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Just to give everyone a refresher on the biz model that MFNX is following. They are building out dark fiber networks in all the top tier cities as well as a handful of international metro areas. There are several points to remember when looking at this company.

1) They are NOT a service provider. They build fiber but they don't sell any telecom services. You can liken MFNX to a real estate company building apartment buildings in high rent areas. They build dark (i.e. meaning no optronic equipment, just the fiber strands) fiber networks in dense metro areas connecting most buildings in a given area.

a) this means that everyone wants to buy fiber from them (i.e. they are not a competitor).
b) The economics of selling dark fiber are huge once you dig the trench for the cable. MFNX digs one trench and puts in a fiber cable containing 400-800 strands of fiber. Each one can carry up to OC-192 bandwidth plus multiplexing depending on the optronics the customer decides to put on there.
c) I estimate that MFNX will recoup their entire infrastructure investment by selling less than 1/3 of the fiber strands...the other 2/3's is GRAVY!!!

2) No one else is laying dark fiber similar to MFNX. MFNX was first to market and it's difficult to justify overbuilding (especially at a cost of $1mm/mile in many cases) such a robust network. Most would rather buy from MFNX.

a) CLEC's are building general fiber loops in cities but do not have many of the fiber routes that MFNX has built. All of the CLEC's are buying fiber from MFNX to connect their loops to their customers.
b) Corporate customer's are generating significant demand for MFNX fiber. (i.e. an investment bank, bank, or other financial institution that wants connections between it's offices that are secure, separate, and fast.) I think this will start to rub off on retail as well to connect all outlets in a particular city.
c) Even the Level 3's and QWST's of the world are buying fiber from MFNX because it doesn't make sense to dig again. Also since MFNX's fiber is dark they can implement whatever technology they need to match the rest of their network.

3)The ABOV acquisition has been questioned as a diversion from their core biz model but really it's just an extension.
a) ABOV has one of the most ubiquitous networks for connecting to the internet. Many of the smaller ISPs that lease fiber to connect to the internet would rather buy from ABOV because they get cheaper fiber, more bandwidth and interconnect agreements to boot. (ISPs normally have to pay for those agreements).
b) ABOV is the MFNX of ISPs. With the advent of ISP/CLEC combinations it makes sense for MFNX to own ABOV.

4) MFNX management has strong construction experience which allows them to execute rather flawlessly in the area of fiber buildouts as well as route planning and rights of way attainment.

In summary, MFNX is probably one of the best ways to play the last mile solution. They call themselves the "arms dealers" of telecommunications providers becuase they are a neutral party. They need to be to sell that many fiber strands! Also keep in mind that fiber in the local markets, as opposed to long haul is very scarce. This makes MFNX the only game in town.

Hope you all have a better understanding of what MFNX's biz model is now. I think there is a huge misperception in the market that MFNX is a CLEC. I would classify them as real estate.

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