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Muni Fiber as Real Estate - Community Broadband Bits Episode 111
Hunter Newby is back for his second appearance on Community Broadband Bits to discuss his thoughts on carrier neutral approaches to spur our economy with more investment in better networks. We just talked with Hunter in episode 104 on carrier neutral approaches to middle mile networks.
Now we discuss these types of approaches within communities - how to spur more competition without the owner of the infrastructure actually offering services directly. This has been a challenge historically, but we continue to see signs that this approach can be viable in the future. Hunter Newby is the CEO and founder of Allied Fiber.
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Thanks to Waylon Thornton for the music, licensed using Creative Commons. The song is "Bronco Romp."
Hunter Newby: It's the difference commerce, you know, and the economy growing, and not.
Lisa Gonzalez: Hey there, and welcome again to the Community Broadband Bits Podcast from the Institute for Local Self-Reliance. I am Lisa Gonzalez.
This week, Hunter Newby, founder and CEO of Allied Fiber, returns to talk with Chris. If you caught our last interview with Hunter, you'll recall their conversation about the benefits of the carrier-neutral network model offered by Allied Fiber. In this interview, Chris and Hunter delve deeper into the concept of fiber as real estate, and how that concept can be expanded to bring better connectivity to every user -- government, business, and residential. As connectivity becomes more entrenched in our everyday activities, we need to recognize that a variety of models are available. There's no one-size-fits-all for local communities. Hunter and Allied Fiber offer one possible example and a launching point for future approaches.
Here are Chris and Hunter Newby from Allied Fiber.
Chris: Welcome to another edition of the Community Broadband Bits Podcast. I'm Chris Mitchell, and today, I'm back with Hunter Newby, the CEO and founder of Allied Fiber. Welcome to the show.
Hunter Newby: Thanks, Chris. Great to be back.
Chris: So, today, we're going to pick up where we left off, a little bit. Previously, we were speaking about your approach to backhaul -- this "fiber as real estate" carrier-neutral type facilities. And today we're going to be applying that more to local governments -- communities where they have residents that they want to connect rather than solving a backhaul type problem. And seeing as how we're recording this in the middle of the summer, thinking of movie blockbusters, I was thinking we could start by talking about -- if we had a city that was destroyed by an alien invasion that, as inventive humans, we beat back, and then we had to rebuild that city, what would we be doing in terms of having -- installing fiber in conduit at the beginning of rebuilding this city, to make sure that everyone had the best opportunity to access the Internet?
Hunter: Well, I think it's pretty inventive. So, if you look at it from a clean-slate perspective, and you're going to do city planning these days, there's a couple examples around the world. If we're going to start everything in a buried [?] sense, you'd basically build a physical distribution system that has junction points -- access points -- and a core. And, at the very least, two points for interconnection physically, where equipment would reside, for the purposes of "riding" the network. And I'd also go so far as to say that there should be two data center type structures as well, in that -- in terms of the body, in a biological sense, the difference between the heart and the brain, and where things sit in your body -- you've got to build physical infrastructure that sort of mimics that. And build according to, initially, the size of the market. And, of course, means modular and can scale, according to how many more people and
what not -- devices -- move in and appear in that area. So that's where you start.
Chris: You're describing the physical way we would build a network to make sure that anyone could offer services -- that we would have multiple service providers connecting, so that residences and businesses wouldn't be locked into anyone just because they happen to own the infrastructure. I think that's the conceptual framework.
Hunter: If you look at what they've attempted to do in Australia, with the NBN, you know, there's two components, really -- there's the fiber component and then there's the -- let's call it, generically -- the colocation component. In the perfect scenario, which would be clean-slate, the Australian NBN example, which, I think, would be the largest and probably the best in modern-day, you have to build the fiber and machinery -- and own all that infrastructure -- and it all has to be neutral -- it has to be run as real estate. Correct. You just said -- it is predicated on the basis that this is all neutral infrastructure. It's built -- there has to be an entity that designs it, and then one that builds it, and administers it and maintains it, and runs it as real estate. And, you know, the municipality -- the city itself -- could do this. Or they could actually hire someone to do this.
