Open Access

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

Published

3 years ago

September 22, 2020

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 35^th 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.

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Jericho Casper

Contributing Reporter 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 and has a passion for universal access and a vendetta against anyone who stands in the way of her getting better broadband.

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Open Access

Sweden’s Open Access Fiber Deployment Offers Lessons for U.S. Strategy

The country boasts internet penetration with 98% served with Gigabit symmetrical speeds.

Published

9 hours ago

December 6, 2023

Jericho Casper

Photo of COS Systems CEO Mikael Philipsson from the company.

December 6, 2023 – The former CEO of a fiber deployer in Sweden urged the United States Tuesday to be bolder in broadband deployment, reflecting on the Nordic nation’s aggressive buildout of open access fiber networks that now provide 98 percent of the population with access to gigabit download and upload speeds.

COS Systems CEO Mikael Philipsson, and former CEO of GlobalConnect, highlighted at Broadband Breakfast’s Digital Infrastructure Investment Summit Tuesday how Sweden’s gigabit broadband strategy drove an open access “fiber race” in the Nordic nation, from which he said the U.S. can learn.

Philipsson called for U.S. network engineers to “plan for 100 percent,” saying if municipalities start to cherry pick which homes they build to, it will result in a fraction of the population likely never being served.

When GlobalConnect was planning its wholesale fiber network, it built fiber to the smallest, most rural locations first, then invited all ISPs to provide services over the network on equal terms, he said.

The Swedish government’s broadband strategy adopted in 2016 encouraged rapid investment and innovation. The government had several initiatives and strategies to encourage private investment in broadband networks, including subsidies and grants for private investment in rural areas, the promotion of public-private partnerships, and encouraging open access networks.

Today, 60 percent of the Swedish market has adopted internet service that utilizes the open access model, with the other 40 percent choosing a vertically-integrated fiber or cable offering that still relies on a wholesale fiber backbone. Due to consumer demand, even the former incumbent, Telia, adopted the open access model in order to maintain its competitive advantage.

Lessons along the way on the open access path

But there were hard lessons learned along the way, Philipsson said, including labor shortages and permitting issues that caused buildouts to stall for 12 to 15 months at a time.

“It’s going to be more expensive and take a longer time than you think,” warned Philipsson.

Fifteen years earlier, leaders of GlobalConnect were deciding whether to pursue an intensive infrastructure rollout. In what would become a defining moment, the team decided to challenge incumbent providers who at the time owned 99 percent of the physical infrastructure in the country, launching a fiber-to-the-home wholesale network with private backing.

The company’s move kicked off a land grab across Sweden, as infrastructure providers raced to compete for a share of the wholesale fiber market.

“It was a fight on the street to get customers,” recalled Philipsson. “We rolled tractors out on the street as a marker to say ‘We will serve this part of the town.’” Within five years, GlobalConnect had addressed two million households across Sweden with a fiber offering, and built its wholesale network to pass one million homes with a 70 percent take rate.

The positive effects of adopting the wholesale model across Sweden were sweeping for service providers, infrastructure providers, and residents, alike. Service providers with big ambitions were able to launch their services nationally with no capital expenditures, he said. Competition drove providers to become more customer centric, offering differentiated pricing models and expanded offerings to separate themselves, he added.

“Partner up with your former competitors, perhaps,” said Philipsson. “Sharing infrastructure is really the end game for digital infrastructure, just like all the other infrastructures.”

Open Access

Gigapower Exec Pitches Value of Open Access Networks to Maximize BEAD Money Efficiency

The open access model allows multiple ISPs to use the same infrastructure. That could benefit Gigapower.

Published

3 months ago

September 13, 2023

Jake Neenan

Screenshot of Bill Hogg, CEO of Gigapower, during Broadband Breakfast Live Online

WASHINGTON, September 13, 2023 – Gigapower is in talks with state broadband offices about potentially building out open access infrastructure with grants from the Broadband Equity, Access and Deployment Program, the company’s CEO said Wednesday.

“I think that when the time comes for BEAD, this platform will be a perfect fit,” Bill Hogg, the company’s CEO, said at a Broadband Breakfast Live Online event.

That’s because consumers could still choose from multiple internet providers offering different services at different price points, all on BEAD-funded Gigapower infrastructure, Hogg pitched. The traditional ISP-owned infrastructure model would only bring service from the provider that won a state contract to expand their network, he claimed.

“They like the idea that multiple ISPs will be able to bring choice to their constituents,” he said of state broadband officials. “They don’t have to pick a winner or a loser.”

Gigapower, a joint venture between AT&T and the investment firm BlackRock, is already slated to build a 1.5-million-location open access network. That means it will own and operate a fiber network while allowing multiple internet service providers to use that network to connect individual homes and businesses.

