07.31.2012 by Andrew M. Seybold
However, if they use their in-ground and planned fiber along with other assets and make them available, for a fee, to the private sector, there is a good chance that more of us will have access to better broadband services and the city will gain a new source of revenue.
Over the past few years, the FCC has been promoting broadband to rural America, which is a good thing. Broadband should be available to everyone. Further, it has been issuing reports about the true speed of broadband services in areas where broadband is available and has concluded that it is getting faster. While the FCC has concentrated on rural broadband, several cities and companies are once again looking at providing broadband to more urban areas.
Within the past month, three different announcements caught my eye. The first was the report that downtown Chicago could become a mega-hotspot under plans the mayor has for that city. Next was the announcement by the City of Seattle that the City Council had passed legislation to provide better broadband services to homes and businesses using the city’s fiber network to offer fiber to the home through partnerships with private third parties for high-speed Internet services via the 500 miles of fiber owned by Seattle. The third was the recent announcement by Google that it will be providing fiber to the home in Kansas City. It appears as though cities are ready to both partner and compete with existing ISPs, including local telephone companies and cable providers.
While each of these models is somewhat different, and there are a few models that have not yet been put forth (see below), it is obvious that cities are feeling an obligation to try to improve speed and accessibility for broadband services. In the first case, Chicago, which in 2007 scrapped a citywide Metro-Wi-Fi network because of the costs involved, is preparing to try it once again. The mayor’s plan is to make Chicago into the most connected city by using streetlights and traffic lights for Wi-Fi access points and also extending it into the subway system. At this point this is still only a plan with no definitive dollar amount attached, but Chicago did recently turn its airport Wi-Fi services into free services.
Seattle’s plan is one of the best I have seen. It would provide public/private partnerships between the city and existing or new companies interested in providing fiber or broadband services to the home. It might work like this—The city leases its existing fiber to a company that then provides broadband access to homes and businesses. The city makes money by leasing excess capacity on its fiber network, the company makes money by using that fiber and extending it to homes and businesses and, as a result, the citizens of Seattle end up with faster and perhaps less expensive access to the Internet and maybe even TV and phone services as well.
The system in Kansas City is very different because it is being fully funded by Google, which has changed the model of providing fiber to the home in a number of ways. First, it claims that it will provide fiber to the home at 5 Mbps for free. For $70 a month, you will have gigabit speeds, faster than any other supplier providing broadband services today. Next, instead of buying and reselling the equipment needed in the home, Google is building it itself along with the back-end equipment. Google claims that it will make a profit on this network, and some of its marketing is a major departure from its current practices.
According to a recent article written by Stacey Higginbotham that appeared on the Internet, Google claims that traditional fiber operators pay about $670 per house in installation fees simply to run fiber past the house. Usually, a company such as Verizon runs the fiber and then tries to sign up customers. Google’s approach is to use a form of social networking. It is telling residents that if they want fiber to the home they need to organize their neighbors and then present Google with a “fiberhood” of people who want either of the fiber services. Once the fiberhood is formed, Google will run the fiber and connect the homes in the fiberhood to the network and, obviously, try to extend the size of the neighborhood uptake as it goes along. Google says that by doing this it can limit the number of times a truck and crew has to work a neighborhood. Each house will pay about $300 for the device; a price point at which Google claims it will also make money on the device. In the future, Google says, residents will be able to do a self-install.
All of these ideas have merit though I do question the City of Chicago’s plan to once again attempt to deploy Metro-Wi-Fi. Typically, there is no financial model for doing this and if the city plans to give away free Wi-Fi, it will incur all of the building and operational costs. As mentioned, this plan is still being developed. Perhaps they will run a spreadsheet and realize that with the true costs involved, they would be better off investigating the types of public partnerships Seattle is considering. One of the problems with Muni-Wi-Fi is that it provides really poor inbuilding coverage and is prone to interference. A number of years ago, we were hired by the now defunct Wi-Fi group of EarthLink to test its system in Anaheim, California. They deployed fifty access points per square mile and the system was not providing adequate data speeds or coverage. They then increased the number of access points per square mile to seventy, but the system still proved to be unreliable and was finally scrapped. The list of Muni-Wi-Fi failures is long indeed, and while there are a few success stories, these systems are primarily providing Wi-Fi access in parks and other outdoor areas and don’t really address in-home and in-business services.
Turning to the Seattle model, I think that this should be a model for the future. Where I live, for example, the City of Santa Barbara has more than 200 miles of fiber in the ground, Cox Cable has fiber on poles for its cable TV system but still feeds the homes with cable, and Verizon was going to install fiber to the home but has decided not to (though it has fiber for cell site connectivity and to provide high-speed connections to businesses willing to pay for it). AT&T has no fiber in the city, but NextG, now owned by Crown Castle, has fiber running all over the city and county that is being used for MetroPCS wireless microcells and nothing else at this point. Today we can get 3 Mbps DSL from Verizon and 20 Mbps from Cox, but not much else. However, we do have city fiber, NextG fiber, and other assets that could be used for private/public partnerships to provide us with faster broadband services.
The systems don’t necessarily need to be fiber to the home although that certainly is the preferred method. Various technologies could be combined. For example, from fiber on a pole you could use Wi-Fi or TV White Space wireless to the home, cable as the cable company does, or a combination of all of these technologies depending on the neighborhood. The greatest expense is running fiber all over a city, but if some or all of that has been done and has the capacity, it could easily be leased to others interested in building out systems.
All of this points to the fact that it is time for public/private partnerships in order to provide broadband services to homes and businesses all over America. Perhaps Google would be willing to work with cities, using some city assets and adding fiber where needed, helping the city realize an income while being able to build broadband services faster in more cities than it can on its own. Perhaps Verizon would reconsider its own fiber expansion or it could share the assets with the city. Or perhaps other Internet service providers that are reselling DSL or their own wireless access might also be interested in working on a joint venture to provide more broadband to more homes. There are many different ways in which these types of systems could be configured and put together.
There does not have to be a single business model or way to put these private/public partnerships together, and there are many options. The demand for broadband services by cities, schools, medical facilities, and businesses will only increase over time so it makes sense to me to make use of the infrastructure that is being put into place for these high-usage organizations and expand it to homes and businesses. It is time to rethink existing business models and to look around to see what other assets there are that can be combined to achieve the goal of more and better broadband in an urban community as is being done in the rural areas of the United States.
Something That Will Never Happen
There are still a lot of telephone poles with lots of wires strung on them. Usually, each utility on the pole is assigned a specific area. Electric utilities are at the top, then the phone company, then the cable provider, and, as in this area, companies such as NextG use the bottom location for fiber for their own or their customers’ use. Suppose, just suppose, that by forming private partnerships, all of the wires on the pole (with the exception of electric wires) could be removed and a single large-capacity fiber cable could replace all of them. All of the providers of services down a street would share this fiber and break it out for the service they need where they need it. Fiber has a lot of capacity and it can be used to replace telephone wires, cable services, and most other services that typically serve a neighborhood. Think about how doing that one thing would change what we see when we look down a street.
The City of Seattle, Kansas City, and even Chicago have decided that it is time to make better, faster, and in some cases less expensive broadband available. Cities certainly do not want to get into the business of providing TV, voice, and Internet services to homes since the back-end costs would make it cost-prohibitive. However, if they use their in-ground and planned fiber along with other assets and make them available, for a fee, to the private sector, there is a good chance that more of us will have access to better broadband services and the city will gain a new source of revenue. We all know that at this point in time, any new source of revenue will help both the city and its residents. This seems to me to be an idea whose time has come.