UTOPIA Trailblazing New Opportunity For Customer-Owned Fiber

[Some excerpts from Geoff Daily's excellent blog on Broadband. As you
know this has been a model I have been advocating for some time, and
have tried to deploy in Ottawa with additional twist of bundling the
cost with the customer's energy bill -- BSA]

Geoff Daily's Blog: http://www.app-rising.com/

My blog: http://free-fiber-to-the-home.blogspot.com/

UTOPIA Trailblazing New Opportunity For User-Owned Fiber

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http://www.app-rising.com/2009/11/utopia_proving_new_option_for.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+AppRising+(App-Rising)&utm_content=Google+Feedfetcher

An exciting development has occurred recently in the world of fiber
deployment. A new model is emerging in Brigham City, a city of less
than 20,000 in northern Utah, for how user-owned open fiber networks
can be financed and deployed.

It used to be that the only way you could get fiber was if you were
lucky enough to have a private provider lay it or to live in a city
that did it itself. Today in Brigham City, for $3,000 you can buy your
own fiber. And in fact more than 1,600 local residents have already
bought in to this new opportunity.

With that fiber they'll get access to UTOPIA's competitive and
growing ecosystem of service providers, where they get to choose what
services from what providers they want running on their pipe.

While this may sound radically different from how fiber has been
traditionally deployed in the US to date, user-owned open fiber
networks have already been a big success in Sweden, helping them wire
remote mountainous communities with world-class broadband
infrastructure.

We also need to realize how potentially brilliant the open fiber
concept is for rural America because of how it allows for competition
to happen between service providers on a single pipe. With open fiber
you can make sure that everyone benefits from having access to a
competitive marketplace of communications services.

But I'm even more excited about what UTOPIA's new model could mean
for the future of fiber deployment.

The biggest problem with the economics of deploying fiber is that you
have to carry a massive debt load and begin paying it off before much
revenue starts coming in. Plus you have to invest a lot of money into
neighborhoods without any real idea of how many people are going to
sign up for service.

The user-owned model totally changes these dynamics. First off, by
having users pay for their own pipes you disaggregate most of the
debt. Just look at Brigham City. They're building a $5.5 million
network and the city's only putting up less than $700,000. So no
massive debt load for the city (or a private provider for that matter)
to carry.

The second major piece of this is that UTOPIA's going to have
built-in take-rates when they build out neighborhoods. Plus churn
should fall to zero since people own their pipes.

Basically the way I see this is as the possible beginnings of a new
third model for fiber deployment in the US. You no longer have to wait
for a private provider to make the investment, or for your city to
figure out how it can overcome all the roadblocks and then actually
execute effectively. Instead users who want service can band together
and find a way to get it now rather than waiting twenty years for
someone else to figure out how to do it.



They have developed a special assessment area model, though, that
allows homeowners to commit to a $25 a month payment over 15 years to
spread out the cost over time.

Another potential trouble spot is how to deal with renters who want
service but landlords who don't want to pay to have it installed.

But while there are questions still to be answered, the keys for
right now is that this model has worked elsewhere, and now at long
last we have someone willing to step out and see if it can work here
in the US.

So I say to UTOPIA: best of luck as you continue on these endeavors!
The rest of the country is watching, and we're all hoping you succeed
as there are millions of us that wish we could get our fiber now but
can't.

And to Brigham City: Kudos to you all! We are all cheering you on,
inspired by your commitment to getting yourselves wired with the most
important infrastructure of the 21st century.




Update on the Ottawa pilot

http://www.techmediareports.ca/reports/content/ottawa_fibre_to_the_home_expe
riment_hits_a_snag

Lessons from the land of cheap broadband in Hong Kong

[Excerpts from CNN article. While HK density is a factor, it still does not account for the huge price differential in Internet pricing between HK and elsewehere in the world. I love the quote "The telecom industry tends to commoditize people. Our strategy is to commoditize bandwidth". - BSA]

Lessons from the land of cheap broadband in Hong Kong

http://brainstormtech.blogs.fortune.cnn.com/2009/11/13/lessons-from-the-land-of-cheap-broadband/?source=yahoo_quote



City Telecom's 400,000 customers pay $13 a month for 100 megabit synchronous broadband. And they get a money-back guarantee: If they don't clock 80% of the promised speed, the company pays them twice their monthly fee.



If you live within coverage area of Verizon's FiOS
service (VZ
), you pay as much as $150 a month for up to 50 megs downstream and 20 upstream.

How can City Telecom possibly offer service that's more than twice as fast at less than 10% of the price?

Density is a blessing

It's partly geography and partly vision. While Hong Kong has 7 million inhabitants, only a small fraction of the island's mountainous terrain is developed, which means everyone basically lives on top of each other. The population density is 16,380 people per square mile – versus 640 in Japan and 80 in the US. That makes every customer far cheaper to serve. "We have a phenomenal network built at $200 per home. Verizon is talking about a cost of north of $1,000 per home,"
Lai says. "We built ours at one-fifth the cost."