Chris: That's something we've talked about for a while -- the idea that -- for us, at the Institute for Local Self-Reliance, we think the municipality should own it. But we don't care that much who operates it. To be frank, the owner is who makes the decisions, and that's where you have to make sure the owner can't be co-opted by the incumbent providers, effectively. But, fundamentally, you can have anyone operate it. I mean, you want to have someone, certainly, who's competent, who's going to make sure that it's operated well. And you want to have a recurring contract, so that you have some sort of, you know, -- so that you have some ability make sure that they have an incentive to keep doing a good job. But, effectively, it needs to be owned by someone who cannot be co-opted by Wall Street, I think -- is ultimately what it comes down to.
Hunter: We're talking about physical layer infrastructure, and we're talking about an entity that would manage and administer the physical layer, meaning -- What we're not talking about is coming up with a design for infrastructure that then the municipality goes out and says, well, I own the infrastructure, but I hire someone to come in and build and run a broadband network. There's another step, beyond the manager of the physical fiber and colo, and that is, then, who lights that fiber -- all the way to the home or the business. There could be multiple providers of competitive lit transport. There could be multiple transport providers to businesses in a community. Depending on the size of the community, there really can't be multiple triple-play providers to the home, especially not to compete to go to the same home. And the reason for that is whoever builds the fiber to the home wants also to be the provider the lit services. That
provider -- that single provider -- could not then also be the manager of the fiber. And there's a reason for that. Because they're inherently not neutral.
Chris: Right. Verizon would say in conferences, often, when -- I remember, years ago, when people would bring up "open access" and FiOS, Verizon would say, look, our strategy is to own the customer. You own the line, you own the customer. That's what we want to do. And you can read into that, basically, we can treat that customer however we want to, because we own the customer.
Hunter: And that's why you need to bifurcate physical infrastructure as real estate from services. Any entity that's going to come in and manage infrastructure cannot be in the lit service business. The best of breed is what's going to serve the community best.
I don't have a problem with a cable company or a telephone company that comes in and -- takes to build the physical infrastructure -- saying it's theirs, if that's the franchise that they got. But it's proven now, through multiple examples in different states -- the incumbent providers have gone to the state legislatures and made it either illegal or next to impossible for the municipalities to fund, through bonds, any infrastructure or any providers -- even themselves -- as broadband providers, that are competitive to the franchise holders. That's a Catch 22. You know, now you've got somebody sitting there that's saying, well, I'm THE provider because I paid for the infrastructure; no other can exist. But the level of service that they provide is, you know, beyond sub-par. And it's too expensive. So how do you break that logjam? You break it by not getting into it in the first place. That changes the game. And it's all to the benefit
of the municipality, from economic development and productivity and job growth, and then ultimately people -- and taxes. Which is really where the muni guys want to make their money. They want to make their tax base strong and grow it. And the best way to do that today, in this century, is through communications infrastructure.
Chris: So, basically, when you're talking about this approach, this is something we haven't really seen in the United States, right? Because UTOPIA kind of comes close, but.... And you're really talking about a three-layer kind of model, the way I understand it, which is more like Stockholm. UTOPIA has sort of a two-layer model. The cities own and operate the network, effectively. And they lease it to wholesalers, who do everything else. In Stockholm, you have -- the city owns and operates the real estate at the bottom level, and then you have a middle level of independent entities, some of which are non-related entities owned by the city, and some, I think, are maybe private. And they operate at sort of this middle-man kind of level. And then there's a third layer that actually does the connecting of residents -- mostly apartment buildings and things like that.
Chris: You're really talking about -- you really mean -- real estate. You're not talking about doing the "open access" type of stuff. That would be a second -- probably -- entity contracted by the city.
