June 4, 2020 — In a Broadband Breakfast Live Online webinar on Wednesday, digital infrastructure experts considered the role of open access networks in shaking up the landscape of internet infrastructure in America.
In particular, questions about who will construct, finance own and operate digital infrastructure needs of the future were thoroughly discussed
Moderator Drew Clark, editor and publisher of Broadband Breakfast, prefaced the discussion by explaining that unlike a vertically integrated model in which one company owns, operates and provides internet service, the open access model disrupts broadband companies’ ability to monopolize the supply chain.
Open access networks allow one entity to own the utility-like infrastructure component, another entity to operate the network, and still other parties to provide a range of advanced broadband internet services.
Several panelists backed the open access model as the answer to funding last-mile connections. Open access networks can have the impact of effectively lowering the cost of a capital-intensive network infrastructure building process.
Roger Timmerman, CEO of UTOPIA Fiber, detailed how the open access model offers the unique possibility to work directly with cities on what they want and need. Communicating with municipalities to find ways to comfortably finance open access infrastructure has led to the expansion of the open access network, he said.
Each city has a different customer types, landscapes, existing infrastructure and needs, Timmerman added. For example, when UTOPIA Fiber deployed in three different cities, the company decided to use three different business models to provide access. In Idaho Falls, Idaho, UTOPIA Fiber helped support a municipal electrical utility. In Woodland Hills, Utah, the network operator built and operates a network owed by the municipality. In Morgan, Utah, UTOPIA Fiber financed construction, but with a city guarantee of subscribers.
Monica Webb, director of market development and government affairs at Ting Internet, said that there exist a diverse array of ways to finance last-mile infrastructure. Ting expanded to offer fiber service in 2014 and now offers service in over 10 markets.
In some markets, such as Charlottesville, Virginia, Ting owns and operates the networks end-to-end. In other cities, like Raleigh, North Carolina and Centennial, Colorado, Ting leases core infrastructure from municipalities to build onto it, deeper into rural areas.
In other cases, private entities build the infrastructure and Ting offers services on their networks.
A different financing model was introduced by Darrell Gentry, CEO of Next Level Networks. Next Level Networks empowers actual homeowners to own their own networks, paying construction and operation costs.
The company developed a crowd sourcing app to empower residents to band together to build necessary infrastructure where it is most demanded. By utilizing this model, infrastructure builders know there will be a net gain from the beginning of a project.
Panelists agreed in order to fund fiber to the last mile, it is necessary to build into cities first, where network adaption will be high. This will generate the necessary revenue to build into sparser neighborhoods.
Isak Finér, chief marketing officer of COS Systems, emphasized the importance of prioritizing concentrated neighborhoods where demand is greater. He recounted seeing a number of projects stagnate due to being built in the wrong neighborhood.
“When going into an area, we ensure the investment we make will be offset by the revenues we expect,” Webb echoed.
After initially turning a profit, the revenues generated could be cross-subsidized to invest in infrastructure in low threshold communities, Timmerman said.
Other panelists agreed that government funding must play a roll as developing infrastructure will not always result in a financial net positive.
Some panelists said that the private sector fails to fund digital infrastructure in areas where they predict there is little return on investment. Municipalities can play a crucial role in aggregating demand for future-proof open access networks.
In order for cities to take control of their own economic future, now is the time to consider different infrastructure funding options, panelists said.
The Broadband Breakfast Live Online discussion was a preview of Digital Infrastructure Investment, a Physical/Virtual Event taking place on Monday, August 10.