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From Sweden, a Perspective on Why Open Access Networks Are the Right Choice for Communities

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BROADBAND BREAKFAST INSIGHT: A good, basic summary of what an open-access network is, and why cities can benefit through the open-access approach. The best part of this piece is the discussion about why open-access is necessary for Smart Cities. Left unsaid are some of the more innovative approaches to financing open-access networks. Some of these were discussed at the Broadband Communities event earlier this year.

Guest Blog, Isak Finer, COS Systems: Why I Believe Open Access is The Right Choice for Communities, from Next Century Cities:

An increasing number of US cities are considering a deployment of fiber networks to ensure job creation, economic development, and quality of life for their residents. Community leaders realize that the younger generations and businesses of the future will not accept inadequate broadband access. What they also realize is that the incumbent providers will prioritize their investments to the bigger markets or the densest urban areas where the business case is the most favorable. It’s simply how the market dynamics work. For the US to reach its national broadband target and to stay competitive in an increasingly connected world, cities need to build networks. The right model for community networks is Open Access and this blog post will explain why.

What is an Open Access Network?

First, we need to agree on what the Open Access business model is, since there are more interpretations of the term than one could count. Some people consider a model where a network owner builds a fiber ring in the community and allows multiple providers to tap on to that fiber and build their own last mile network to the actual houses, as Open Access. We don’t encourage that approach since it won’t create enough choice for the end user, which is the very definition of Open Access.

The Open Access model described here is a 2 or 3-layer model where there are subscribers, service providers, an operations company, and a network owner. In the 2-layer model the network owner is also the operator managing their own network, while in the 3-layer model the network owner has contracted an external operations company to manage the day-to-day operations of the network.

The network owner will build the actual fiber infrastructure and maintain it. This is the ideal role for the city or community to be in, and often in mature open access markets this is a utility company since they are used to deploying cables or pipes in the ground. The most important thing to remember is to document the network properly so that it will be easy to locate e.g. a fiber cut in the future or how to do construction work without the risk of cutting the optical cables.

The operations company would manage and often supply the active layer equipment in the network. This means the routers and switches that control the actual internet traffic and keep track of which ports should be open or not, among other similar things. When a subscriber orders a service, it’s the operations company that will make sure that service is properly activated with the service delivered by the service provider that was chosen by the subscriber. Large operators often have systems that could automate this, so that the subscriber could get the service activated instantly.

The service providers are generally private companies who specialize in delivery of IP based services such as Internet access, VOIP (Voice over IP, replacing the traditional phone line), IPTV (replacing traditional TV) and other services getting more common today, such as home security, cloud storage, elderly care services, etc.

The very important difference in the Open Access network compared to traditional networks built by a service provider is that the subscriber has a choice. Since the Network Owner (the city) has built the network all the way to the house, they open the market to any service provider to sell services to the subscriber. If you’re not happy with your current provider you can just switch to another one. It’s even possible to buy Internet from one, TV from a second and VOIP from a third provider.

What about the money?

In the Open Access model the subscriber will buy the services from service providers, most commonly from a marketplace provided by the operations company where all the providers and services are published for subscribers to easily compare and choose what suits them best. Just like an Appstore, where all apps are easily available to the smartphone user. Subscribers would pay service providers directly and receive technical support from them as well. The service provider would in turn pay the operations company a fee for being allowed to deliver services over the network, normally a monthly fee per service. Then, if the network owner is a separate entity than the operations company, there is an arrangement between those two, that normally goes two ways. The network owner is paying the operations company money for operating their network, while the network owner is sharing the revenue from the service providers based on how much utilization (customers) there is on the network.

A pothole some network owners and/or operations companies have come across has been sending bills to the subscriber, for example a monthly fee that’s supposed to cover costs for maintaining the fiber infrastructure. This setup is very costly for numerous reasons. One is the cost for the handling of all those invoices, but the major issue is that it creates uncertainty for the subscriber about whom to contact when they have a problem. Because they get invoiced from multiple entities for their broadband related services, they might contact the network owner or the operations company with issues that should be handled by the service provider, and vice versa. This confusion will cause a lot of unnecessary communication between the different parties, perhaps sending the customer back and forth.