Hunter: Yeah. I really mean real estate. And it gets more challenging when you get closer to the home itself. Because how many fiber providers are you going to have going to a single home? One? Maybe two? Maybe a cable company and an incumbent telco. But in any scenario, it doesn't really pay to build fiber to every single home if those providers are going to have to compete with each other -- and also provide that fiber to others behind them as "open access." Nobody would want that job. But that is the role of the municipality, I think, because they're the ones who have control of the right-of-way. And if they could figure out how to build the infrastructure, in the same way that they build a sewer, and they build a water line to the house, or whatever. It's the same thing. But you have to always protect it -- as physical infrastructure. And, as you said, not let it get corrupted by the providers of the lit services that can
come in and try to sign some deal, and say, well, now I own that physical path. No, you don't. You're a provider over it, and we'll lease some of the facilities to you, but if you're not going a good enough job, then we can bring in someone else.
Now, of course, the service providers don't necessarily like that. So this is all about control. And the way to take control back, and put it in the hands of the municipalities, and then the states, and then obviously on the national level, this all has to be connected -- which is what Allied Fiber does. You have to have physical layer independence. The municipalities can do the same exact thing that we're doing. And then -- as a matter of fact, that's how we interplay with them. The municipalities that stand to gain the most the soonest are the ones that sit right along our route. Because they can append their local networks to our long-haul network. And now, there's an on-ramp, off-ramp to the superstructure. So not only can they reach the outside world, and go places, but the outside world can get to them, and get into their community. And that's really where you start to see the power of this.
Everybody talks about community development, economic development. And they think about it wrongly, I think, very quickly, in terms of broadband and triple-play. And that is important. It's something that you have to get. For the people at home, they have to have that. But who's going to provide that? Who's going to provide that level of service? Who's going to ** that infrastructure as I've been describing? What do they really want to do? So if you're building fiber in a community, you've just built an island, basically. And if you can't figure out how to connect the dark fiber that you've built in that community to another type of provider of dark fiber but on same terms -- reasonable rates and terms -- then how is anybody going to be able to get to your local fiber? And then how are you going to be able to attract a data center, or large data centers? These are the pieces that a lot of people don't connect in their mind.
And part of it, too, from the community perspective -- and counties and what not -- is that they're confined to their own jurisdiction. They're not allowed to leave their jurisdiction, so they can't think outside of those lines. That's where Allied Fiber comes in. We break through those lines. And we're going to cut through counties -- that the county will be able to, basically, connect into us, in a couple different places, at the very least. And associate, physically, their local fiber system with our global fiber system. And that's our thoroughfare.
Chris: Is there a certain number that communities should have in mind in terms of the number of carrier-neutral facilities they should have? If it has 25,000 people, 50,000 people, you know, 500,000 people? Is there a rule of thumb?
Hunter: You know, at least one.
Chris: Right. One is the best way to start, right?
Hunter: One. Just one. And then build from there. And once you have one, then you know how many more you need. So many people have been indoctrinated into the public Internet mindset, and the cloud, which is beyond that mindset, where it's just everywhere -- you know, it's all over the place. They don't realize that there's a physical layer under that, that drives all of that. And no one knows where it is. No one really sees it. It's there. But they don't understand it.
Chris: There was a fiber cut in the Midwest at one point, and some towns were cut off. And I remember reading the article about it, saying they thought they were doing well because they had bought, from two different providers, fiber paths. And they didn't realize that they were in the same trench. And so they thought that they were redundant, and they were not.
Hunter: And they always find out after something breaks or something goes wrong. And there's a physical network sense -- something breaks and something goes wrong. And -- guess what -- there's a business model sense, where something breaks and something goes wrong. And we're there, in a lot of states in this country right now. Something is broken. People can't put their finger on it. And the reason why is because they think the Internet should be open. And the Internet should be free. And the Internet should be this. And the Internet should be that. And what they don't realize is that the network providers that control physical access -- the path to the Internet -- are the ones that make the rules and set the rates. It's no different than what Rockefeller did with Standard Oil. He controlled the rate of freight on the only rail lines, and that's how he controlled the entire oil industry.
Chris: So if I'm a city manager, and I'm trying to figure out what I should be doing.... Let me roll this out for you and see if you would agree. I'm going to be trying to figure out how to get conduit and fiber from my residential areas -- you know, ideally touching the house, but maybe in the meantime, I'm getting partially there and finish up later. But I want to get, basically, fiber from the homes to some sort of aggregate point. And ideally that will be a point where maybe I have a school, or maybe some sort of facility where, in the future, I may want to put a carrier-neutral facility there. But for now, I want to aggregate that, and I want fiber running from that aggregation point back to some sort of other central location where maybe I have my first carrier-neutral facility. And so I want to, basically, you know, I want to have these sort of corridors where I have my fiber trunks, going to aggregation points. And then figuring
out how to have fiber that then goes out and hits my businesses and residences and that sort of thing. So that, over time, I can scale. And I have something to offer multiple different providers.
