Why Boulder Is Ideal for 1 Gbit/s Broadband Network from Google

I started this article weeks ago before the RFI was due and never found the time to finish it.  The problem was that there was too much content to keep confined to a short article.  After looking at my draft and realizing that readers, including Google, did not want to read a 10,000 word explanation, I condensed it to a bullet list.  So here are the reasons that Google should choose Boulder, Colorado to for their Google Fiber for Communities Project:

1. 69% of our residents have bachelors’ degrees or better
2. We have the highest per capita number of software developers in the nation
3. Boulder ranks #3 in the number of inventors
4. Boulder ranks #7 in the number of entrepreneurs
5. 10% of our businesses are home-based and over 25% of people work from home
6. Home to the $100 million SmartGridCity™, the nation’s first fully integrated electricity system
7. Seven federally funded laboratories
8. University of Colorado at Boulder
9. Industries such as green energy companies, biosciences, health care, foods, clothing and footwear, outdoor and biking companies, electronics manufactures, computer companies, storage companies, defense contractors, venture capitalists, and several other industries but let’s not forget Google!
10. Silicon Flatirons Center as a center for telecom and technology debate and discussion
11. Telecom companies with several decades experience building last-mile fiber networks including working with leading edge vendors and operation of these networks
12. Many Existing facilities to support the build-out of the network
13. 96% broadband penetration so we know how to use bandwidth
14. Headquarters to a few globally known advertising, public relations, and media firms
15. More Asian restaurants per capita than San Francisco or New York

Technorati Tags: Google,Google Fiber for Communities,Boulder,#boulderfiber

Telecom Pragmatics Calls Google Effort “Token”

Telecom Pragmatics recent press release and report stating that Google’s Fiber for Communities project will be just a token effort misses the objective of Google’s project.  Google has been very clear through its minimalist communications of its objectives for this project.  They want to stimulate new applications, test new deployment techniques, and drive competition beyond the current duopolies.  They do not want to become a carrier or service provider.  They do not want to get into the business of building networks.  Google simply wants to find a business model for building last-mile networks that will stimulate the deployment of ultra-high speeds at reasonable costs through competition.  Whether they will do that in one or a couple communities is still up in the air.  Google clearly states that they do not have the expertise to come up with a solution to the U.S.’s broadband deficiencies, but they are betting on the telecommunications industry and capitalism to find one.

Google is currently vetting over 1,100 RFI submissions to find the few finalists that assembled the appropriate players to test out a model for building an open-access municipal network.  Their approach is different that the bureaucratic direction of the FCC with the National Broadband Plan.  They know that they do not have all of the answers and are looking to the experts to develop some solutions.  I applaud Google in their efforts and whether they select Boulder, Colorado or not, I will support their efforts to the fullest.  Sam, Mark, and David at Telecom Pragmatics are smart guys and I know that they understand what Google is trying to accomplish.  I trust that their report fully divulges Google’s true intentions.  As a community that has been driving FTTH for two decades, we need to fully open our experiences to Google to make their little experiment a success. 

Technorati Tags: broadband penetration,Google,#boulderfiber,Boulder,Google Fiber for Communities,Telecom Pratmatics

What the 1,099 Communities Not Selected by Google by Google Should Do

The past month has been crazy ever since Google announced that they are going to build an open access fiber-based network in one or a couple communities from 50,000 to 500,000 in population.  Over 1,100 communities submitted responses to the Google Fiber for Communities Request for Information including my own Boulder and Longmont, Colorado.  Those communities took the time to thoroughly understand how broadband infrastructure could benefit their community.  So what should the 1,099 or so communities that are not selected do?  They should build the open-access broadband network anyway.

Why?  Communities that responded to the RFI realize that a broadband infrastructure will not only offer their citizens greater choice of service providers, but also provide economic growth to their community.  Studies in Europe, Asia, and North America have confirmed the benefits that will come to these communities (link and link).  Some cities conducted their own surveys asking businesses how a broadband infrastructure could benefit their business.  Boulder’s results can be found here and here.  So now that Google has stimulated this awareness of the benefits, why should a community take it on themselves to build the network?  Obviously one of the incumbent carriers will build it eventually, right?

Communities need to realize that incumbent carriers are not going to make any multi-billion dollar investments in infrastructure in the next couple of years no matter how hard they squeeze them during franchise negotiations.  Verizon has publicly announced that they have completed their FiOS buildout passing approximately 18 million homes and gathering 2.86 million TV and 3.43 million Internet subscribers.  AT&T’s U-verse service only reaches 2.1 million subscribers and it based on a FTTN architecture that only provides limited speeds.  Comcast has been the most aggressive with hitting more than 80% of its service territory with DOCSIS 3.0 by the end of the year and reclaiming spectrum for more data use via Project Calvary.  Comcast is offering speeds up to 50 Mbit/s for Internet.  The bottom line is that if you do not live in a major metropolitan areas that these providers already hit, you can only expect incremental or no improvements in service.  Most of these communities will not see Internet speeds greater than 50 Mbit/s or a choice of more than two video providers. 

The economics of building a single carrier infrastructure are not suitable for these companies to undertake.  Verizon spent $23 billion building out its FiOS network which equates to over $7,600 per subscriber.  Ivan Seidenberg, CEO, stated that they would like to achieve at least 7.2 million subscribers;  thereby, cutting the cost per subscriber in half.¹  Assuming that the company nets $50 each month per subscriber, which is generous, and that Verizon achieves its 7.2 million subscribers, it will take over 5 years to see a positive return on investment.  Investors in public companies do not want to see payback periods beyond 2 years even though the investment’s lifetime is greater than 20 years.

The economics for a open-access infrastructure are much different because there are multiple service providers utilizing the infrastructure that improve the fill rate and cash flow.  Successful open-access networks enjoy a fill rate of greater than 60%.  Some of the installation issues that plague large companies like Verizon are mitigated in municipal networks.  Smaller carriers have reduced installation costs down below $1,500 and even lower.  Just taking these two factors into account and allocating $30 per month to pay for the infrastructure moves the payback time to 5 years, and that figure does not include the revenue from any business customer that definitely improves the economics.  This article, published on the Gerson Lehrman Group site, takes a look at the economics with a smaller adoption rate but does not separate the service from the infrastructure.  They conclude that the payback time is much less.  Our company, Inphotonics Research, has more detailed case studies that indicate a payback period closer to the 5 year period factoring in all of the expenses and incomes which is far too long except for the patient investor.  On the other hand, the municipal bond investor may see a compelling investment opportunity and communities may even be able to enjoy a net positive revenue flow into their general fund.

Now that communities realize the the economics are feasible and that such a network provides numerous benefits to the community, how will they do it?  The purpose of Google’s grand experiment is to show communities how they could build their own infrastructure.  Their objective is not to build these networks in every community, but share the results so other communities could do it themselves.²  Understanding the formula will get a community started.  It does not give them the expertise to build and operate the infrastructure as well as attract service providers.  Companies exist that will assist communities to plan, build, and operate their infrastructure such as Inphotonics Research.  These companies have the relationships with appropriate industry players to make the project successful for a community.  So if you are one of the communities that does not end up selected by Google, go ahead and leverage Google’s work and build the network yourself.  You can do it with a little help.

Technorati Tags: broadband,broadband penetration,Comcast (CMCSA),AT&T,DOCSIS,FTTH,telecom,Verizon (VZ),#boulderfiber