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.
UTOPIA Fiber Goes to Court in Utah Over American Fork’s Build Permit Refusals
Fiber builder says it has been denied permits that have harmed it and its customers, despite an existing city agreement.
October 13, 2021 – UTOPIA Fiber filed a lawsuit Wednesday against the city of American Fork in Utah for breach of contract after the city allegedly denied build permits to the fiber builder despite there being an existing contract between the two parties.
The fiber provider, which runs an open network on which private telecoms rent space on to provide services, alleges the city had approved some permits that only allowed it to construct backbone transport lines through the city connecting other cities, but denied it key permits that would have allowed it to extend services to UTOPIA Fiber customers inside the city. Those services include connections to American Fork’s public schools.
In July 2020, the city allegedly terminated the 2018 rights-of-way agreement with no explanation, the lawsuit claims. It also alleges that the city specifically discriminated against UTOPIA Fiber by adding additional scrutiny to its permit requests when it believed no such scrutiny existed for other providers.
Broadband Breakfast attempted to make contact with the city, but a phone call was not answered and a voicemail message was not returned by the time of publication.
“American Fork’s refusal to approve permit requests by or for UTOPIA for service laterals for customers within American Fork has harmed UTOPIA, its customers, and the private ISPs who wish to offer services within American Fork using UTOPIA’s Network,” the lawsuit said. “In some cases, UTOPIA has been forced to buy capacity from other network providers that are allowed to install infrastructure in American Fork, so that UTOPIA can fulfill existing contracts with its customers.
“In other cases, UTOPIA has been forced to cancel existing customer orders for connections within American Fork and has lost significant revenues as a result,” the suit added. “UTOPIA has also recently been forced to cancel or reject over a dozen additional customer orders because UTOPIA is unable, due to American Fork’s conduct, to obtain the permits needed to fulfill those orders, and again lost significant revenues as a result.”
In a press release, UTOPIA’s executive director Roger Timmerman said the lawsuit was a “last resort and not an easy decision to make.
“It is our hope that with judicial review, American Fork City will reverse its policies, work within the boundaries of the law, and ultimately, act in the best interest of the people and businesses in American Fork City by allowing them access to the increased options UTOPIA Fiber provides,” Timmerman added.
UTOPIA Fiber is asking the U.S. District Court for the District of Utah to force the city to pay the company damages sustained as a result of the alleged actions, to find the city violated the law with respect to its actions, and to force the city to cease the alleged “discriminatory and preferential actions” against the company.
UTOPIA Fiber, a sponsor of Broadband Breakfast, has designed, built, and operated more than $330 million worth of fiber projects in the state since 2009.
Mike Harris: Investing in Open Access Fiber Optics is Investing in the Future
Chattanooga’s municipal broadband network has delivered $2.7 billion in social and economic benefits during its first decade.
In the United States, most Internet Service Providers are privately owned companies who have established copper network infrastructure exclusively for their own use, forcing customers into often unreliable, unsustainable internet package deals. But in 2010, the small city of Chattanooga, Tennessee invested in an early publicly owned fiber optic network.
As the co-founder of open-access telecom company SiFi Networks, I believe that investments in similar open-access infrastructure will help bridge community divides and futureproof a city’s economic and social prosperity.
According to a study by Bento Lobo, department head of finance and economics at the University of Tennessee, Chattanooga’s municipal broadband has delivered over $2.69 billion worth of social and economic benefits during its first decade. With a population of just 185,000, imagine the potential savings for a city the size of New York.
So, how did Chattanooga achieve this and what were the city’s motivations?
Motives behind the madness
In 1969, Chattanooga was dubbed America’s dirtiest city. A post-industrial wasteland, it entered the late twentieth century with a stagnant economy, declining population and high levels of unemployment following the closure of its large manufacturing factories. It’s not surprising that decades later publicly owned utility company, EPB, chose to invest in its residents’ future.
EPB began replacing the underground copper wiring — originally established to exclusively handle telephone calls — with fiber optic cables feeding connectivity to the entire community. Fiber optic networks are vastly superior to copper because they can transport data using photons travelling at the speed of light. Previous infrastructure uses electrons capable of less than one per cent of that speed.
Where before Chattanooga was perceived as an underdeveloped, low-income area, suddenly businesses were moving in, employment was growing, and more adolescents were graduating from high school. Is it about time for other cities to follow suit?
Why other cities should follow suit
Internet connectivity is a human right much like water, electricity and gas utilities. Yet 21 million U.S. citizens are still living without reliable broadband according to the Pew Charitable Trusts. Research also shows that 40 percent of schools and 60 percent of healthcare facilities outside metropolitan regions lack internet download speeds of at least 25 Megabits per second (Mbps) and upload speeds of at least 3 Mbps. This is the acceptable speed defining a reliable broadband connection.
As the Chattanooga model demonstrates, the solution is the establishment of fiber optic infrastructure. With fiber networks, EPB offers residents and businesses gigabit speeds of up to 1,000 Mbps, or 1 Gigabit per second. In hindsight, with this capacity Hamilton County was well equipped to deal with the 75 percent increase in total volume of bandwidth being used per day during the pandemic, with residents being forced to work and educate from their homes.
