Would you like to own and install fiber to your home?

There are many examples of municipal ownership of access networks, but ownership and control could also be pushed out to home and building owners.

Wu and Slater discuss this alternative in a recent paper and a test is underway in downtown Ottawa, Canada, where fiber has been deployed to serve a 400–home neighborhood, but a service provider has not yet signed on.

The Norwegian telecommunication company Lyse Tele reports that 80% of their 130,000 customers have agreed to dig their own trenches and bury their own fiber in exchange for a discount on installation. This has been good for business -- only .2% of customers who have installed their own fiber switch to another service provider.

While this sounds good, there are questions. Who owns the fiber, Lyse Tele or the home owner? Who controls the fiber -- can their customers reach competing services or are they locked in to Lyse Tele?

I have seen estimates that it costs Verizon about $1,000 to connect a home. I would gladly pay that if it meant I owned and controlled the fiber and could get connectivity from competing ISPs over it. I would consider it an investment -- increasing the value of my house -- not an expense.

I own my own sewer, water and gas lines and call a plumber when there is a problem. I would be happy to own my fiber.

Four excellent videos on municipal fiber networking

We have discussed infrastructure ownership options, and Benoit Felten has posted four excellent videos on municipal fiber networking. Three are interviews of people who gave talks at the recent Freedom to Connect Conference: Terry Huval, Tim Nulty and Bill St Arnaud. The fourth is a presentation given by Felten in New Zealand last month.

1. Terry Huval, Director of the Lafayette, Louisiana Utility Service fiber to the home project.

Huval discusses the motivation and business model that gave rise to the project, their legal battles (3 years of fighting until the State Supreme Court ruled unanimously in their favor), the services they offer, and the applications they will be offering in the future.

2. Tim Nulty, Project Director, East Central Vermont Community Fiber Network (ECFiber).

ECFiber plans to build rural fiber connectivity to 21,866 households in and around 22 Vermont towns. (So far 21% of those households have pre-registered). Nulty presents data on costs and revenue, and concludes that the network is a viable business. They will offer both retail and wholesale Internet service over the network, and he explains why a pure wholesale network like that in Stockholm makes sense in Europe, but would be defeated by the incumbents in the US.

3. Bill St Arnaud, Chief Research Officer at CANARIE, Canada's research network with a mandate to develop next generation networks, applications and services.

St Arnaud describes the "G-commerce" model, which combines connectivity with energy savings and pollution reduction. Installation of fiber to the home will be financed by a 1-2 cent per kilowatt hour increase in electric bills and energy-cap savings from reduced power consumption as high speed communication substitutes for transportation.

4. Benoit Felten, Senior Analyst, Yankee Group.

Felten gives examples from France and the Netherlands showing that network sharing is profitable even for incumbent ISPs. Take-up rate is more important than average revenue per customer, and the fastest way to convert 100% of the population to fiber is sharing it among service providers. He outlines and presents examples of several business models ranging from passive sharing of access and rights of way to offering retail service.

Why is connectivty in Stockholm so much faster and cheaper than in US cities?

We've been discussing US broadband policy and the stimulus package, and this table shows the cost of fiber-based, residential Internet service in several cities (Brough Turner provided the European and Asian data):

Where?	Monthly cost	Uplink (Mbps)	Downlink (Mbps)
Stockholm	$11	100	100
Seoul	$24	100	100
Hong Kong	$35	100	100
Tokyo	$61	100	100
Amsterdam	$127	100	100
Lafayette, LA, Municipal	$58	50	50
Lafayette, LA, Cox Cable	$140	5	50
US, where available, Verizon	$145	20	50

Can we explain the large speed and cost differences?

The Cox Cable offering in Lafayette, Louisiana seems to be the worst deal. It is the slowest and only five dollars a month less than the Verizon network. The municipal network in the same city is faster and cheaper. The Cox network reaches more neighborhoods than the municipal network, and they are forced to compete with temporary sale prices.

Stockholm is at the other extreme. They have a municipal network that reaches every block in the city. Unlike Lafayette, they do not offer consumer service over their fiber, but lease network access to anyone who would like to offer service. The Internet service providers, including incumbent telephone and cable companies, compete on an equal footing.

As a result, there are many competing service providers in Stockholm, and, as Turner points out, the city owns the expensive, long-life assets like fiber, rights of way, conduit, and tunnels, and the service providers own the electronic equipment that is relatively cheap and is upgraded frequently as technology improves.

Many factors determine the cost of Internet connectivity, but the ownership model is significant, and it seems the Stockholm model is superior to those in the US.

Note that analysts at the OECD also endorse the Stockholm ownership model, writing that:

Municipal networks can play an important role in enhancing competition in fibre networks. If these develop, governments should encourage them to be open networks, that is providing dark fibre to service providers rather than becoming themselves service providers. Nor should the existence of a municipal network providing dark fibre mean that investment in other fibre networks in that municipality should be prevented.

Should some of our broadband stimulus funds be used for Stockholm-style municipal networks?

Click here for a paper with more on this topic.

Click here for a PowerPoint presentation on this topic.

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Update 11/10/2014

Stockholm reports 19 years of financial and user success. The Stokab report should be required reading for all local government officials.

The FCC national broadband plan -- can the Internet help?

