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U.S. Should Follow UK in Open Access Infrastructure Investment, Say Broadband Breakfast Panelists

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June 10, 2020 — The U.S. should follow the European example of investing in wholesale open access infrastructure models, said panelists at a Broadband Breakfast Live Online event Wednesday.

One company that has found success using a purely wholesale model is the U.K.’s CityFibre.

“We chose a model that was pure wholesale, because we knew that there were enough retail customers there that did not own any of their own infrastructure, and that if we could show them a scale operator like ourselves that could give them 10 times the speed at 50 percent of the cost and we could get to scale, then they would move their traffic over,” CityFibre CEO Greg Mesch explained.

While this approach has not yet proved workable in the U.S., Mesch said he believed it could still be successful if multiple service providers committed.

“We’ve led a reference design model and then a regulatory model that is maybe fit for purpose for all the Western countries to look at, which is, how would you get a pure fiber provider going and get him in a state where he can really roll out at scale across the country?” Mesch said.

Screenshot of panelists at the Broadband Breakfast Live Online event

The U.S. is held back by a weaker regulatory market than that of the U.K., and also faces substantial lobbying from the telecom and cable industries, said Municipal Capital Markets Group Managing Director Chris Perlitz.

“The struggle we have is that the [Federal Communications Commission] has been stifling our ability and rather stifling the local government’s ability to make proper decisions,” Perlitz said. “And then there’s been a lot of smoke and mirrors in the market, generally not really being clear as a path of how you go about this.”

Matteo Andreoletti, head of infrastructure equity in Europe and North America for the Smart City Infrastructure Fund, agreed with the importance of CityFibre’s model.

“We think that the solution will need to actually have a combination of technologies, but the number one criteria that we use is to promote the open access wholesale model…and the ability of deploying this model at scale to provide reliable connectivity to a high number of cities,” Andreoletti said.

Andreoletti illustrated his point with the example of Smart City Infrastructure Fund-backed SiFi Networks, a private developer of open-access fiber networks in Fullerton, California.

“What we really liked about the business model was their intention to provide a service for tier two and tier three cities —midsize cities that often neglected, or are not able to access the right level of financing and capability,” he said.

Development in smaller municipalities is important in “avoiding a major digital divide, but also it’s a way to stimulate economic growth, because better connectivity drives businesses and preserves competitive disparities,” Andreoletti added.

Ready.net Founder Jase Wilson pointed out the importance of looking into the different ways of capturing value from remote services.

“We’re spending over a trillion dollars a year as a country on health care…and yet there are hundreds and hundreds of telehealth capable public health institutions in the United States, but the people that don’t have access to the internet and strong enough connection aren’t able to do it and participate in it,” he said.

Investment horizons need to be long, Perlitz said, pointing out that he has been working with some healthcare organizations who are just now starting to receive return on telemedicine investments for the first time.

Digital infrastructure investment does not fall into the typical private equity model of three to five year return on investment, Andreoletti added, and current business models depend on visionary cities who are willing to invest in smart city technologies long term.

“The struggle that I’ve seen is trying to get the cities to understand the tangible value,” Perlitz said. “…It compresses the return on investment pretty fast, but it’s hard for them to get their head around, because accounting for those values is hard to do.”

In spite of the longer timeframe, Mesch emphasized the eventual value of investing in pure fiber open access infrastructure.

“If you do it, you will increase the GDP growth in your city by one to two percent per year for the next decade and beyond,” he said.

Editor’s Note: All of these topics will be explored in greater length at Broadband Breakfast’s Digital Infrastructure Investment Physical/Virtual Event at the Broadband Communities Summit. Register here to attend Digital Infrastructure Investment.

Development Associate Emily McPhie studied communication design and writing at Washington University in St. Louis, where she was a managing editor for campus publication Student Life. She is a founding board member of Code Open Sesame, an organization that teaches computer skills to underprivileged children in six cities across Southern California.

Open Access

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.

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Barbara Hayes (left) and Roger Timmerman (right) speaking at Broadband Communities Summit 2022 on May 4

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.

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Open Access

‘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.

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Photo of Elizabeth Walker and Andres Carvallo at the city council meeting.

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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Open Access

Construction of Yelllowstone Fiber Network in Montana Begins Ahead of Schedule

The project will be Montana’s first open-access fiber-to-the-home network.

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Photo of Bozeman, Mont., from January 2011 by Mike Cline used with permission

WASHINGTON, March 24, 2022 ­– Montana fiber provider Yellowstone Fiber announced Wednesday that construction has begun on a $65-million network based in Bozeman, well ahead of anticipated pace.

The network, operated in partnership with large Utah-based open-access network UTOPIA Fiber (a sponsor of Broadband Breakfast), will be Montana’s first high-speed all-fiber internet network as well as its first open-access fiber-to-the-home network.

The start of construction for the privately-funded network comes only six months after initial announcement of the project.

Not only will the network connect every address in Bozeman, but it will also extend “deep into Gallatin County,” according to the developer.

Businesses are expected to receive speeds of up to 100 Gigabits per second and residential properties will experience up to 10 Gbps to create what the city of Bozeman has called “the first true gigabit city in the state of Montana.” Pricing plans are expected to be announced this spring.

The first six internet service providers to provide services on the network will be Blackfoot, Global Net, Hoplite Industries, Skynet, Tri-County Telephone Associates, and XMission.

Montana is one of the least-connected states in the U.S. About a third of residents in Gallatin County, in which Bozeman is a city, lacks internet access.

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