Tag Archives: dark fiber

Riverside’s open access muni fiber network is open for business

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Municipal dark fiber is now available for lease on an open access basis in Riverside, California. Riverside Public Utilities (RPU) – the City of Riverside’s municipal electric and water utility – has gone live with its dark fiber webpage, which sets out the rates and terms for leasing strands on its 120 mile network.

The base rate is $125 per strand-mile per month (one mile minimum, by tenth of mile after that), which can fall to $70 with term and volume discounts. Drops, laterals and end points cost $150 per month each.

Dark fiber is available to any business that wants to make use of it, including Internet service providers, mobile carriers and other telecommunications resellers. There are no plans to offer lit services or Internet bandwidth to businesses, or provide residential service of any kind.

Security is always a concern for any public utility. The fiber strands that RPU uses for its own operations will not be shared with any customer. The only strands that will be terminated at a customer’s location will be ones that are either leased to that customer or used to monitor network continuity.

Like RPU’s electric and water systems, the fiber network has a citywide footprint and is particularly dense in the downtown area, where several office buildings are already on-net. It’s interconnected to Southern California Edison’s 5,000 mile regional fiber network, Charter Communications’ local network and to the County of Riverside’s RC3 data center, where connections to other major fiber and telecommunications companies are available. RPU’s fiber route also passes several other potential interconnection points, including an AT&T central office, a Level 3 data center, UC Riverside, and Metrolink stations.

If a connection to a particular building or area of the city isn’t already available, RPU will build laterals and extensions to order. Terms for new construction and information about planned projects are also on the new webpage.

Full disclosure: Riverside Public Utilities is my client and I’m working on their behalf (although what’s posted on my blog is purely my responsibility). Take it for what it’s worth.

FCC misses night and day difference between lit and dark fiber

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The Federal Communications Commission’s decision to allow CenturyLink to buy Level 3 Communications might have broken with merger review practices, but it is solidly in line with its past nonsense regarding wholesale broadband services. Earlier this year, the FCC justified backing away from common carrier regulation of business-to-business service with the circular argument that if ISPs – Comcast and Charter Communications, in particular – don’t follow common carrier rules, then common carrier rules don’t apply.

In its latest departure from logic, the FCC majority claimed that allowing a managed services-centric legacy telco to buy the nation’s largest independent fiber company wouldn’t harm the market for “long-haul transport service” because lit service and dark fiber are the same thing…

In conducting our review, we evaluate the competitive availability of long-haul transport considering both lit transport services and dark fiber, as we recognize dark fiber as a substitute for lit fiber transport services for purposes of our public interest analysis and there is no basis in our record to distinguish between lit and dark fiber transport.

There is, in fact, a huge difference between buying lit (or managed) service, where bandwidth quality, reliability, capacity and routing are determined by the provider, and leasing particular strands of dark fiber between two points and lighting it up with your own equipment.

The latest example of why that’s an important distinction came three weeks ago when the County of Santa Cruz lost internal connectivity and its primary link to the Internet during a major wildfire, due to an otherwise unrelated cut in an AT&T fiber line. County staff didn’t know that the direct connections between major sites they thought they were buying from AT&T were actually being routed through San Jose. A single misplaced chop by a road construction crew was enough to take it all down.

Dark fiber is also an essential building block for competitive service providers. When independent ISPs are forced to buy managed service on terms dictated by the monopolies they’re competing against, anything resembling a free market disappears. By ignoring this distinction and approving the CenturyLink-Level 3 deal with no thought given to the damage it will do, the FCC is whacking market competition, not regulatory weeds.

Fiber network planned to run alongside California high speed rail

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At least the fiber will be fast.

California’s high speed rail project is supposed to connect San Francisco to Los Angeles (well, maybe Burbank) with 200 mile an hour trains in 2029. The entire system, which is planned to extend 800 miles and include Sacramento and San Diego, would be completed some time after that. The first operational segment – location still undecided – is slated to start running in 2022. That’s assuming it’s actually built and the current schedule holds. Neither are guaranteed at this point.

But whenever and where ever it eventually appears, the high speed rail line will include conduit suitable for fiber optic cables, which will be made available to other users. That’s according to Rachel Taylor, an attorney with the California High Speed Rail Authority. She spoke at a energy-water-telecoms workshop organised by the California Public Utilities Commission last week.

