The Long March to Fiber Will Take Many Roads….
Susan Crawford wrote a much-talked about piece last week entitled “You Didn’t Notice It, But Google Fiber Just Began the Golden Age of High Speed Internet Access”. She’s right about the problem, but the Golden Age is going to be far more complex and harder to achieve than the article lets on: we are a long way from a truly competitive market for broadband. In fact, to get there, competition is not the most important element. For now the most important thing is to get places fibered up. How that should happen depends on local variables. But the path Google has taken in Huntsville: leaving the ownership of the broadband system in the hands of the town and renting dark fiber, rather than ceding it to the company providing the service, will happen only in the minority of places. And I say this as the CEO of a company that is laying fiber in cities and towns despite telling mayors they should own it themselves.
Susan extrapolates from Google’s recent announcement that it will be renting ‘dark fiber’ — fiber optical cable that has already been installed but is currently being used only for smart utility purposes. This does have elements to be emulated but there are very few cities and towns in the United States who have anything like the infrastructure that Huntsville is leasing to Google. This does not mean that cities should not aspire to build such infrastructure, but we should also recognize that this is a very complex issue for those cities.
As CEO of Ting Internet, a company doing what Google Fiber does, but usually in smaller cities like Charlottesville, Virginia, I speak with mayors and city leaders all over the country. Most prefer a private partner to provide the capital and engage in the construction project required to build a fiber network. It is simply easier politically, economically and bureaucratically.
I tell every mayor I speak with that if I were them, I would build it myself and have the city own this most important piece of infrastructure. This would allow them to ensure that their citizens receive high levels of Internet service, both speed and reliability, and customer service. The first feeds economic growth. The second is just nice for people.
But it is not easy. Building a municipal fiber network sufficient to allow a Google Fiber or a Ting Internet to provide Fiber-to-the-home (“FTTH”) is rare, expensive and takes a long time to build. It is also worth it and should be done everywhere! But it won’t be and I think it is important that we respect and understand the different choices that will be made. For most cities today, having a private partner will be their only choice and getting that symmetrical gigabit fiber network is more important than how they get it.
There are two competing narratives today, Google Fiber is doing great things and changing the world and Google Fiber sucks and is not a serious competitor. They are both true. In the short term Google Fiber, Ting Internet, Sonic.net and the very few others who are using end-to-end fiber are not serious threats to the telecom incumbents.
In the long term, we are an existential threat. Luckily for those of us competing, telcos and cablecos do not feel it is a threat worth responding to substantively. And by substantively I mean competing by building out their old cable or copper networks with end-to-end fiber rather than trying to retrofit their old television or telephone delivery infrastructure with band aids like DOCSIS 3.1, a hack that will get faster download (but not upload) speeds out of the existing cable plant.
Susan’s other main example is Stokab, the municipal project that brought open access fiber, fiber that a number of different companies could hook up to, to Stockholm in the late 1990s. While Stokab is fantastic, it is shocking to me how few places have copied its model. We also know from those involved that even Stokab has not been immune to political machinations and some ebb and flow. The end state, the 95% end-to-end fiber connections that Susan references, is a terrific outcome and one that most cities can only hope for, but we should not underestimate how unique and difficult it is.
The Huntsville story is also not a first in the United States. Ting Internet announced a similar partnership with the City of Westminster early in 2015. The city is building the network, we are lighting it up, and over time it will become an open access network.
From what little I know, I think Westminster has a better deal than Huntsville. I believe they will make more per customer and we will be running an open access platform for them eventually. In Huntsville, the city will have to maintain relationships with multiple suppliers if they hope to create competition.
The important takeaway is the heterogeneity. There are on the ground reasons why things are different in Huntsville and Westminster. Having another creative model for cities to put into their toolkit is fantastic, but no one model will begin a Golden Age.
An example of this is viewing the right demarcation point between infrastructure and competitive supplier. It may indeed be, as it is in Huntsville, at the point where hardware lights up the network, but it may also be at a service level above that. There is very (very) little that is competitive with hardware. Certainly different companies can buy different levels of quality and ports with different speeds, but it is not really a point of competition or service differentiation in a true sense. The MVNO market, small providers who rent mobile network access from companies like Sprint (which we do with Ting Mobile), and the domain registration market (where we provide wholesale services with OpenSRS), provide examples where the competitive layer sits as a web service on top of the network and the differentiation is in website and control panel design, customer service and, of course, price. This also creates significantly lower barriers to entry as electronics are expensive and, again, do not provide much of a point of true service differentiation.
I wish the above to serve not as an argument for one model over the other but rather as an example of the many different solutions that are available.
And all this talk of competition and open access is nice, but is unlikely to happen in the US for a long (long) time. Ting Internet, or companies like us, are unlikely to seriously consider going into a market like Huntsville unless we were either local or trying to make a point (which could be fun!). There are currently tens of markets with true symmetrical gigabit fiber connections broadly available. There are nearly twenty thousand who will have them available over the next twenty years. Ting Internet, and others who will follow us, will rightly look at unserved markets before going into a market like Huntsville and competing. What IS truly important is the spectre of competition, which a network owned by the city provides. This will serve to keep suppliers on their toes and, in and of itself, should be enough to create much higher service levels than the abyssmally low ones we find today. When we at Ting Internet are entering a new market, of course we look at the existing cableco and telco situation in a city or town, but we do not consider it truly competitive any more than a horse drawn carriage is competitive with a car.
Once a small provider like Ting has created an open access fiber network in a town, a company like Comcast is very unlikely to enter as a competitor. Why would they? What would their basis of competition be? Better design? Better customer service? [insert your own joke here]
So let’s applaud Huntsville and Google. Both of them deserve credit for this announcement. But let’s also recognize that solutions to creating fiber infrastructure are as unique as the cities and towns they will inhabit. And most importantly, let’s recognize that there is unlikely to really be any competition inside of markets until MUCH later in this long march to fiber. And that is ok. For now, let’s those of us who view the fiberization of North America as a mission — and I count both Susan and myself among that group — focus on what we can do to get as many cities and towns fibered up as we can. Then let’s turn our mind towards competition.