The customer should get one single bill from the service provider and all inquiries should go through the service provider. The operations company will need much less staff and focus on the more technical issues the service providers cannot handle.

Who will connect the farmer?

Everyone can agree that the farmers are quite important, since they provide the food we eat. But the farmers are as affected by the new digital era as everyone else. They collect their orders online, they pay their bills online, and have many high tech devices like milking machines that expect network access. Their kids also need to be able to do their homework which is has moved online. But the costs of building to these areas of low population density make a return on investment challenging. Private companies must make money to survive and in all honesty, would you be happy to see your retirement fund investing in companies who wasn’t trying to maximize their profit? No, many profit-maximizing firms will not build to rural areas. But the community has a different agenda. Communities recognize the importance of investments that create indirect benefits as well as direct benefits.

The above scenario also explains why the “dark fiber middle mile” version of Open Access won’t work. Even with a fiber ring, the service providers would only build where they are able to make a quick return, leaving farmers even worse off because cherry-picking off the middle mile would result in less overall revenue for a business model that would connect everyone. Having local government build an open access fiber network to everyone will avoid this problem.

Why Competition is key to success

As in all industries, competition will drive the price down and quality up and competition is only created if the end customer can actually make a choice between different providers. Research from my home country of Sweden, with the most mature open access approach anywhere, shows that there is a clear correlation between the number of service providers and the price of service. Especially when you go from one to two and three providers, but even the ninth and tenth provider will help to push the price down.

In the lowest cost community networks, a 100 Mbps symmetrical Internet service costs approximately $25. In Sweden the hundreds of Open Access community networks have been key to the vast build-out of high-speed broadband and especially fiber networks. Sweden has a population density of only 57 people per square mile (US has 90) but according to PTS (Sweden’s FCC) still 99.99% of the population has access to at least 10 Mbps broadband, 73% to 100 Mbps  and 79% have access to fiber (within 45 yards of a fiber line). These numbers are for 2016 and increasing rapidly as both private and public network owners are now competing fiercely to reach the last customers with fiber first. So at a national level the build-out of strong community networks also pushes the private telecom giants to build more and faster and provide higher speed services at competitive prices, which benefits the country as a whole.

The Open Access model is also an enabler for the city to control the subscriber price on an aggregate level. If the city wants to subsidize Internet services to increase adoption they can simply lower the cost to the service providers to sell services on the network, which due to competition will drive the end customer price down and lead to higher utilization.

Why Open Access is necessary for Smart Cities

Today there is a big trend towards IoT (Internet of Things) where a lot of different devices and machines are connected. It could be everything from the heating system in your house being accessible to control and monitor via an app in your phone, to the utility placing smart meters in every home, or street lights that are connected to be able to allow much more sophisticated management of traffic, enabling free passage for emergency vehicles. All these smart services that will benefit the community and residents will be easy to implement if the city owns a citywide fiber network, but consider what happens when the entire network, or big parts of the network (in the case where the city only builds the fiber ring) is owned by private providers.

Let’s say you have five different profit-driven providers owning the infrastructure. This means you need to negotiate five different agreements to be able to deploy the services and still you might not be able to do a city wide roll-out, since the private providers will only have built their network in areas where they reach their ROI targets. As a city you might be forced to build those “worst” areas just to be able to deliver those smart services to all who need them and thereby force you into being a network operator anyway. With an open access network reaching every desirable end-point you’re ready for any smart service application the future may hold.

Yes, the private service providers will be able to make money

There is a fear that open access would lead to great service for subscribers but push the prices so low that ISPs will not have enough margin to profit. The answer is yes and no. No, those companies who don’t adapt to the competitive nature of the Open Access networks won’t make money. If you don’t deliver capacity and speeds as promised and don’t have excellent customer service (things not as important if you own the infrastructure and the customers have no other provider to turn to) you probably won’t be very successful in the long run. Also trying to lock customers in with long contracts or using data caps will be a hard sell in a competitive environment.

For those providers who focus on delivering high quality of both service and support at a reasonable price, there is the chance to also be very profitable. By focusing on service delivery, customer care and billing and not having to spend resources on capital intensive construction and maintenance of the physical infrastructure, they can build a highly specialized organization.

