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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

British Telecoms Are Aligning with Emerging U.S. Position on Open RAN Adoption

Open RAN adoption is said to save telecoms money and boost security, as providers are forced to move off Huawei.

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Howard Watson, chief technology officer of BT Group

October 18, 2021 – Howard Watson, chief technology officer of telecommunications company BT Group, spoke on Wednesday at the Broadband World Forum about the future of the UK’s network infrastructure, including removing Huawei’s equipment from their networks and developing open radio access networks for wider use.

Speaking at the opening session titled “Building an innovative converged network infrastructure for the UK,” Watson discussed the challenges and possibilities for offering fast, secure broadband and offered O-RAN as a solution for wider connectivity.

Watson discussed utilizing open RAN to facilitate greater interoperability between vendors’ equipment, as it opens the market to more technologies due to its open configuration. The concept advocates for a more open radio access network than provided today, which is held by fewer vendors.

The Federal Communications Commission has pushed for ways to develop open RAN to minimize network security risk, as the movement has gained significant momentum since Huawei was banned over the past 18 months. FCC Acting Commissioner Jessica Rosenworcel has described open RAN as having “extraordinary potential for our economy and national security.”

“When customers go back into the office, the infrastructure they left behind must have key growth” Watson said, referencing the shift in office culture toward remote work during the COVID-19 pandemic.

“Expectations of customers change,” Watson said, adding that “they expect broadband to be always on, they expect high bandwidth.” Above all, “they expect investment no matter the cost.”

BT is seeking to deploy to 90 percent coverage in the UK by 2028.

On the sidelines of his keynote address, Watson noted BT’s progress in limiting Huawei products to 35 percent of an operator’s fiber access footprint by 2023. The UK government requires that Huawei’s equipment must be removed entirely by the end of 2027. The UK considers Huawei a “high risk” vendor for its network infrastructure.

However, BT is waiting for Huawei’s equipment to grow old before replacing it, Watson said. “Our intention is to ensure that we get the full economic life out of the Huawei [products] that we have deployed,” he said. He said BT believes the products can be used until 2031 or later.

“We’re in talks with government about that timeline” Watson said.

Panel discussion about European fiber investment

Watson said that “densification” happens in areas that are fiber rich, so “providing fiber to smaller cell sites is naturally an evolution.”

He said that BT is looking at a range of alternatives including Wi-Fi solutions to getting 1 Gigabit per second (Gbps) capability to household through open architecture-based solutions.

In addition to Watson, a panel focused on the investment parameters for fiber investment featuring officials from Macquarie Group and Eurofiber.

The panel focused on investment challenges and strategies for broadband infrastructure investment and  discussed an opportunistic vision for broadband deployment. Speaking of more mature market with a history of broadband adoption, Macquarie Managing Director Oliver Bradley asked how providers could transition to more efficiency and maximizing the value of an existing network.

Among the principal drivers for investment include co-investing and deregulation, he said.

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Open Access

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.

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Photo of Twin Peaks in American Fork, Utah, by Bryant Olsen used with permission

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.

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Expert Opinion

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.

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The author of this Expert Opinion is Mike Harris, the co-founder of SiFi Networks.

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.

Chattanooga at night

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 commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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