Of course building the network in the first place required vision.
City Telecom was founded 17 years ago as an international calling-card company by two cousins who plowed in 100,000 Canadian dollars to get started. They could have leased lines to get into Internet-service business the way many carriers do, but that would have meant encountering the same last-mile bottleneck. So, they built their own $400 million network over a decade.

And now the company is on a tear. The largest IP service provider on Hong Kong, PCCW , has about 1 million customers, according to Lai, but is growing at a fraction of the pace. It added only 3,000 in the last six months, compared to 41,000 for City Telecom. PCCW recently slashed its prices to match City Telecom, but still can't come near the speeds. But can City Telecom really make a business out of cheap broadband?

Innovation trumps incumbency

Lai insists the company already has. "The network is cash flow positive since 07. We're debt free with 10% revenue growth and 30% EBITDA growth," he says. "Our stock is up 200% in 12 months, and the market is starting to realize what we're doing."

All that success, Lia adds, is a result of having a Big Hairy Audacious Goal and doing everything possible to achieve it. "The telecom industry tends to commoditize people. Our strategy is to commoditize bandwidth, to make 100 megabits the industry norm in Hong Kong," he says. "Our plan is to win by offering the best service at the lowest possible cost structure. Thirteen dollars is not a lot, but if you scale it and drive your cost base down, it's a beautiful business to be in."

If only some US telecom executives felt likewise.

Switzerland Government Gets it

Switzerland Switzerland



Wednesday, 7 October 2009



FTTH round table 'making progress'

The Swiss Federal Office of Communications (ComCom) has revealed that
round table discussions on the deployment of fibre-to-the-home (FTTH)
networks are producing concrete results. According to the regulator the
major players are now in agreement on uniform technical standards,
meaning that there are no technical barriers to the rapid expansion of
the fibre network. A consensus has also been reached on coordination,
which will prevent the parallel construction of new networks by laying
multiple fibres in every building (known as the multiple fibre model).
At the same time the participants at the round table have agreed that
all providers must have access to the fibre-optic network under the same
conditions, so as to protect end-users' freedom of choice. The
participants drew up further recommendations for standardised network
access by services. Thanks to an open interface, service providers will
enjoy network access to customers at all times via network operators.
If, at a later date, the customer opts for a different service provider
on the same fibre-optic network, the switch will be possible without any
technical complications.

The roundtable discussions involve cable network operators, telecoms
companies and electricity utilities. Further roundtables and working
groups will be held to clarify points. ComCom will also examine whether
new regulatory measures are needed to govern FTTH deployment, with the
aim of reporting to parliament by mid-2010 at the latest.

New Zealand Government gets it

The NZ government has taken a major step forward in building a structurally separate FTTh network

http://www.med.govt.nz/templates/ContentTopicSummary____41902.aspx

The government's overall objective for the ultra-fast broadband investment initiative is to accelerate the roll-out of ultra-fast broadband to 75 percent of New Zealanders over ten years, concentrating in the first six years on priority broadband users such as businesses, schools and health services, plus green-field developments and certain tranches of residential areas.

This government's objective will be supported by government investment of up to $1.5 billion, which is expected to be at least matched by an equal amount of private sector investment, and will be directed to open-access infrastructure.

On 16 September 2009, Communications and Information Technology Minister Hon Steven Joyce announced the final design of the government's broadband investment initiative [link to Beehive website].
Key highlights

Key highlights of the government’ proposal include:

* An open, competitive partner selection process.
* Government investment will be directed to an open access, passive fibre network infrastructure.
* A new Crown-owned investment company ('Crown Fibre Holdings') will be operational by October, which will carry out the government’s partner selection process and manage the government’s investment in fibre networks.
* Crown Fibre Holdings will establish with private sector partners a 'Local Fibre Company' (LFC) in each region, to deploy fibre network infrastructure and provide access to dark fibre products and, optionally, certain active wholesale Layer 2 services.
* The Government is open to national proposals and proposals aggregating any combination of LFC regions.
* Expansion from 25 to 33 candidate coverage areas based on the largest urban areas (by population in 2021).
* LFCs will be required from day one to be open networks facilitating access to their infrastructure on an equivalent basis to all users.
* LFCs cannot be controlled by any party who also operates as a telecommunications retailer.

The regulatory and telecom policy issues of PON versus home run fiber

[Here are 2 excellent pointers on the telcom policy and regulatory issues with respect to PON versus home run fiber. As governments around the world accelerate plans to deploy next generation broadband there is clear desire by many to ensure greater completion and create a level playing field for new entrants. Most incumbents prefer to deploy various forms of PON as it keeps them in control of the network (and the customer), even if they are obligated to provide some sort of open access. PON is also seen as marginally cheaper than point to point home run fiber (but with new optical ribbons that is debatable). Regulators on the other hand, especially in Europe, see point to point home run fiber as way of promoting facilities based competition and ensuring structural separation between service providers and infrastructure. Home run fiber also opens the door to new business models such as condominium fiber, customer ownership of the last mile (Google’s Homes with tails) and Green Broadband where the cost of fiber and service is bundled with the energy bill. Thanks to Prashanta Mukherjee and Benoit Felten for these pointers – BSA]