It’s also easy for new entrants, since there are no large investments as would have been the case if you are to build your own infrastructure. In Sweden there are numerous nationwide service providers who started with just a few guys in a basement, today creating jobs for hundreds of young, service-minded people. Even though the price for broadband in Sweden is lower than in the US, the profit margin among Service Providers on Open Access networks in Sweden is looked upon with envy by companies in other industries.

Conclusion

Open access is the right choice for cities who consider building their own network infrastructure. It’s important that the network is built all the way to the subscribers’ property. This way the digital future of the city is in their own hands. They can decide which providers are allowed to sell services on their network and adopt smart city services as they please. It will also give more power to the subscriber since there is competition at the subscriber level. This will make sure services are delivered with quality and at reasonable prices. The affordable prices will increase adoption and subsequently create the benefits the new broadband enabled services will bring to the community as a whole.

Reprinted from Next Century Cities: Guest Blog, Isak Finer, COS Systems: Why I Believe Open Access is The Right Choice for Communities | Next Century Cities | Broadband Internet & Infrastructure

Broadband Breakfast is a decade-old news organization based in Washington that is building a community of interest around broadband policy and internet technology, with a particular focus on better broadband infrastructure, the politics of privacy and the regulation of social media. Learn more about Broadband Breakfast.

Health

FCC Proposes Notification Rules for 988 Suicide Hotline Lifeline Outages

The proposal would ensure providers give ‘timely and actionable information’ on 988 outages.

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Photo via Health and Human Services

WASHINGTON, January 26, 2023 – The Federal Communications Commission unanimously adopted a proposal to require operators of the 988 mental health crisis line to report outages, which would “hasten service restoration and enable officials to inform the public of alternate ways to contact the 988 Lifeline.”

The proposal would ensure providers give “timely and actionable information” on 988 outages that last at least 30 minutes to the Health and Human Services’s Substance Abuse and Mental Health Service Administration, the Department of Veteran Affairs, the 988 Lifeline administrator, and the FCC.

The commission is also asking for comment on whether cable, satellite, wireless, wireline and interconnected voice-over-internet protocol providers should also be subject to reporting and notification obligations for 988 outages.

Other questions from the commission include costs and benefits of the proposal and timelines for compliance, it said.

The proposal would align with similar outage protocols that potentially affect 911, the commission said.

The notice comes after a nationwide outage last month affected the three-digit line for hours. The line received over two million calls, texts, and chat messages since it was instituted six months ago, the FCC said.

The new line was established as part of the National Suicide Hotline Designation Act, signed into law in 2020.

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Health

FCC Eliminates Use of Urban-Rural Database for Healthcare Telecom Subsidies

The commission said the database that determined healthcare subsidies had cost ‘anomalies.’

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WASHINGTON, January 26, 2023 – The Federal Communications Commission adopted a measure Thursday to eliminate the use of a database that determined the differences in telecommunications service rates in urban and rural areas that was used to provide funding to health care facilities for connectivity.

The idea behind the database, which was adopted by the commission in 2019, was to figure out the cost difference between similar broadband services in urban and rural areas in a given state so the commission’s Telecom Program can subsidize the difference to ensure connectivity in those areas, especially as the need for telehealth technology grows.

But the commission has had to temporarily provide waivers to the rules due to inconsistencies with how the database calculated cost differences. The database included rural tiers that the commission said were “too broad and did not accurately represent the cost of serving dissimilar communities.”

FCC Chairwoman Jessica Rosenworcel gave an example at Thursday’s open meeting of the database calculating certain rural services being cheaper than in urban areas, when the denser latter areas are generally less expensive.

As such, the commission Thursday decided to revert the methods used to determine Telecom Program support to before the 2019 database order until it can determine a more sustainable method. The database rescission also applies to urban cost determinations.

“Because the Rates Database was deficient in its ability to set adequate rates, we find that restoration of the previous rural rate determination rules, which health care providers have continued to use to determine rural rates in recent funding years under the applicable Rates Database waivers, is the best available option pending further examination in the Second Further Notice, to ensure that healthcare providers have adequate, predictable support,” the commission said in the decision.

