May 20, 2020 — Sweden has a knack for being the first to the table of tech. Ericsson, a telecommunications company based in Stockholm, introduced the world to the first telephone switch and the first mobile phone. Sweden is home to several game-changing tech companies: Spotify, Skype, Candy Crush, Minecraft and Pirate Bay, to name a few.
“Their valuations were just crazy, insane,” Isak Finér, chief marketing officer of information technology solutions provider COS Systems, said of the Swedish companies’ stock prices at their respective heights.
Part of the Swedish environment and culture is being primed for innovative technology, Finér told Broadband Breakfast in an interview: “Some are scared when something new comes. Sweden is always early.”
This is especially true for technologies that enhance efficiency in their work and in their personal lives. “People like to be self-reliant,” he said. But it also means that “they don’t want to talk to someone if they don’t have to.”
Sweden is also ahead of the curve in implementing open access networks, which is where COS Systems thrives.
Creating a model ecosystem for broadband in the elongated country
An open access network is a business model for providing internet to homes and institutions that is more competitive than the model most prevalent in the United States. In the U.S. model, big communications companies dominate. Not only do companies like AT&T, Comcast and Verizon own their broadband infrastructure, they also operate it. And they offer broadband internet services on top of the infrastructure.
Open-access networks are much more common outside of America. They can be a little complicated to visualize. If you think of a broadband network as a railroad, the train tracks represent the network of underground fiber-optic cable that feeds high-speed internet into homes and businesses throughout the country.
The current dominant model in the U.S. calls for the same people who own the “train tracks” to also supply the “trains,” or in this case the internet services.
An open access model, by contrast, allows train cars run by CarCo, a completely different company, to run on the railroad tracks owned by TrackCo. This gives the consumer more access to wider choices.
A willingness to adapt to the newest technology, along with the Swedish affinity for self-reliance, created a fertile environment for open access networks to take root. In 1994, Sweden’s version of AT&T, Telia, began charging “outrageous prices” for internet service, said Finér.
In response, Swedish municipalities revolted and began building their own networks.
Sweden proves fertile ground for companies that want to help open access networks grow
In addition, several aspects of Swedish demographics allowed for this revolution to flourish and become the norm within the Scandinavian nation: A consensus on the role of municipal governments, urbanization, digital literacy and a high standard of living, to name a few. That, paired with a unique government-sponsored program where employees could borrow computers from their employers for free, allowed the new paradigm of distributing internet to bloom.
COS Systems emerged in 2008 as a company that sold software to help network operators assess the demand for broadband in an area, called “demand aggregation,” and automatically juggle a host of competing service providers on one fiber optic cable.
They initially found success in Sweden, but realized that much of the country’s fiber had already been built out by the early 2010s. In 2013, they set their sights on America.
The COS Systems business model is one of practicality and logic: Invest in the neighborhoods (which became known as “fiberhoods” when Google Fiber got in the picture) that want internet the most, and which will in turn generate the greatest revenue.
This greater long-term access to capital can then be used to build out fiber in less profitable areas, which very often are the more rural or less dense regions.
At that point of the process, Finér said, “it’s up to the neighborhood itself to get the neighbors excited [about broadband access and] get them signed up.”
This strategy has worked in Sweden, where wealthier municipalities initiated the open-access revolution. After 20 years of investment and slow growth, Swedish builders now have the capital to reach the far-flung villages. Though the Swedish digital divide has not been completely annealed, it has nearly been closed.
Will the COS Systems model also play itself out in the United States?
Some critics poke holes in a strategy for deployment that focuses first on the wealthiest neighborhoods with the greatest ability to pay for broadband. Frequently, but not always, wealthier neighborhoods show greater demand for broadband. And some say this could deepen socioeconomic inequalities.
For the broadband developers that make use of COS Systems, they often reply, “We can’t cherry-pick, we have to build to everyone,” Finér said.
How does this translate to the American internet landscape? The rollout of open-access networks in the U.S. has been patchy.
Some states, such as Washington, have been on the forefront of developing open-access models thanks to a law that requires all its utilities — water, electricity, and broadband — to form municipal networks. And it has registered some successes and provided a model for states who wish to do likewise.
Brian Snider, CEO of open access builder Lit Communities, told Broadband Breakfast in an interview that “you don’t get a lot of churn” in an open access business because clients on the whole are more satisfied with the model.
Furthermore, he said he foresaw large volume deployments of open-access infrastructure for all the big carriers, including Google Fiber, a company Lit Communities said it had recently worked with. And, said Snider, the current coronavirus pandemic has increased demand for his networks and launched business “into a whole ‘nother stratosphere.”
Do restrictions on municipal networks also impact open access networks?