Taylor said that two fiber guideways will be installed along the route, one to support rail operations and the other for third party use. No business model has been determined. Options include installing dark fiber and leasing it out, much as BART does in the Bay Area, or just selling conduit space. Like BART, access to the fiber will be restricted to pre-built access points. “You can’t get into our dedicated right of way, so that’s why there are access points designed into it”, Taylor said.

An openly available dark fiber route between the Bay Area and LA, via the San Joaquin Valley, will be a valuable asset for economic development along the primarily rural rail corridor, and it’ll be welcome competition to the long haul fiber routes that already run north and south. When – if? – it eventually arrives.

Watsonville growing economy and cash with muni dark fiber

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“We want to be able to service other business”, said Bob Berry, public works project manager for the City of Watsonville. “We think we want to turn this into an enterprise fund”.

The city is installing dark fiber between key public buildings and, incidentally, through core business areas of Watsonville. The project was launched after Charter Communications raised the price it was charging for similar connections from free to $150,000 a year, a move made possible by its shift from local to statewide cable franchising. Besides supporting the city’s internal network, plans are in the works to generate revenue – and stimulate local businesses – by leasing dark fiber and conduit space to interested service providers.

The first phase of the project involves stitching together existing city-owned conduit. Because Watsonville began specifically identifying and routinely mapping potential broadband assets, such as traffic signal conduit, several years ago, building a 4-mile fiber network only required installing about a mile of new underground duct work. The work will cost about $200,000, less than the $300,000 that the city originally estimated. It’ll begin in January.

Berry was speaking at a broadband deployment workshop organised by the Central Coast Broadband Consortium (CCBC) earlier this month. Public works professionals from other Monterey Bay area cities and executives from local Internet service providers quizzed him on construction details and operational plans. Particularly interesting to the ISPs was the decision to put fiber access points every three hundred feet, at least along the new sections of the route. The closer together those points are, the less it’ll cost, on average, to hook up businesses along the way.

Watsonville is a city of about 50,000 people in southern Santa Cruz County. Its neighbor to the north, the City of Santa Cruz, isn’t much bigger but there’s a whopping difference in median household income: $63,000 versus $46,000 in Watsonville. Improving broadband infrastructure – for business and government – is a high priority and seen as a critical resource for closing that gap. The City of Watsonville has been an entrepreneurial broadband champion, serving as the lead agency for the CCBC and developing a broadband mapping and analysis center that serves the region.

Metro broadband: without the political cards, you’re not playing with a full deck

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Political value: the need for speed at the San Leandro public library.

There’s an argument to the effect that the prices charged for broadband service by telcos and cable companies in urban areas are higher than necessary to provide that service and make a reasonable profit.

It’s not crazy talk. You can make a case that more densely populated areas have lower per household costs – opex and capex – and that more affluent areas have higher profit margins. There are counter arguments too, not least of which is that telecoms network costs should be spread across all users. Personally, I favor the whole system approach – the more people reached, the more valuable the network – but the marginal cost approach has valid uses.

However, it doesn’t follow that an independent competitor in a metropolitan area will be able to charge less for equivalent service or the same for better service. The telecoms business has huge economies of scale: fixed operating costs are high relative to variable costs and large purchases by big companies bring hefty discounts. Particularly for television programming. A local competitor operates at a significant cost disadvantage.

A significant fraction (30%? 40%?) of households passed have to be willing to pay more ($50 per month more is a good placeholder) to either incentivize an incumbent to bring in fiber or support the operating cost and capital requirements of an independent system. The market research I’ve seen says that’s not happening.

People may value significantly better broadband services highly in many senses of the word, but not economically. At least not to the extent that an independent, privately financed metro scale FTTH overbuild in a competitive market is economically sustainable. Not yet.

Something else has to be on the table for an independent FTTH overbuild to work. Construction and operating subsidies, (significantly) below market rate financing, publicly owned assets are examples. In other words, you’re adding political value to whatever economic value is present in order to make a business case.

