Communications Infrastructure – New England Leadership and Success

We all know that The Red Sox, The Patriots, and The Celtics are examples of successful leadership that has arisen from New England, but another New England super star is its Communications Infrastructure sector. The New England entrepreneurial ecosystem has long been identified with communications equipment, storage, life sciences and software. However, a somewhat less visible, but equally robust segment of our innovation fabric is the Communications Infrastructure cluster. These are the companies that build, own and operate the critical communications network infrastructure that enable today’s modern Internet, voice and mobile communications services. These are companies operating everything from wireless towers to cable systems to telephone / data networks to CDNs (content delivery networks).

A number of the world’s largest and most successful players in this arena were founded, funded, built and continue to thrive in New England. Many of us are well aware of Akamai, the noteworthy leader in the CDN arena that was founded in Cambridge, MA. However, many people are still surprised to learn that American Tower, a company with a market capitalization of $12 billion (even after the recent fun in the public markets), is the largest wireless tower company in the world and was founded and is still headquartered in Boston. American Tower is the undisputed leader in providing physical infrastructure for wireless service carriers, US wireless carriers generated over $100 billion in revenues in 2007. There are numerous other companies that have been founded, built and achieved notable success in the past 20 years in this industry segment in New England. They include cable systems, CLECs (competitive local exchange carriers), tower companies, hosting and data center companies, CDNs, etc.

What is exciting for those of us who have the opportunity to invest with entrepreneurs building new companies in this sector is that there are many successful and experienced entrepreneurs in this industry cluster in New England. These people are constantly seeking to start new companies to build on and expand their experience from their prior endeavors. We see this occur in many sectors where a single company creates many spin outs (with Shockley / Fairchild / Intel being the most notable having spawned hundreds of independent companies). In fact, I have had the privilege to invest with a number of great entrepreneurs with American Tower roots who went on to build highly successful communications infrastructure companies. These entrepreneurs are also very willing to take start-up risk and build companies into big, multi-hundred million dollar enterprises, thus continuing to feed the virtuous cycle of company creation and innovation.

I was prompted to write this post because of the recent closing of the sale of a local tower company that I helped found, Optasite, for over $400 million and the pending closing of another sizable wireless tower company acquisitions totaling over $200 million. These two acquisitions were announced only a day apart from one another. These are notable because they are occurring in the context of a dearth of venture backed exits (in fact, the Optasite sale was the largest venture-backed exit in Q3), but also because the CEOs of each are American Tower alumni (one of whom is Jim Eisenstein who I had the privilege to work with as an investor in Optasite) but also because Optasite is located in Westborough and Lightower is located in Boxborough.

This is good news for the New England entrepreneurial ecosystem because it shows that we have another strong, high growth cluster that is driving innovation and giving rise to multiple spin out companies that will expand the sector and its strength in our market (and I hope provide the opportunity for more great investments

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