These gigabit speeds also allow for a high degree of network responsiveness necessary for establishing a smart grid system. Most US cities use standard grid systems, which rely on consumers informing a service when they have a power outage or system failure.
Smart grids establish a two-way communication network using digital devices and automation so that service providers are notified immediately when problems occur. EPB’s Hamilton County smart grid, for example, can quickly re-route power around storm damage decreasing outages by 40 per cent in minutes, according to Lobo’s study. He estimates Chattanooga’s consumers will save $20.6 million per annum simply from avoiding spoilage and loss of productivity due to power outages.
Saving money, saving livelihoods
EPB has more than proven that fiber networks are a socioeconomic investment benefitting everyone, not just those lucky enough to live in a fiber area. Better, faster connectivity will enable businesses in all neighbourhoods to thrive, creating job opportunities. During the ‘gig decade’ (2011-2020), EPB’s fiber network directly supported the creation or retention of approximately 9,500 jobs in Hamilton County, luring the migration of global corporations like Volkswagen. The U.S. Bureau of Labor Statistics has reflected this, stating Hamilton County’s unemployment rate being 4.7 percent as of November 2020, compared to the U.S. overall percentage of 6.7.
The social benefits don’t stop here. A study by South Australia’s premier, Jay Weatherill, correlated gigabit networks with improved support for police and fire communications, wastewater management, traffic control and medical diagnostics. These are all features of SiFi Networks’ FiberCity and if Chattanooga has demonstrated anything, it is that fiber networks improve residents’ quality of living above all else.
FiberCity — the next step?
Chattanooga has demonstrated the importance of staying connected. To this end, becoming a SiFi Networks FiberCity could be the next step for cities across the US.
Privately financed networks, like SiFi Networks’, are often the best option to guarantee necessary funding for construction, maintenance and expansion of fiber infrastructure. Municipalities wouldn’t have to rely on taxpayer’s dollars, which can instead be diverted to healthcare, education and other social entities. During a period of continuous technological evolution, FiberCities have one simple mission: to combine advantages of Chattanooga’s gigabit speeds with futureproofed smart city services across the U.S.
Mike Harris is a successful entrepreneur and technologist, having previously founded Total Network Solutions Ltd in 1989, which he later sold to UK telecoms giant British Telecom in 2005. He subsequently co-founded SiFi Networks and is a current investor in the company. He is also the chairman and owner of the New Saints Football Club in Wales, UK. This piece is exclusive to Broadband Breakfast.
Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to firstname.lastname@example.org. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.
SiFi Networks Announces $2 Billion Plan to Put 30 Cities On Their Network
SiFi Networks uses private capital, at no cost to taxpayers, to fund its open access model.
HOUSTON, September 30, 2021 – SiFi Networks has announced a plan to commit $2 billion, sourced from private investors, to build open-access fiber networks in cities across America, the company said at an in person and virtual press conference at the Broadband Community Summit here on Tuesday.
SiFi has plans to begin developing fiber networks in 30 cities by the end of 2022 and to pass over 40,000 homes per month by early 2023.
Ben Bawtree-Jobson, CEO of SiFi Networks, said that the company is working with more than 100 cities and has plans to expand FiberCity Aid, their program which decreases the network costs for ISPs providing service to low-income residents, in an effort to close the digital divide.
The company said that its open-access model gives “communities a much-needed choice against existing cable monopolies and duopolies whose networks have fallen far behind new technologies and skyrocketing consumer demand.” Open access networks allow multiple telecoms to use the same infrastructure to provide services.
Bawtree-Jobson, alluding to existing copper and cable networks being at or near capacity, warned that, “communities need to make policy decisions pertaining to broadband in the next 24 months. Prioritizing long-term competition should be first and foremost in the minds of lawmakers so their cities and towns are no longer hamstrung by large monopolies.”
Additionally, on Wednesday SiFi Networks and East Hartford Mayor Marcia Leclerc announced that East Hartford, Connecticut, is receiving a $40 million all-fiber internet network. This will be both the first open access and first all-fiber network in the state of Connecticut, the company said.
“We’re able to partner with communities to build FiberCities on an Open Access network, using private capital, at no cost to taxpayers. It’s a win for consumers, it’s a win for business, and it’s a win for government,” said Bawtree-Jobson.
Founded in 2012, SiFi Networks’ business plan is to privately fund, build and operate citywide, open access, 100 percent fiber networks. Their networks are made available to internet service providers, providing them with the ability to lease space on SiFi’s network and enter a market quickly and efficiently. Service providers would then be expected to concentrate on customer service and support.
SiFi is currently developing or operating in more than 40 cities across the United States, covering over 1.5 million homes and businesses. SiFi has stated that ISPs of all sizes are welcome to partner with their network to provide thousands of Americans with fiber internet. The APG Group recently acquired 16.7 percent of SiFi Networks while also investing 500 million dollars for joint ventures into SiFi’s open access model.
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