Whether the political value exists is a legitimate topic for debate, and some communities or state and federal policy makers might conclude that it is. The California Advanced Services Fund (CASF) is one example of policy-driven broadband investment. Leveraging a public owned electric utility, such as in Chattanooga (FTTH) or Palo Alto (dark fiber), is another. So is partnering up public assets and private investment, as in San Leandro. And there are more. And there are counter-examples too.

Claims made by some that ordinary metro FTTH overbuilds are self sustaining investments with no risk to taxpayers are at best distractions. For now, it is as much a political question as an economic one. Debate should be encouraged.

The problem with FTTH is there’s no problem

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It’s not about finding a mass market solution. It’s about finding a sufficiently acute mass market problem.

The struggle to develop a general fiber-to-the-home (FTTH) or premises (FTTP) business model for city-wide deployments doesn’t result from a market failure. Quite the contrary. It’s evidence that the laws of supply and demand are in full effect.


Demand, meet supply.

People generally get the broadband service someone else – a business or government agency mostly – is willing to give them for the price they’re willing to pay. FTTH market research tracks closely with actual results. If you ask consumers if they’d like faster broadband, they say yes (who wouldn’t?). But when you test price points, they’re generally pleased with what they’re paying now and don’t perceive enough additional value from higher speeds to motivate them to pay more.

From the point of view of a city or other prospective overbuilder, it’s a competitive market. AT&T, Comcast and the rest do a fair job most days meeting most customer expectations. They leverage that complacency to fiercely defend their turf. Successfully, for the most part.

Cities are good at filling broadband infrastructure gaps where immediate economic demand exists, either directly or by bringing a private partner to the table. Lit San Leandro, Palo Alto’s dark fiber and Mountain View’s WiFi system are good examples. But those are specific solutions in largely unique business circumstances that also suit the particular political character of each city.

There won’t be a market-driven case for FTTH until a sizable fraction of the residents and small business owners in a community have a problem that 1. they’re willing to pay an extra, say, $50 a month to fix, and 2. can’t be solved to their satisfaction by existing technology and service providers.

Adding institutional IT budgets to the kitty is not as helpful as some FTTH backers, such as Gigabit Squared, think. An organization with an IT budget hefty enough to make a difference is really looking for wholesale service. Big IT systems need big pipes and budget accordingly. That’s helpful, maybe decisive, for funding a middle mile project, and there are examples where it’s done the trick.

You need a significant fraction of the available homes and businesses ready to spend more now, to tip the balance for an FTTH business case. Until the economic demand (i.e. marginal willingness to pay) develops, the Gigabit Squared model will only work if it leverages political demand: grants, direct tax money, cross-subsidies from other municipal utilities or other public support, in healthy quantities.

Gigabit Seattle’s financial vehicle is still a concept car

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Car of the Future as conceived by Studebaker's Director of Styling, Raymond Loewy, in the August 1950 issue of Science and Mechanics. Loewy wrote about the new styling for tomorrow's rocket age population. Via Wikimedia Commons.
Thanks for the down payment. Just need to find someone to co-sign the loan.

“Gigabit Squared is providing the capital, although details of the financing model aren’t clear,” wrote Stacey Higginbotham in a story for GigaOM following Gigabit Squared’s announcement last May that it had formed a partnership with Gig.U and was bringing $200 million to the table to fund fiber networks in as many as six cities.

The financing model was equally unclear last week when the City of Seattle and the University of Washington blessed a plan by Gigabit Squared to build a demonstration fiber-to-the-premises network in 12 Seattle neighborhoods. No cash is committed or, according to the City of Seattle, even contemplated.

Higginbotham aside, most of what’s been written about the $200 million fund is uncritical and assumes it’s a done deal. Not so. Gigabit Squared’s public statements are nuanced, to put it gently.

In the 23 May 2012 announcement, president Mark Ansboury didn’t say he had the cash in hand. “We intend to make available $200 million in investment capital,” he said. His words speak to plans, not accomplishments.

The next day, Ansboury expanded on his funding strategy in an interview with industry blogger and consultant Craig Settles.

“Our initial commitment of $200 million is based on the combination of some equity and leveraged financing. Each of our deals will be different,” Ansboury said. “So how much equity versus how much financing we’re going to do are going to be really dependent on the mix of what a community brings to the table: how much in kind, how much support and the things we need to do.”

