Taking Ownership of the Rural Network

I read two stories today that affirm my commitment that local governments should build their own network infrastructure and sell access to private service providers.  The first article from TelecomTV discusses how the two largest LEC in the U.S., AT&T (T) and Verizon (VZ), are reducing investment and even neglecting their rural networks.  Verizon’s sale of their land-line assets in rural areas to Fairpoint and Frontier are witness to their strategy.

So what are we to do?  Should the FCC reinitiate Universal Service and force the LEC to serve these smaller, less profitable markets?  Do we institute unbundling to all LEC like the second article suggests?  These heavy-handed government solutions are just taxes that produce minimal results in a marketplace that is trying to be competitive.  The best solution is to let municipalities or other local government entities build and take ownership of their infrastructure.  It is commonly done with roads, sewer, water, and electric utilities.  Why can’t we do it with telecommunications?  It is the next infrastructure.

Allowing local governments to build their own infrastructure means that they can take advantage of their long-term financing capabilities where a private corporation’s shareholders would expect a quicker payback.  The municipality in turn sells access to this network on a non-discriminatory basis to any service provider that would like to sell services.  This open access network enjoys a >65% utilization bringing down the time to a positive ROI to 5-7 years.  At that time the governmental entity starts making money.  Cash flow becomes positive in just a couple of years enabling them to build out the entire area over time.  This objective can be completed while being taxpayer neutral.

The city enjoys the increased economic benefits provided from the network and true competition from service providers.  Traditional service providers such as Verizon, AT&T, Comcast, Time Warner Cable can still provide services to the community just as they would with their single-purpose network.  Additionally new service providers can now offer services to compete with the traditional service providers.  Imagine Verizon offering FiOS in Boulder.

This approach reverses the trend from looking at a solution from the national level to the local level.  Localities are free to choose an architecture, technology, and implementation plan that suits their needs; not have one dictated to them by the FCC or some other federal agency.  Yes there are challenges to funding, planning, constructing, and operating these networks.  Subsequent articles will address those issues.

It is time for the U.S. to take a new approach to its broadband strategy and enable communities to take their destiny into their own hands.  There are already several instances where such a business model is already working in the U.S.  The problem is that many cities face legal challenges from incumbent providers trying to protect their outdated business models.  It is time for them to realize that the service is not the network.  Take a lesson from Google where their services are utilized over 3rd party networks exclusively.

If the FCC has to exert a heavy hand, let it be to abolish any restrictions preventing localities from building and operating open-access broadband infrastructure.  Private enterprise will step in and assist these communities to build these networks just as it did in the early 20th century when electrifying America.

Technorati Tags: broadband,AT&T (T),Verizon (VZ),FCC

It’s All In How You Market It: Loosing the Case for Competition

A few years back, I was working with Longmont Power and Communications (LPC) to take advantage of the fiber ring and FTTH capabilities that they have.  Longmont, Colorado is a city with a population of 100,000 just north of Boulder.  They are in an economic transition into a knowledge-based community.  Their tax base is eroding as retail shops close up to make way for the big-box stores.  Providing the community with low-cost broadband services from more than just the two incumbents would give the town a much needed economic shot in the arm.

LPC and other departments in the city saw the value in trying to utilize these virtually stranded assets unfortunately state law prevented them from taking advantage of them.  The only way to get around this law was to let the voters decide if the city should get into the telecommunications business.  At that time the political will was not there because they were embarking on another ill-fated venture for municipal Wi-Fi and the newly elected mayor was a Qwest-lifer.  I moved on.

Several months ago, RidgeviewTel in Longmont thought that they could utilize the city’s assets to provide broadband services to the community.  Much like before, they were not asking for the city to actually sell the services, but lease access to the existing fiber network so they could provide the services.  They went through the effort to have Question 2C placed on the ballot for yesterday’s election.

Big telecom and cable caught wind of the effort and started a very effective marketing campaign backed by a conservative grassroots organization.  They accurately brought up the past attempts of the city’s failed ventures, but they failed to mention that the city ended up with some very valuable assets without any taxpayer expenditures.  Also, this group failed to mention that the city is not going to be the service provider just lease the infrastructure of which will generate revenue.  They painted a picture of another government takeover of the private sector like is being proposed for healthcare. 

The voter’s bought the cleverly marketed campaign and overwhelmingly defeated the measure by 12%.  What they also bought was a loss of a third and possibly more service providers in the city that could offer a variety of voice, video, and data services in competition to Qwest and Comcast.  The City was not proposing government provided services to compete with the incumbents.  They were just going to provide non-discriminatory access to infrastructure for another company.  The secondary benefit would have been to taxpayers in the revenue that RidgeviewTel would have paid to lease the bandwidth on the network.

Although this ballot question seemed counterintuitive to voters because it asked them to let the government do something which sounds like the domain of private enterprise, it was really a vote towards keeping the status quo for a duopoly. 

The battle in Longmont will be a battle we will see time-and-time again as the federal government disperses the stimulus money to small telecom companies wanting to build broadband networks.  Some of these networks are based on a public/private partnership like was being proposed in Longmont.  My only hope is that voters in other communities are not swayed by the tactics used in Longmont.

In subsequent articles I will discuss the value of the public/private partnership as a business model for building broadband open access last-mile networks.

Technorati Tags: Longmont,Colorado,Qwest,Comcast,fiber,broadband

I’m Back

Okay, so it has been quite a while since I have last written anything on my blog.  I have lost most of my followers, but I was immersed in a start-up venture and did not have much free time to write.  It was another learning lesson where I gained some valuable experience that I will transfer into the next venture.

As many of you know, I have been intimately involved in driving fiber-based broadband networks most of my career.  Although I was always very close to the carrier in the implementation, I was always the vendor providing the equipment.  Still I gained a keen appreciation of the economics, business models, financing, architecture, operations, and services of those networks.  Now it is time for me to move to the other side, and be the person building those networks.

In the coming months, I will write articles describing the launching of this venture and the challenges that will be posed by Big Telecom.  Net Neutrality will be discussed from the perspective of who are the real friends of the consumer.  The resurrection of Palm and Sprint will be mentioned as well because I really enjoy my Palm Pre.

I hope that you choose to follow me on this journey and provide feedback and recommendations for topics.  I welcome your participation.  Thanks for sticking with me.

Technorati Tags: broadband,Sprint (S),Palm,telecom