mile fiber network that goes around the state of Texas and we have a really dense fiber assets in what’s called the dash markets, Dallas, Austin, San Antonio and Houston. Were full service telecom company that offers a wide area network, managed services, VOIP and colocation facilities to our customers.
Matt Register: All right. And colocation we were talking quickly during the break. Colocation facility, let me see if I get this right, if I remember, right. So, colocation facility is a customer server in your facility that you maintain but its their equipment. Is that accurate?
Scott Widham: Right. If you want to maintain your server in a redundant resilient environment, a data center. We have seven data centers, one in Fort Worth, two in Dallas, three in Houston and two in Austin. All right good. Well, your main business though is, is that pipeline. Right. Is that cable that goes in and provides that Internet connection is that accurate?
Scott Widham: Right. Nirvana for us, is having a fiber optic connection to our end user. That way we can control the whole user experience but in our business we’re all networks and networks. So if somebody has 15 locations, I’m going to have to connect to AT&T or Verizon or another provider to provide that access.
Matt Register: Okay and so how does that work? You just have agreements between yourself, that they’re going to have to use your cables at some point. You’re going to have to use there’s. And you just kind of have a, you know, co… cooperation agreement there?
Scott Widham: Yeah. We call it “quapetition”. In other words, will have an interconnection agreement with another carrier and then we’ll terminate access with them or they’ll terminate access with us.
Matt Register: That’s my new favorite word for the day. Call up co-op, “quapetition”.
Scott Widham: Another $5.
Matt Register: Yeah, I like it. I really do like it. Now, technology is coming on to the point that… And since it started that exponential curve, that doubling of, you know, computing power every 18 months is continuing and that curve is getting pretty steep now. Right? What are you seeing as far as requirements for bandwidth and requirements for speed of an Internet connection now versus five years ago?
Scott Widham: Well, I’ll give you a couple examples; in 2015 versus 2019, the video IP traffic will be nine times greater, total Internet traffic in the United States will be three times greater by 2019 from what it is now. So there’s an insatiable appetite for bandwidth and having fiber to the end user allows us to give them as much bandwidth as they want. Whether it’s a gigabit, 10 gigabits and 100 gigabits.
Matt Register: OK. Well at some point the, the demand outpaces your ability to lay, lay fiber in the ground or you guys increasing your ability to lay fiber in the ground.
Scott Widham: Well, we’re adding about a building a day in Texas, right now, with fiber. But once you have fiber, than you can, there’s really no limit to the bandwidth that you can offer. Just a matter of the, the cost of the electronics.
Matt Register: OK, I got it. I didn’t realize that. So once you have the fiber there, you have the ability to scale that fiber optic line up to the point that it can handle a whole lot more traffic.
Scott Widham: Right. When we started the company, we were offering T1 services. Which is one megabits. Then over time, we offered an Ethernet over copper, capability that allowed us to go to 40 megabits. Now we have fiber. Where we can offer gigabit Ethernet service and 10 gig and 100 gig. Whatever we need to, whatever the customer wants, we can deliver.
Matt Register: Oh, wow. So it’s a function of electronic. Same, the same wire, the same, same fiber optic cable and a whole lot more traffic. That’s interesting. I did not, I didn’t realize that. Talk to me about the regulator, regulatory environment here.
Scott Widham: Well, it is less than it used to be. The federal government emasculated a lot of the power from the state PUC’s.
Matt Register: OK.
Scott Widham: So, we are regulated by the federal government but not so much by the state of Texas.
Matt Register: OK. Well you guys have been a fast growing company. And you, I mean a very sizable company. Talked to me a little bit about, as the leader of this company, as it’s gone, as it’s grown, what have you done different, What do you have to do differently now than, that you didn’t, whenever, early in your career?
Scott Widham: Well, I think when you buy a company it’s, there’s only a few things a CEO has to do but he has to do them really well. One is to set a strategy for the company. One is to put together an operating business plan that gets approved by the owners or the board of directors. And probably most importantly is to put together a good management team. And that’s the most important thing we do.
Matt Register: No doubt. Right. Okay. So, you’ve gotten good at identifying, bringing on board and ensuring everybody’s pulling the same direction.
Scott Widham: Yeah and this is the fifth company I’ve been CEO of. And what I’ve been able to do, is bring along my management team to new projects. So, they’ve been able to create some wealth along the way, as well. Which is really gratifying.
Matt Register: Yeah, that’s good. Kind of like a football coach bringing his team with him, right, when he, when he ends up changing, changing companies. How do you end up preparing, you know, ensuring that you are working on, on the business not in the business? Right? Because that’s a big challenge that a lot of our CEOs end up having. Right? You have to stay above the tactical limit and work on the strategic.
Scott Widham: Yeah. So, everybody has a role in the company. And what I do is sit down with my direct reports and have a contracting session on a fairly regular basis. And then we agree on what task are to be performed and then we have sophisticated management tools and financial tools that monitored that performance. As long as things are going well, I believe in pushing the decision making as close to the customer as possible and leave them alone, let them do their job.
Matt Register: Sure.
Scott Widham: To the extent, things are not going so well, then we have another discussion.
Matt Register: Well, I got it. And you’ve got to get involved or your direct reports have to get involved, as soon as something is not going correct. What is coming next? I keep hearing about other technologies that are coming out. Right? Some cell technologies, 5G. What is the next generation of this?
Scott Widham: Well, you’re right. 5G is coming, I think in 2020 there will be some major roll outs. There is a number of test markets going out now, including Houston with AT&T. What wireless means to us is just less wire. In other words, I think 5G is going to allow access to about 12 customers. So, it’s still gonna need fiber to those connections.
Matt Register: Okay. So, one node gives you 12. So, there’s going to have to be a tremendous, My wireless isn’t going to, isn’t going to wipe out your business model at all. Right?
Scott Widham: No, in fact, we’re looking at some wireless applications where we’ll use Wi-Fi to the end customer. So we’re all, we all shop the same stores, we all use the same technology.
Matt Register: OK. No, that’s absolutely interesting. Alpheus.net is the web site. Right?
Scott Widham: Yep.
Matt Register: All right. Got it. So, Scott Widham is the CEO of Alpheus Communications, LLC, out of Houston. Hey, thank you very much for joining us.
Scott Widham: Thank you Matt. Enjoyed it.
Matt Register: All right, absolutely. Hey we’ll be back right after this guys. We got to pay a couple bills. We’re going to be back. You don’t even have time to go anywhere. And we’re just getting warmed up. Don’t miss it. We’ll be back.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.