Translation: we don’t have the money yet, but we think we can find it if the locals put enough on the table.

“It was the idea that a community has underutilized assets,” Ansboury explained. “That a community has a certain pent up service demand, that the community has the capability to aggregate capacity and demonstrate the need and value for broadband. In doing that, then you can create the financial vehicles. You don’t care if its public, private, grant…you can create the vehicle that justifies the value proposition for bringing that kind of capital to the table to help build out out the network.”

Translation: give us your dark fiber and city, county, school district and university IT budgets, wheedle some pork out of the feds and the state and have residents sign pledges (with maybe, say, a $100 deposit) to pay for installation and subscribe to service. We’ll get back to you.

His financial model assumes that if community demand can be demonstrated and big users, particularly government and educational organizations, commit future budget dollars, plus whatever broadband assets and grant money they can find, then that’ll be a sufficient guarantee for private investment and bonds, bank loans or vendor financing.

That puts the Seattle announcement in a clearer context. “The City, the University and Gigabit Squared have signed a Memorandum of Understanding and a Letter of Intent that allows Gigabit Squared to begin raising the capital needed,” the joint press release read.

There’s the demonstration of demand. Now it’s time to show that the financial vehicle has wheels.

Seattle passes the fiber (50 mega) buck

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The unveiling of Gigabit Seattle yesterday is just the first step on a long road to building a fiber to the premises (FTTP) service for residents. The City of Seattle and the University of Washington have endorsed a plan by a consulting firm – Gigabit Squared – to “begin raising the capital needed” for a demonstration project.

Gigabit Seattle coverage

It’s not small change. The 200 miles of fiber needed to reach 50,000 homes and businesses in 12 neighborhoods will cost something like $50 million to install and light up. In round numbers, the Seattle demo looks remarkably similar to plans for building an FTTP network in Palo Alto: similar mileage, existing city-owned dark fiber network, urban terrain, prevailing wage rules, environmental standards and university-leaning demographics. Depending on the assumptions made, construction costs would be around the $40 to $60 million range.

I did an extensive analysis of the costs, potential revenue and overall FTTP business case for the City of Palo Alto earlier this year. Specifically, I looked at whether or not it could be built and operated solely on the basis of subscriber revenue, including up front charges. The short answer is no. The long answer is hell no.

On the other hand, if you build it with money that doesn’t need to be paid back for a couple of generations, then it’s possible. Not certain, though. Depending on the assumptions, such a network might generate enough revenue to pay operating costs. Or might not.

Either way, the City of Seattle won’t be picking up the tab. “The City’s only costs are for existing staff,” says the FAQ on the City’s website. “There is no additional City money going into this project, and there is no risk to the taxpayer.”

In fact, the City of Seattle is expecting to be paid for the dark fiber it’ll be contributing. It’s up to Gigabit Squared to find the money. And as Esme Vos points out, “they are an engineering and consulting firm, not a traditional ISP” with a track record to show investors and cash flow to smooth out the bumps.

So far, the only source mentioned is a $200 million kitty that gigabit Squared says it has raised in partnership with Gig.U, a consortium of U.S. universities. Gig.U is led by former FCC staffer Blair Levin, who headed up development of the National Broadband Plan. That money is intended to be split amongst at least six projects, of which Seattle is the second announced (first was Chicago).

Even though details on the cash are vague, Gigabit Seattle has surprisingly firm plans. Initial engineering work is scheduled to begin in the next two or three months, with project completion by the end of 2014.

That’s for the demo project, which will only reach 12 Seattle neighborhoods out of more than 100. According to the city’s FAQ, Gigabit Seattle has set a benchmark of a 15% take rate. Once 15% of the potential subscribers in the first 12 neighborhoods sign up for service, the network will be rolled out to the rest of the city in phases. That’s not an impossible figure to hit. Palo Alto’s research shows there’s a fair chance of getting to 15% even with a $100 per month price tag.

But first they need to find the cash to build it, and it won’t be easy if they have to show a plausible timeframe for an investment grade return on investment.