Spawned from the Infrastructure, Investment, and Jobs Act, the BEAD program allocates $42.5 billion to subsidize broadband infrastructure – primarily fiber – in areas that still lack adequate internet service because of geographical barriers or low population density. After submitting initial proposals by the end of the year, states will be able to start doling out this money to fund projects.

Gigapower is actively looking to add more service providers to its lineup, Hogg said.

“We fully intend to have other ISPs on the network,” he said. “We’re having good discussions with potential future tenants.”

Benefits of open access

AT&T will be the first tenant on the open access network, part of its deal with Blackrock. The telecom is looking to reach more people as quickly as possible, said Erin Scarborough, its president of broadband and connectivity, but building out fiber is costly and expensive. Making use of a network outside the company’s existing infrastructure will make it easier to expand into new areas and was a key motivator for investing in the project.

“That’s one of the key tenets of this agreement and why we were looking to do it,” Scarborough said.

The open access model is a departure from the norm in American telecommunications. There are regional open access networks like Utah’s UTOPIA Fiber, but large ISPs have traditionally opted for the security of owning and operating their own networks.

“When you start thinking about operating more efficiently with less capital, sharing networks has always made sense,” Hogg said. “We think that this model is going to break down the historical bias telecos have had about not controlling all the assets.”

Despite the company’s investment in the project and first-provider status, Scarborough and Hogg were emphatic that AT&T will not have a management role over the network.

“We are the network operator,” Hogg said of Gigapower. “We own the assets. We own the negotiation for the commercial terms.”

Our Broadband Breakfast Live Online events take place on Wednesday at 12 Noon ET. Watch the event on Broadband Breakfast, or REGISTER HERE to join the conversation.

Wednesday, September 13, 2023 – AT&T and BlackRock’s Gigapower Joint Venture

In December 2022, AT&T and BlackRock, through a fund managed by its Diversified Infrastructure business, jointly invested in the Gigapower joint venture that is expected to build fiber connectivity to an initial 1.5 million customer locations beyond AT&T’s current footprint. Notably, AT&T will rely on a commercial wholesale open access platform, where multiple providers share space and compete for customers over the same fiber infrastructure. Could Gigapower alter the historical reluctance of U.S. telcos toward such networks? How will the deployment impact open access projects throughout the United States? Get the facts from this special Broadband Breakfast Live Online event.

Panelists:

Bill Hogg, CEO of Gigapower
Erin Scarborough, President, Broadband and Connectivity Initiatives at AT&T
Adam Waltz, Managing Director at BlackRock Infrastructure
Roger Entner, Founder and Lead Analyst of Recon Analytics
Drew Clark (moderator), Editor and Publisher, Broadband Breakfast

Adam Waltz is a Managing Director in BlackRock’s Global Infrastructure Fund focused on investments in digital infrastructure opportunities across fiber networks, data centers, and wireless infrastructure. He serves as a Board Director at Gigapower, BlackRock’s joint venture with AT&T to develop a commercial wholesale open access platform on a state-of-the-art fiber network.

Bill Hogg leads Gigapower, an open access, wholesale fiber broadband company that builds and operates fiber solutions lit for fast connectivity and designed for network resiliency and reliability. Bill retired as President, AT&T Technology Operations, and was responsible for all planning, investment, engineering, construction, delivery, and assurance of AT&T’s wireless and wireline networks. Previously, Bill served as President-Technology Development, responsible for the development of AT&T’s products and services, digital experiences for customers, and systems supporting the operations across AT&T’s networks and services.

Erin Scarborough leads the team responsible for AT&T’s efforts to connect more Americans to greater possibility through fiber and wireless 5G investment initiatives, participating in government funding programs and public private partnerships. She and her team are taking a strategic, state-by-state approach working closely with state and local governments as they assess their broadband access, affordability and adoption needs. She also leads the combined broadband and mobility product management teams and has cross-functional responsibility for product profitability, pricing, customer experience, product design, multi-year roadmaps, development, and value-add services across the product portfolios.

Roger Entner advises telecom, media and technology companies on strategic and tactical business as well as public policy issues to allow them to compete better in the marketplace. Some of the challenges he helped to address are mobile market trends and business drivers and how to position themselves for growth and profitability, TMT convergence, bundling, changes in media consumption, software-defined networking, transition from MVNO to MNO, as well as providing the evidence and arguments for light touch wireless regulation and spectrum allocation for 5G. Under Roger’s leadership, Recon Analytics has launched the fastest and most agile telecom insights service based on more than 400,000 respondents across consumer mobile, home internet and business telecom customers.

Breakfast Media LLC CEO Drew Clark has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

WATCH HERE, or on YouTube, Twitter and Facebook.