The American Recovery and Reinvestment Act of 2009 directs the FCC to develop a national broadband plan within one year. This is reminiscent of the energy policy task force President Bush established during his second week in office. Bush's task force operated in secret, but President Obama has promised us an open and transparent administration, using the Internet as one tool.

It would be a shame if large, incumbent Internet service providers -- telephone and television companies -- dominated the FCC broadband planning process the way large energy companies dominated the formulation of the Bush energy policy.

Before deploying next generation access networks, we should consider new technologies and ownership and business models, but that will not happen if the incumbents write the plan.

Can the Internet be used to open the FCC planning process, to take it beyond the "beltway" and its lobbyists? The administration has established the Recovery.gov Web site to inform us on stimulus spending. How might the FCC use the Internet to open its broadband planning process?

Recovery.gov is Web 1.0; Stimuluswatch.org is Web 2.0

The President has signed The American Recovery and Reinvestment Act of 2009, which includes $7.2 billion for broadband access. You can see a brief summary of the bill here.

As we have seen, the Obama administration hopes to use the Internet for transparent, two-way communication with the public. To this end, they have launched the Recovery.gov Web site, which will be continuously updated, telling us "how, when and where" the recovery funds are spent.

As of today, Recovery.gov is definitely a Web 1.0 site -- it summarizes the Recovery Act, requests comments using an email form, and asks us to check back frequently for data on spending. They don't even have RSS feeds.

Contrast that with Stimuluswatch.org, a Web 2.0 site. Stimuluswatch began by importing a database of "shovel ready" projects that was posted by the US Conference of Mayors. Users can search the database by city, keyword and project type, and view the project descriptions and estimated cost and number of jobs created.

But, the main purpose of the project database is to organize user input. Users who are familiar with a particular project can drill down to the project page and:

• Make neutral, factual changes by editing its wiki page
• State opinions and debate the value of the project by posting comments
• Share comments with friends on Facebook
• Vote on whether or not the project is critical

(Check this video for a more complete description of navigation and user input).

I checked my city, Los Angeles, and the results were sobering. The database includes 321 projects with a total estimated cost of $7.3 billion, creating and estimated 82,341 jobs. Of these, only 11 projects had more yes the project is critical than no votes, and they accounted for only 3% of the cost of all proposed projects. Obviously citizen votes are only one factor to consider in selecting projects, but this indicates that we need to be selective if we are to avoid "porkwatch.org."

It sounds as though the administration plans to use Recovery.gov to let us know what they have done, but Stimuluswatch.org could be used in deciding which projects should be funded. That could be done by extending the database to include requests for Federal grant applications that are actually submitted now that the stimulus package has been approved.

Stimuluswatch.org was conceived of and built in under two months -- the administration should be working with them.

Let's slow down on broadband stimulus in order to consider ownership alternatives

The economic stimulus package is moving through congress. Republicans are fighting it on the grounds that more tax cuts are needed and we need more time to make sensible investments. I agree that we need to slow down on broadband stimulus to consider ownership alternatives. Here is the "elevator ride" pitch:

• The current strategy of privatization with hope for competition under independent regulation has failed in many developed and developing nations. In the US, regulators have been unable to create competition and our infrastructure has suffered.
  
• The large broadband incumbents have benefited from public subsidy, have failed to live up to commitments, and have used their power to defeat attempts to create competition
  
• The US has little fiber in the access network today, but will have fiber to all urban and many rural homes and buildings in the long run. The question is not whether we are going to deploy new infrastructure; the question is “who will own it?”
  
• We should take the time to evaluate decentralized alternatives to near-total ownership by the incumbents. Local governments, cooperatives, small ISPs, and home and building owners might own parts of our next generation infrastructure.
  
• This evaluation can be fast and cheap. The work of the National Science Foundation in designing and creating NSFNet and connecting universities, colleges and foreign networks provides an excellent example of a small government staff calling on experts from academia and industry to design a network and a strategy for deploying it, followed by procurement via competitive bid.
  
• We need immediate economic stimulus, but that can come from tax cuts and investment in many sectors as well as broadband.
  
• Nobel economist Paul Krugman acknowledges the need for rapid stimulus, but in this article he says we should downplay the “jump start” metaphor and focus on job creation through infrastructure investment over the next four plus years.
  
• We will be living with the fiber and high-speed wireless infrastructure we build today for many decades. We will also be living with its owners.

Click here for a paper with details on the above.

Click here for a PowerPoint presentation on the above.

Broadband policy -- how can we catch up?

The US government funded the development of the Internet, but our infrastructure has fallen well behind many other developed nations. We have little fiber in our access networks, and have failed to establish competitive Internet-service markets.

President Obama has stated “As we renew our schools and highways, we'll also renew our information super highway,” and set a goal of deploying next-generation broadband:

(To) work towards true broadband in every community in America through a combination of reform of the Universal Service Fund, better use of the nation's wireless spectrum, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives. America should lead the world in broadband penetration and Internet access.

Obama intends to involve the government more heavily in planning, subsidizing and procuring Internet infrastructure.

If our only concern were rapid economic stimulus, we could subsidize today's telephone and cable companies, but they have not served us well. We need to consider long run technology and the structure of the industry as well as quick stimulus. The infrastructure we install today will be with us for decades.

For more on this topic see this article or this PowerPoint presentation.