Eastern California lights up in July

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“We have started and we will finish,” said Michael Ort, CEO of Praxis Associates, the company behind the Digital 395 project. “There have been people who have bet against us and that’s a great motivator. It’s going to happen.”

The ambitious, ARRA-funded network will connect Reno to Barstow, in the California desert east of Los Angeles, installing nearly 600 miles of fiber optic cable. Most of the path runs along U.S. 395, down the eastern side of the Sierra Nevada through towns like Carson City, Mammoth Lakes, Bishop and Ridgecrest.

Ort was giving an update to a community broadband forum organized by the Eastern Sierra Connect Regional Broadband Consortium in the Mono County town of June Lake. The project has been enthusiastically backed by local officials and residents, who are eager to bring high capacity, carrier grade middle mile connectivity to the many small towns, communities and tribal lands along the way.

But even with that support, bureaucracy has been the biggest obstacle he’s had to overcome.

Problems have come from the maze of state and federal regulators that have a say. Twenty three different agencies had to sign off on project plans, a process that ate up two years of what is supposed to be a three year project.

“You have to satisfy everyone’s needs,” said Ort, explaining that different agencies have different objectives and sometimes exactly opposite requirements. For example, one might ban digging along a certain route while another might require it. Approvals included individual permits for almost 400 archeological and historic sites.

Even so, Ort is confident they’ll have it operating by the 31 July 2013 deadline.

The project is funded by $81 million from the 2009 federal stimulus bill, under the Broadband Technology Opportunities Program (BTOP), and $19 million from the California Advanced Services Fund. Ort says construction costs – not counting permits and environmental clearances – are running between $25 and $30 a foot. Much of the work involves plowing fiber into the ground, but some it requires using a giant “rock wheel” to chop through granite.

When it’s done, Digital 395 will dramatically reduce the cost of connecting to the Internet from eastern California. Customers will primarily be major institutional users, Internet service providers and other resellers, and major telecommunications companies that want a back-up path between northern and southern California. Plans are to price 100 Mbps of Internet connectivity in the one thousand dollar range, using traditional T-1 lines as both pricing and quality of service benchmarks. Simple Layer 2 – Ethernet – connectivity would be about $6 per Mbps, under current plans. Pricing would be flat and not dependent on distance.

EDA opens new source for broadband funding with $2 million for San Leandro conduit

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The City of San Leandro will fill in key gaps in broadband availability in industrial and commercial areas, thanks to a $2.1 million grant from the U.S. Economic Development Administration. The press release is here.

As far as we can tell, this award is the first ever given by EDA for a community broadband project, with credit largely due to the City’s economic and business development staff. They worked closely with the EDA to develop the innovative framework required and to meet the stringent requirements of the program. Tellus Venture Associates assisted staff during the process.

The money comes from EDA’s Public Works Economic Development Assistance program. It will pay for 7.5 miles of conduit, which will be connected to the City’s existing infrastructure. The new conduit will make it possible for Lit San Leandro, a privately funded fiber optic system, to extend the reach of its 11 mile network to more than 18 miles. The work is expected to be completed within a year.

Lit San Leandro, the brainchild of Dr. Pat Kennedy, the CEO of San Leandro-based OSIsoft, offers dark fiber and lit broadband services up to 10 Gbps to businesses along the existing route. The City and Lit San Leandro are working in partnership, with the City leasing conduit to the venture.

Thanks to this project, San Leandro is home to the fastest library in California. The main library is connected to the Lit San Leandro network and has clocked speeds in excess of 300 Mbps. It can do even better – right now, the limitation comes from the ability of computers to handle high data speeds, not from the network itself.

The new conduit will largely complete the job of making 21st Century broadband available to San Leandro’s industrial land. The three areas targeted – Doolittle/Adams, Marina/Catalina, Alvarado/Teagarden – were identified in a study conducted by Tellus Venture Associates, which has served as a consultant to the City throughout the negotiation and implementation phases of the Lit San Leandro project.

The study resulted in the approval by the San Leandro City Council last month of a strategic plan for commercial and industrial broadband development. Other action items identified include bringing additional fiber and wireless access to Downtown San Leandro, offering business assistance grants for broadband projects and adopting broadband-friendly planning, public works and community development policies.

Learn more by watching the San Leandro “Get Connected!” video.