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Open Access

CEO Greg Mesch Recounts How CityFibre, UK’s Third Major Telecom Provider, Grew With Wholesale Network

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September 22, 2020 — Open access and wholesale networks have been slow in coming to the United States. Yet in the United Kingdom a network utilizing a wholesale model, CityFibre Networks, is taking the country by storm.

CityFibre, led by CEO Greg Mesch, is simultaneously improving internet reliability and accessibility for users, while simultaneously allowing existing internet service providers to extend their reach. With £4 billion in investment, it is building fiber networks to eight million premises, or 30 percent of the UK market.

Fiber buildouts in the United Kingdom were lagging

UK’s fiber coverage ranked 35th in the world in 2010UK. The country’s advanced broadband market was dominated by two major players: British Telecom’s Openreach and Virgin Mobile.

Consumers had limited options, poor service, and high prices.

“When the opportunity to build a fiber network arose, we decided that instead of building it vertically-integrated, we would do it all open-access, or all wholesale,” Mesch said during the Digital Infrastructure Investment event at the Broadband Communities Summit.

“Why put a fiber network in that’s just only used by one ISP,” he questioned. He called for operators to “open it up to everyone” and attempt to “attract all ISPs to the network.”

CityFibre is nowhere near Mesch’s first fiber endeavor, as he worked with a variety of fiber and other telecom ventures in Europe before founding the UK company.

While CityFibre designs, builds, operates and owns the network, it allows existing internet service providers to operate on the platform, making no effort to compete with them.

In order to break ground on the project, Mesch raised £1.6 billion and completed multiple fiber acquisitions.

Vodafone and Goldman Sachs partners join in with CityFibre

CityFibre’s last-mile deployments began in late 2018, supported by Vodafone, a UK-based internet service provider and a substantial investment from individuals associated with Goldman Sachs.

Since the latter end of 2019, the broadband provider has embarked on aggressive plans to roll fiber out across the UK, seeing itself as the leading independent supplier of fiber networks after BT and Virgin Mobile.

The networks initial two-phase plan was to spend £2.5bn to deploy a 1 Gigabit per second (Gbps) fiber-to-the-home network to 20 percent of the current UK broadband market.

Phase One aimed to extend the network to a minimum of one million homes and businesses across 12 cities by the end of 2021. Phase Two promised to reach 5 million premises in 37 cities by 2025.

Current construction plans for CityFibre

Mesch updated Digital Infrastructure Investment attendees on CityFibre’s current construction plans: Above and beyond the prior Phase Two goal, the company is aiming to utilize a £4 billion investment to extend their fiber network to 8 million premises, 30 percent of the UK market.

Mesch detailed critical steps the company made in deploying the full fiber network and what it took to attract existing service providers to use the system. He said CityFibre had been able to attract some of the UK’s best-known telecom brands as clients.

To get its start, the company developed a strategic partnership with the biggest mobile operator in the UK in 2017, Vodafone. The company then moved to acquire TalkTalk, another fiber operator, which it bought from FiberNation. With the purchase, the company nearly double in size, effectively becoming the UK’s third largest national digital infrastructure platform.

Mesch said that key to attracting incumbent providers to use the network was providing 1 Gbps speeds and pricing the product less than existing operators.

In an attempt to advise up-and-coming entrepreneurs, Mesch said it is crucial to “aggregate demand across cities” and then build a wholesale, open unit.

“Once you have scale, incumbent providers will use you,” he detailed.

From publicly-traded to privately-held company

Attorney and Broadband Breakfast Editor and Publisher Drew Clark asked Mesch whether he preferred operating under a publicly-traded or a privately-traded company model. Mesch replied with a laugh, saying he loved both models and hated both models.

Ultimately, Mesch said that he personally believes “the best place for fiber ownership is in private hands.”

While CityFibre was initially a public company, it moved to become classified as a private infrastructure class ownership structure in 2018.

“We think it’s a perfect time to shift from public ownership and public scrutiny to private long-term patient capital while we go through this mass period of construction,” Mesch said in a 2018 interview with Reuters.

In order to amass scale, it is crucial that fiber assets remain in private hands, urging that while “one city isn’t scale, 50 cities is,” he said.

“It’s much easier for a big operator to consume from us,” than from cities, Mesch argued, claiming it is impossible for incumbents “to deal with 25 or 50 different municipalities.”

“We’re building across 100 cities in the UK,” said Mesch, and “being in private hands allows for the standardization of access rules and terms of service and is altogether easier to finance.”

“All pension funds have started to classify fiber as an investible asset,” he noted, “therefore, if you’re a pure fiber asset you’re deemed investible by an infrastructure fund,” while municipalities are not.

Mesch concluded saying “it behooves a city to help a private company build, but I don’t think a city should do it on their own.”

The United Kingdom’s push for full fiber buildout by 2025

Stakeholders in the UK are on the same page when it comes to the importance of deploying an accessible fiber network to all.

Last election, both the Labor Party and the Conservative Party, the two dominant parties in the country, campaigned on plans to deploy “full fiber” networks across the UK, within 5 years.

Mesch said that Britain’s need for a world-class digital infrastructure has never been greater, which is why he stands firmly behind the government’s plan for nationwide coverage by 2025.

“Essential to making an economy work and compete across the world today, is a world class infrastructure. Full fiber will play a critical role in levelling-up the UK and so today we are accelerating our plans to bring full fiber to more towns and cities, even faster,” he said.

The government and the people’s push for an accessible, reliable nationwide fiber network has benefited the company enormously. “The government is attracted to the model, which allows us to build at scale” with limited obstructions, said Mesch.

Mesch reported that when planning the network, the company uses a city-centric model, which accounts for public sector buildings, businesses, 5G, and consumers.

CityFibre believes that, underpinned by a full fiber infrastructure platform, these towns and cities will spur economic growth, helping to further develop the UK and make the country more competitive as a whole.

Can the wholesale model work in the U.S.?

During the event, Mesch mentioned that he would love to see what a wholesale model could do to expand fiber throughout the United States.

“I think a city fiber model could work in every city across the U.S.” said Mesch, although he noted the scale of the project would be “huge to do.”

While there is talk of what a CityFibre model could do across the U.S., how the model would operate over such a vast market remains unknown.

In an attempt to advise anyone interested in taking a stab at the pitched project, Mesch said “the first move would be to consolidate all wholesale, open access providers across the U.S., city-by-city,” noting that “as soon as you get scale, the bigger providers will use you.”

Displaying his interest in potentially trying to replicate Mesch’s model across the U.S., Ben Bawtree-Jobson, CEO of SiFi Networks, a North American open-access operator, joined to comment and ask questions of Mesch.

Bawtree-Jobson asked Mesch what the biggest obstacles were in constructing CityFibre Networks.

Mesch replied saying “today it’s the construction, but five years ago is was getting people to believe the model.”

Visit Digital Infrastructure Investment for complete information and summaries of the sessions from the Broadband Breakfast mini-conference, which is being re-broadcast at Broadband Communities Virtual Summit.

Former Assistant Editor Jericho Casper graduated from the University of Virginia studying media policy. She grew up in Newport News in an area heavily impacted by the digital divide. She has a passion for universal access and a vendetta against anyone who stands in the way of her getting better broadband. She is now Associate Broadband Researcher at the Institute for Local Self Reliance's Community Broadband Network Initiative.

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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