Regulating Fiber Access Networks in New Zealand
http://www.prashanta.com/assets/Uploads/Highlights-assets/2009-8-20-Regulating-Fibre-in-NZ-Paper-Web.pdf

Point to Point versus GPON: A comparison of two optical network access technologies
http://www.fiberevolution.com/2009/08/gpon-vs-p2p-comparison.html

My testimony at FCC broadband workshop

[The FCC has been tasked to develop a national broadband strategy and are holding a series of workshops. I was invited to give a short presentation on some of the ideas we have been working in Canada and elsewhere. Here are my speaking notes – Bill]

www.broadband.gov

My presentation and background slides can be found at
http://www.slideshare.net/bstarn/fcc-broadband-workshop


Good morning

First all I would like to thank the FCC staff inviting me to give speak at this event and I applaud their initiative in this area. These workshops will be very critical in defining a national broadband vision not only for the US but other countries around the world as well


I am Bill St Arnaud Chief Research Officer for CANARIE

CANARIE is the Canadian equivalent of Internet 2.

Our mandate is a bit broader in that we have been tasked to advance Canada’s telcom and Internet networks and applications

We work closely with organizations like Internet 2, NLR , Educuase in the US and institutions like UCSD

As everyone knows the Internet originated with the R&E community.

Not many people realize however that R&E community is also a major pioneer in new broadband architectures and business models

The R&E community has long experience in operating their own networks national and locally and many university networks are equivalent to those that would be deployed in a small city

New broadband Concepts like condominium networks, customer owned and controlled networks, hybrid networking, etc all started with the R&E community

[First slide]

In my opinion the biggest challenge in developing a national broadband vision is defining a business case

Many people think that government is going to invest billions of dollars in a national broadband deployment

In this era of trillion deficits and near bankrupt state and local governments I very much doubt that governments will be able to make any significant investments in broadband

So we have to look at the private sector as the primary vehicle for deploying broadband

But the business case for private sector to deploy national broadband is also very weak, especially if we want multiple facilities based competitors

I think there is general agreement that multiple facilities based competition is the ideal solution as competition drives innovation, lower prices and more choices for the consumer

But the business case for traditional NGA deployment is very weak and is predicated on 40% takeup and triple play revenues of $130

And of course revenues from triple play are gradually being undermined as video and voice service migrate to the internet in the coming years

Even with those numbers high speed broadband based on fiber will only reach about 40% of customers

So what we need is to experiment with new business models to underwrite the cost of next generation broadband

NEXT SLIDE

Some good examples are the “Home with Tails” concept that some Google analysts are advocating where the customer owns the last mile

Another one is Green Broadband where the cost of the broadband infrastructure and service is bundled with the customers’ energy bill, and the customer is encouraged to reduce their energy consumption, while the service provider makes money from the energy bill rather than triple play. There are now several pilots around the world adopting this model

As you may have heard CANARIE has launched a modest Green IT pilot program to help industry and academia capture new business opportunities in this field

Other examples include the condominium fiber deployment in Netherlands being lead by KPN in partnership with Reggenfiber

Another good example is the Swisscom national condo fiber project being deployed in partnership with numerous energy companies in that country

So my number one suggestion to FCC is that they work with R&E community and fund a number of NGA pilots that promote facilities based competition

For more information please see the links on your screen

Thank you

Open Access Fiber Infrastructure makes economic sense for carriers

[Benoit Felten, an analyst at Yankee Group has recently published an excellent report on the economics of FTTh, and why an open access infrastructure makes business sense for cariers like that being deployed by KPN in Netherlands (in partnership with RegenFibe and CityNet) , Swisscom and others.

He notes in his report that “ The business model for fiber to the home (FTTH) is a tough one to make fly. Despite the increasing pressure (competitive and political) for wireline copper operators to upgrade their networks to FTTH, the economics of the business model scare both the telcos themselves and their shareholders or financiers… It’s virtually impossible for FTTH to pay for itself in less than five years unless takeup is at least 30 percent, and even then a time frame of seven to eight years is more realistic considering known conditions in most developed markets” This bleak assessment of the business case for FTTH applies not only to carriers but also to municipal fiber builders as well.

However M. Felten clearly demonstrates that “Although it might be perceived by most incumbents as going against the grain, opening up a new FTTH network to competitors is actually an efficient way to increase takeup without sacrificing strategic positioning. It has a significant impact on the reduction of the payback as it generates additional revenue from low ARPU but high-margin wholesale customers.”

I would also add that if the carrier deploys point to point open access fiber infrastructure it opens up new business opportunities such as customer owned fiber (as advocated by Google and others) and bundling cost of fiber and Internet with customer’s energy bill, as in the case of Swisscom. For more details please contact Benoit Felten at Yankee Group BFelten@yankeegroup.com or visit his excellent blog on the subject http://www.fiberevolution.com/ -- BSA]