However, 19 states currently have laws that prohibit their towns and cities from choosing whether or not to build municipal networks, according to Gigi Sohn, co-founder and former executive director of nonprofit interest group Public Knowledge, on a Broadband Breakfast Live Online event.
Sohn claimed these prohibitive laws “were encouraged and lobbied for by the big incumbent telecoms” such as AT&T and Verizon and called them “shameful.” Most such laws — such as those of Utah, for example — prohibit municipalities from directly offering broadband internet services.
But the Utah prohibition on offering internet services by municipalities has had a paradoxical effect: It spurred the creation of the largest open access network in the U.S., which is run by UTOPIA Fiber.
UTOPIA stands for the Utah Open Infrastructure Agency. In collaboration with its 11 city members, UTOPIA Fiber owns and operates a fiber-optic network. More than 25 private companies offer broadband services (the train cars) on the open access network (the railroad tracks).
Despite the obstacles in the way of adoption, Finér remains hopeful about the future of open access in the U.S. However, every country’s story is different is unique in both time and place, and the U.S. is no exception.
The biggest difference comes in the form of funding sources, he said. While the Swedish government and citizenry agreed early on that broadband was “essential infrastructure” that they were willing to invest in, U.S. companies will require the right kind of coaxing and incentives to build out open access networks.
Above all, the key to open access networks catching fire in the U.S. is a substantial increase in private investment.
Anticipating Launch, Yellowstone Fiber to Seek Federal Funds for Rural Broadband
With service beginning in late September, non-profit fiber ISP aims to serve rural Gallatin County
BOZEMAN, Montana, July 27, 2022 – Officials at the non-profit internet entity Yellowstone Fiber announced Thursday that they would pursue federal broadband funding to expand network construction in rural areas of its footprint in Montana.
Because every state is poised to receive a minimum of $100 million to expand broadband infrastructure under the bipartisan Infrastructure Investment and Jobs Act, officials at Yellowstone Fiber believe they are well-suited to obtain funding to connect homes, businesses, farms, and ranches to high-speed fiber internet in the sections of the Montana’s Gallatin County north of Bozeman.
Although Yellowstone Fiber is just going live with its first customers in September – and began offering pre-sales in late July – the new fiber entity believes that the availability of funding through the Broadband Equity, Access and Deployment program of IIJA offers a unique opportunity.
As with all states, Montana will receive a minimum of $100 million to expand high-speed broadband infrastructure to the nearly one-third of state residents who currently lack access.
Speaking about the impending launch of services on Yellowstone Fiber, CEO Greg Metzger said, “This is an important milestone for Yellowstone Fiber and we’re enormously excited to announce we’ll have the network live in a matter of weeks.”
“For decades, people in rural Montana have been limited by slow and expensive internet service and empty promises by cable providers. Today’s announcement signals we’re serious about connecting rural Gallatin County to high-speed fiber and the limitless possibilities that it brings,” he said.
Yellowstone Fiber is building an open access network, which means that Yellowstone builds, owns, and operates the fiber infrastructure, then leases space on its high-speed fiber to service providers, including Blackfoot Communications, Skynet Communications, Global Net, TCT and XMission.
In an interview, Metzger touted the role that open access networks play in enabling free market competition, including better prices, service, and reliability.
Metzger, an entrepreneur who previously manufactured plastic deposit bags for banks, sold that business and bought a furniture company in Montana.
Although he said he would rather be playing golf, when he stumbled across a new funding mechanism, he decided to create a non-profit entity designed to serve his community with fiber optic network services.
Yellowstone Fiber was formerly Bozeman Fiber, and was created in 2015 as an economic development initiative to address the lack of true high-speed broadband in Gallatin County, Montana.
A group was formed including the City of Bozeman, Gallatin County, the Bozeman School District and business leaders and funded by eight banks with a Community Reinvestment Act-designated loan.
This $4,000,000 was used to create a fiber ring connecting anchor tenants including the city, county and the school district, and also servicing the Cannery district and downtown Bozeman.
Anchor operations began in the fall of 2016, and commercial operations in February 2017. In 2020, the network formed an operational partnership with Utah-based UTOPIA Fiber to bring fiber-to-the-home services to every address in Gallatin County.
UTOPIA’s Projects Proceeding in California and Montana, CEO Says
Both the GSCA and Yellowstone Fiber are using UTOPIA’s techniques to provide open access broadband over fiber.
HOUSTON, May 4, 2022 — UTOPIA Fiber’s open access model has found success in California, Montana, and Idaho as it continues to deploy across Utah, the company’s CEO said Wednesday.