Hunter: Correct. There's examples of this. I'll give you one -- Access Ontario in Ontario County in New York. Came out of the great -- It is called the Finger Lakes Regional Development Corporation. It was a -- like a local muni bond funded thing. It's a good example, because they start off by building just a fiber ring. It was meant to be used by anybody. So they were leasing fiber pairs to phone companies, cable companies, utility company, the wireless carriers. Great. And it became the core, that you're referring to. And that ultimately other things came in to append to it. Like triple-play providers. Because that's what the fiber's there for. It's for entities to use. And because it exists and is administered by an independent entity, it drives economic development.
Chris: Right. I think Verizon's actually using that.
Hunter: Yeah, they are. Verizon. Time Warner Telecom. And that's years old now. But what I would suggest, really, is the do-it-yourself way, which is what you're describing. A really good place to go is the Fiber to the Home Council website. They have a really great tool kit -- that's what they call it -- which is this tutorial on how to do all the things that I was just talking about. There are actually entities out there that will come to your community and build you a dark fiber infrastructure as I've just described it. And, specifically, not lighted. And this is where independence comes from, in an economic sense. The physical infrastructure needs to be independent. Just like the roads are independent. Could you imagine if Ford or Chevy owned the road, and you couldn't drive a Honda on the road, or Nissan on the road, or vice versa?
Chris: Yeah, you certainly wouldn't see Elon Musk building Tesla Motors, that's for sure.
Hunter: Right. And Tesla exists because the roads are neutral. And I believe in physical layer independence, physical layer infrastructure that's treated as real estate, which is something that munis should get, because they deal with buildings and rights-of-way all the time. Well, treat fiber and integrated colocation in the same way. And then have an entity that's trustworthy and smart enough to come in and administer that physical fiber an colo to network service providers, and network operators. And then everything will work out. Just like it has with the highways. Just like it has with, you know, every other structure that's similar.
Chris: So, if we were to sum up our conversation, I think, or even sum up, I think, your driving force, it would be, hey, the physical stuff really matters.
Hunter: Yeah. It does. It's there. For a lot of people, it might not be sexy, you know. It's not an app. It's not a link on a phone, or whatever. But really matters. I mean, if you look at Chairman Son from Sprint, you know, Softbank, who's now Chairman of Sprint, you know, he said this just a few weeks ago, from the BBC, about the infrastructure in the U.S. He said I cannot believe that Americans live this way. And people here don't realize just how bad our wireless infrastructure is. And the wireless infrastructure is 100% connected and reliant on the fiber infrastructure. The lack of it is what handicaps us. There's spectrum everywhere, but you can't put up antennas on towers if you don't have the backhaul.
Hunter: And copper backhaul does not work for LTE. These are facts. And this is technical. And it's oh boy, this is all technical stuff. It's really not. It's the difference between commerce, you know, and the economy growing, and not. And there's a reason. And Chairman Son put his finger on it. Because he just bought Sprint. And he basically said the whole Sprint fiber network is shot. [?] The whole country needs a massive overhaul in terms of infrastructure.
Chris: Well, thank you so much for coming on this show, and helping us drive this a little bit closer the home, and let's hope that we can get a better conversation going, in terms of a future where we treat fiber as real estate.
Hunter: Absolutely. My pleasure. Thanks for the time, Chris.
Lisa: Learn more about the concept of fiber as real estate from our June 24, 2014, conversation with Hunter Newby on the Community Broadband Bits Podcast. Send us your ideas for the show. E-mail us at email@example.com. Follow us on Twitter. Our handle is @communitynets. Thank you again to Waylon Thornton for the music. The song is "Bronco Romp," and it's licensed using Creative Commons. Thanks for listening.