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Telecom firms thrive in a Rocky Mountain high

Level 3 Communications started out small, spinning off from an Omaha, Neb.-based construction company in 1998.

Back then, it was installing fiber optics for other telecommunication companies. Today, it is an $8 billion global telecom company, serving 60 countries worldwide. It has 10 million fiber miles and 50,000 global customers — and is just one of the major broadcasting and telecommunications companies that calls Colorado home.

So why did it choose Broomfield as its home base?

“When we got into this high-tech game, Colorado was of interest to us,” said Tracy Shaufler, Level 3’s general manager for Colorado and Wyoming. The company searched for the perfect location to build its headquarters, vetting big-name tech cities such as San Jose and Boston before settling on Broomfield. It ended up choosing the state because of its high quality of life and the ability to recruit top talent, she said.

A lot of high-tech companies migrate to Colorado because it has a large talent pool of engineers and innovative thinkers, she added.

Tom Clark, chief executive of the Metro Denver Economic Development Corp., said consolidation in the telecommunications industry helped create jobs in Colorado. According to Metro Denver EDC, there are 41,970 broadcasting and telecommunications workers in the nine-county region, which is the sixth-highest employment concentration out of the 50 largest metropolitan areas. It is also the largest region in the nation to offer “one-bounce satellite uplinks due to its unique geographic location in the Mountain Time Zone,” according to the EDC.

About 2,560 broadcasting and telecommunications companies call Colorado home, with an average wage of $106,060 a year.

Telecom companies come to the Denver metro area for its central location, large concentration of high-tech workers and entrepreneurs, a lower cost of doing business and a pro-business environment and competitive tax structure, according to the EDC.

Zayo Group, DISH Network, Liberty Media, Cisco Systems, DirecTV and Comcast are just a few of the big names in broadcasting and telecommunications that have a regional presence.

“There’s no place anywhere in the West where you can get this incredible volume of product through all the pipes as you can here in Denver,” Clark said. “All of the major fiber optic comes through Denver. There’s no place else it is going to go. Not through Casper or Albuquerque. That’s a huge asset to us.”

He pointed out that Level 3 was a startup when it arrived in Denver and now it is a Fortune 500 company.

“It was created to do one thing — that was to deal with the problem of how much pictures were slowing down the internet in the late ’80s and early ’90s, and damned if they didn’t stay around to be a Fortune 500 company,” Clark said. “They were here for the pipes and then they built their own pipes. They build their own network out, which they have done very successfully.

“The biggest driver for us is the tech environment. There are some really sharp folks interested in doing business in Colorado,” Shaufler said. “Some of the savviest companies sit here in Colorado so the employment base is very strong for us.”

She added that Level 3 has many great partnerships in technology in Colorado, and new companies are popping up all the time.

“We think this is just the beginning of a very big time of growth for Level 3,” she said. There is a constant demand for bandwidth because “everything is connected to the internet at this time.”

Level 3 continues to diversify its offerings. Shaufler said her company is interested in a broader portfolio across several different disciplines, including security and ethernet.

Shaufler believes that telecom will continue to be a fairly competitive industry to be in and Colorado will continue to be a telecom and broadcasting hub.

“For us, we see Denver as being a second Silicon Valley. Folks are done with that environment. They like getting out to our lifestyle, the opportunities we have in our state to really enjoy a better work life balance,” she said. Add to that the state’s technology incubators in Boulder and Denver, and prospective companies realize there is a great appreciation for innovation in this state.

In terms of competition, Shaufler said “there’s lots of reasons why having multiple carriers in the marketplace makes sense. Level 3 is uniquely positioned to be a standout market leader.”

Boulder-based Zayo Group Holdings, Inc. is another Colorado telecom success story. The company, which was founded in 2007, noticed “dozens of fiber orphans — companies that had fiber in isolated markets — were being ignored by private equity investors and strategic acquirers,” said Matt Erickson, co-chief operating officer of Zayo in May. “Our strategy was to consolidate them into a new type of telecom provider — one focused on providing communications infrastructure to content, cloud, big data and wireless carriers.”

Zayo expects to grow 20 percent each year for the next three years. The company, which went public in 2014, has surpassed $1.4 billion in annual revenue. Its fiber footprint exceeds 110,000 route miles and extends to more than 35 countries.

In 2015, Comcast opened a new office in downtown Denver, very close to Union Station, employing about 200 employees.

Matt McConnell, senior vice president of Comcast Wholesale, said last year that the Denver office “provides a state-of-the-art environment where our employees can collaborate and develop services that empower our customers to navigate the digital world. The workspace offers the latest technology, dynamic workstations and a design that fosters a spirit of innovation.”

In May, Comcast announced plans to open a Fort Collins customer service center, which will employ about 600 employees, and in June the company announced it would move 1,000 employees to a new location in Centennial.

Despite consolidation in telecom and broadcasting over the past few years and that the jobs provided in the area keep changing, Clark said, a lot of innovation out there will change how jobs are done. Using agriculture as an example, he said, in the early 1900s, 40 percent of Americans were engaged in farming.

“Farming is the most productive industry in the United States and getting better,” he said. Satellite-driven tractors and other innovations have cut down on the number of laborers needed to produce food. On the other hand, the food-service business is booming.

“The diversification of what we eat and how it is prepared and how it is delivered, there is massive growth in those,” he said. “That’s what we look at when it comes to the Comcasts of the world. Those jobs will get smaller. We will do more programming of our sets like they do on Xfinity right now.”

Instead, the industry will continue to move and evolve in other directions to keep up with technological innovations — which will, in turn, create new jobs.