WASHINGTON, December 6, 2023 – Federally funded broadband infrastructure in rural areas could be less effective without more internet exchange points, experts said on Tuesday.

The Joe Biden administration’s $42.5 billion Broadband Equity, Access and Deployment program is targeted at bringing fiber-optic cable, the fastest, most future-proof technology available, to areas of the country without adequate internet access. 

That program emphasizes “last mile” builds, connections to individual homes and businesses. But such connections, while necessary, are only part of the puzzle, said Tom Cox, vice president of state and government affairs at Connected Nation, a nonprofit that works with states to expand broadband access.

“If you don’t figure out a way to solve the transport issue, and if you don’t figure out a way to solve the latency issue, a lot of this BEAD money is going to be kind of all for naught,” he said at the Broadband Breakfast’s Digital Infrastructure Investment Summit.

The transport and latency issues Cox referred to are the high cost of data transfer and higher latency for networks that are physically farther from internet exchange points, or IXPs. Those are facilities where local internet providers exchange traffic and data with the broader internet. 

“We’re already talking to providers in rural areas,” he said. “And once they built out to these places, they said ‘We can’t afford it… we are taking a loss because our transport costs are so high.’”

In the United States, IXPs are typically located in larger cities where demand for traffic is already high. That’s because American exchanges are typically for-profit, as opposed to the nonprofit exchanges found in Europe, said Ben Hedges, vice president of network strategy at IXP operator Cyxtera.

Scott Brown manages a data center in Richmond, Virginia. He said after he got connected to a closer IXP in the state, “our latency to most of our destinations, about 30 milliseconds, dropped down to 3 milliseconds.”

The difference was only a few thousandths of a second, but the faster data transfer amounted to a “massive difference in quality of internet,” he said. He also saw lower transport costs than before.

There have to be enough potential users present to attract enough content providers and carriers to set up infrastructure and make a potential exchange point profitable, panelists said. That’s not always an easy condition to meet in the rural areas that will need closer IXPs to get the most out of BEAD infrastructure.

“I think that’s going to be a challenge for us as we look at closing the digital divide,” said Ron da Silva, a telecommunications consultant with Network Technologies Global.

But the increased traffic from new fiber connections could also help make new markets for data centers and exchanges points, he noted.

“The two kind of grow up together,” added Peter Cohen, the principal program manager at Microsoft.

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.”

WASHINGTON, December 5, 2023 – The House Energy and Commerce Committee on Tuesday cleared a bill that would allow the Federal Communications Commission to issue already auctioned spectrum licenses. An identical bill passed the Senate in September.

The FCC’s authority to auction off spectrum and issue licenses expired for the first time in March. At that time the commission had auctioned 8,000 licenses in the 2.5 GigaHertz band for 5G networks, but had yet to issue them.

The 5G SALE Act, introduced in September by Rep. John Joyce, R-Pennsylvania, would give the FCC authority to release those licenses, allowing winners to expand their service areas.

The bill will now go to the full House for a vote.

FCC commissioners have been pushing for a full reinstatement of their auction authority, but supported the stopgap bill at an oversight hearing held by the committee on November 30. 

“The licensees deserve to get access to that spectrum,” FCC Chairwoman Jessica Rosenworcel said at the hearing. “You’re going to hopefully expedite the day when they do.”

T-mobile would see the biggest expansion if the bill becomes law. It spent over $300 million on 7,156 licenses in the band.