“Right now, we are working with [Golden State Connect Authority] to identify various pilot areas for the project and have started preliminary engineering work to determine the initial project area,” Roger Timmerman said at the Broadband Communities Summit 2022.
During the press conference, Timmerman also pointed to UTOPIA’s expansion into Santa Clara, Utah, and its completion of its original 11 Utah cities by the end of 2022.
Timmerman was joined by partners Barbara Hayes of the Golden State Authority and Yellowstone Fiber CEO Greg Metzger as they delivered remarks on their joint ventures. The partnership will create the largest publicly owned fiber network in the US, and as it stands now, would span 38 of California’s 58 counties.
“California may be the world’s fifth-largest economy, but our state’s connectivity is decades behind,” Hayes said. “Investing in open access fiber will be transformative for California.”
Both Metzger and Hayes emphasized that their decision to partner with UTOPIA was largely informed by the company’s track record.
“We needed to have a partner who was successful and had done it before,” Metzger said. “For Montana, this is going to be a breath of fresh air.”
Yellowstone Fiber, formerly known as Bozeman Fiber, is a not-for-profit that will replicate UTOPIA’s open access model to provide broadband to the greater Bozeman region; it will own and operate the fiber but will rely on UTOPIA for assistance on the backend.
UTOPIA’s model of open access has long been a point of interest in the telecom industry. While some claim it will be a solution to the digital divide, other assert that it has merely created a “race to the bottom” where internet service providers are constantly pushed to undercut their completion. Timmerman and others have pushed back against the “race to the bottom” assertion, claiming that providers can find ways other than price to distinguish themselves from their competition, such as superior customer service. Additionally, they point to their recent track record as evidence that critics’ concerns that they can maintain a positive cash flow are unfounded.
Though UTOPIA, a sponsor of Broadband Breakfast, now has positive revenue and has served as a model for open access projects around the country, critics still point toward its more than $300 million in outstanding debt it accrued in its early days, before Timmerman was at the helm.
‘Worst Broadband City’ Brownsville Approves Open Access Fiber Project with Lit Communities
Lit Communities will operate the network, with subsidiary BTX Fiber as the last-mile provider. HMI Utilities is prime contractor.
BROWNSVILLE, Texas, April 1, 2022 — During a special city commission meeting on Wednesday, council members voted to approve a fiber project that will bring high-speed broadband to 100% of its citizens.
Elizabeth Walker, Brownsville assistant city manager, and Andres Carvallo, CEO and founder of CMG Consulting LLC, recommended that the council authorize two respondents, HMI Utilities with Lit Communities, for a combined proposal to maximize technical and financial capacity.
Brownsville, Texas, is a city of more than 182,000 people and is one of the cities with some have called the worst broadband city in the country. The National Digital Inclusion Alliance in 2018 listed Brownsville and a neighboring community as one of the top two worst connected cities in the country with a population of more than 65,000. For Brownsville, 47.1% of households do not have broadband of any type, NDIA found
Lit Communities, a fiber-builder that partners with municipal, county and other government entities, will operate the network, with HMI Utilities as the prime contractor. Lit Communities subsidiary BTX Fiber will be the last-mile provider on the network. However, the project will be an open network with multiple internet service providers.
Standard service on the network will be at least 100 Megabits per second (Mbps) symmetrical.
The research for this project began nearly a year ago in April 2021 when Walker and Carvallo looked at different business models, like public policy only, public services, open access, infrastructure, municipal retail (business only and residential). They looked at these models in similar projects in Texas and across the country, including in places like Knoxville and Santa Cruz County. Eventually, they decided on an open access model.
Specifics of the Brownsville network
All citizens will have access to this broadband. “It is eight middle-mile fiber rings to address the full geography of Brownsville,” said Walker.
The city will own 100% of the middle mile and will be able to license it out in private-public partnerships to create revenue, as well as revenue from the last mile connectivity. To ensure affordability, there will be a cap on what providers can charge.
Affordability “is very important,” said Walker. “The crux of the consideration is just to not deliver access, but to make it affordable.”
This infrastructure will have a life expectancy of 50 to 100 years, said Walker.
Walker said that “evidence suggests that broadband services have a net positive economic and social impact to communities by enhancing key functions such as economic competitiveness, workforce development, training, educational capabilities, municipal operations, and smart city developments.”
This is part of the private-public partnership model of Lit Communities. The company recently partnered with Ohio’s Lorain-Medina Rural Electric Cooperative to install fiber on existing utility poles. In these projects, the municipality in question provides the capital necessary to build a middle mile or backbone network.
“We are not stopping with these initial groups of towns that we are looking at and working into right now,” said Rene Gonzalez, Lit Communities’ chief strategy officer. “It is just the beginning.”
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