Healthcare providers are now permitted to reuse one of three rural rates calculations before the 2019 order: averaging the rates that the carrier charges to other non-health care provider commercial customers for the same or similar services in rural areas; average rates of another service provider for similar services over the same distance in the health care provider’s area; or a cost-based rate approved by the commission.

These calculations are effective for the funding year 2024, the commission said. “Reinstating these rules promotes administrative efficiency and protects the Fund while we consider long-term solutions,” the commission said.

The new rules are in response to petitions from a number of organizations, including Alaska Communications; the North Carolina Telehealth Network Association and Southern Ohio Health Care Network; trade association USTelecom; and the Schools, Health and Libraries Broadband Coalition.

“The FCC listened to many of our suggestions, and we are especially pleased that the Commission extended the use of existing rates for an additional year to provide applicants more certainty,” John Windhausen Jr., executive director of the SHLB Coalition, said in a statement.

Comment on automating rate calculation

The commission is launching a comment period to develop an automated process to calculate those rural rates by having the website of the Universal Service Administrative Company – which manages programs of the FCC – “auto-generate the rural rate after the health care and/or service provider selects sites that are in the same rural area” as the health care provider.

The commission is asking questions including whether this new system would alleviate administrative burdens, whether there are disadvantages to automating the rate, and whether there should be a challenge process outside of the normal appeals process.

The Telecom Program is part of the FCC’s Rural Health Care program that is intended to reduce the cost of telehealth broadband and telecom services to eligible healthcare providers.

Support for satellite services

The commission is also proposing that a cap on Telecom Program funding for satellite services be reinstated. In the 2019 order, a spending cap on satellite services was lifted because the commission determined that costs for satellite services were decreasing as there were on-the-ground services to be determined by the database.

But the FCC said costs for satellite services to health care service providers has progressively increased from 2020 to last year.

“This steady growth in demand for satellite services appears to demonstrate the need to reinstitute the satellite funding cap,” the commission said. “Without the constraints on support for satellite services imposed by the Rates Database, it appears that commitments for satellite services could increase to an unsustainable level.”

Soon-to-be health care providers funding eligibility

The FCC also responded to a SHLB request that future health care provider be eligible for Rural Health Care subsidies even though they aren’t established yet.

The commission is asking for comment on a proposal to amend the RHC program to conditionally approve “entities that are not yet but will become eligible health care providers in the near future to begin receiving” such program funding “shortly after they become eligible.”

Comments on the proposals are due 30 days after it is put in the Federal Register.

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Digital Inclusion

Broadband Breakfast Interview With Michael Baker’s Teraira Snerling and Samantha Garfinkel

Digital Equity provisions are central to state broadband offices’ plans to implement the bipartisan infrastructure law.

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Digital Equity provisions are central to state broadband offices’ plans to implement the Broadband Equity, Access and Deployment grant program under the bipartisan infrastructure law.

In this interview with Broadband Breakfast Editor and Publisher Drew Clark, Michael Baker International Broadband Planning Consultants Teraira Snerling and Samantha Garfinkel go into detail about the role of Digital Equity Act plans in state broadband programs.

Michael Baker International, a leading provider of engineering and consulting services, including geospatial, design, planning, architectural, environmental, construction and program management, has been solving the world’s most complex challenges for over 80 years.

Its legacy of expertise, experience, innovation and integrity is proving essential in helping numerous federal, state and local navigate their broadband programs with the goal of solving the Digital Divide.

The broadband team at Michael Baker is filling a need that has existed since the internet became publicly available. Essentially, Internet Service Providers have historically made expansions to new areas based on profitability, not actual need. And pricing has been determined by market competition without real concern for those who cannot afford service.

In the video interview, Snerling and Garfinkel discuss how, with Michael Baker’s help, the federal government is encourage more equitable internet expansion through specific programs under the Infrastructure Investment and Jobs Act.

The company guides clients to incorporate all considerations, not just profitability, into the project: Compliance with new policies, societal impact metrics and sustainability plans are baked into the Michael Baker consultant solution so that, over time, these projects will have a tremendous positive impact.

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