Wednesday, July 23, 2008

What if you could own your Internet connection?



It may sound strange, and it's certainly not what we're used to. Today we have a "carrier-centered" model; phone and cable companies spend billions to build, operate, and own the "last-mile" connection -- the copper, cable, or fiber wires that come into your house. Individual consumers then pay for particular services, like phone service or Internet access.

In turn, we tend to think about broadband deployment in carrier-centric ways. If we want to see super-fast fiber connections rolled out to consumers, the main question appears to be whether carriers have appropriate incentives to invest.

But there's no law of nature that says this is the only possible model. Many businesses, governments, universities, and other entities already own their own fiber connections, rather than leasing access to lines. It may also be possible to find ways for consumers to purchase their own last-mile strands of fiber.

Here, as anywhere, there would be certain advantages that come with ownership over renting. No one necessarily needs to own skis or a car, but many of us do. If you owned your own fiber, you'd be able to connect it to a service provider of your own choosing. Over time, you might save money, and it could make your house more valuable to have a fiber "tail."

This may all sound rather abstract, but a trial experiment in Ottawa, Canada is trying out the consumer-owned model for a downtown neighborhood of about 400 homes. A specialized construction company is already rolling out fiber to every home, and it will recoup its investment from individual homeowners who will pay to own fiber strands outright, as well as to maintain the fiber over time. The fiber terminates at a service provider neutral facility, meaning that any ISP can pay a fee to put its networking equipment there and offer to provide users with Internet access. Notably, the project is entirely privately funded. (Although some schools and government departments are lined up to buy their own strands of fiber, just like homeowners.)

The main challenges with this model are economic, rather than technical. Most importantly, ownership has to be made appealing and affordable to consumers. The construction company is using conservative estimates that only 10% of homeowners will sign up and there will be a per-customer cost of $2700. If you assume 50% take-up, then the per-customer cost drops to $1100. Both figures might seem like a lot, but people pay for a variety of improvements to their home -- like remodeled kitchens, or a deck -- that also cost large sums.

This model faces other significant obstacles as well and it may only be possible in certain circumstances, if it's practical at all. But the only way to really figure that out is to experiment. Cable television started out as CATV -- community antenna television, an experiment by individual entrepreneurs and rural towns to deliver broadcast signals across longer distances. The Internet started as an experiment in the research community before becoming the worldwide network we know today.

It's also worth considering that, as recently as a few decades ago, personal telephones were unheard of -- the telephone was owned by Bell and simply part of the network. Similarly, the very idea of a "personal" computer used to seem ridiculous, and people relied on sharing access to mainframes. Sure, there are differences between owning your own computer and your own Internet connection, but perhaps one day we may see that the differences weren't as great as we thought.

Even if this experiment fails, it can be a worthwhile data point in discussions about broadband deployment. We need as much creative thinking as we can get to determine how to deliver fast, open Internet for everyone.

The Ottawa trial was driven forward by Bill St. Arnaud, Chief Research Officer at CANARIE, a nonprofit research group devoted to promoting advanced network infrastructure in Canada. If you want to learn more about this idea, check out his presentations here.

15 comments:

DragonI said...

OMG! Where do I signup.

The US is getting it's head handed to it by the East, i.e. Japan and Korea specifically. From what I remember, Japanese ISP's give you 100MB up and down for only $40.

Meanwhile in the US, providers are totally ripping people off. AT&T wants to gouge it's customers even more by experimenting cough instituting tiered service.

Wyatt said...

Just as some ISPs have challenged municipal ISP developments, they would probably challenge this as well.It would be interesting to see how Michale Turk over at Cable Tech Talk would perceive such a plan.

One last point though is how do you connect your own fibre optics to the backbone? Backbones are still owned by the likes of AT&T and such, so how much of an improvement would this really be?

chuck said...

Getting the incentives lined up is indeed the issue. Early cable systems were funded by local appliance store owners where broadcast signals were weak in order to sell TV sets. This was in the post WW2 economy just as TV prices came down due to mass production, TV networks co-expanded with telephone networks to meet demand for product (esp Notre Dame football!).

Ari Herzog said...

This, and ICANN's allowing anyone to buy a top-level domain beginning next year, I wonder what's next.

Is there anything that can't be owned? Or shouldn't?

Tom said...

400 homes have FTTH capability. They decide they don't need no stinkin Internet. They create a 400 home virtual world. They let the local hospital know they are open to negotiations to give access to the hospital to offer telemedicine programs in return for 4 hours of Internet access per day. They let the local grocery store negotiate for access to offer services in return for 2 hours Internet access per day. They continue to negotiate contracts with city departments, churches, and other businesses, and eventually, they have their Internet access paid for for 24 hours each day of the week. Over time, they expand their infrastructure to include maintenance costs and operating costs and royalties on their infrastructure, and the backbone boys get tossed a bone for the privilege of existing.

There, that was easy enough.

Want to learn what can be done with a piddly little virtual world? Visit the Wonderland Project, and let your imagination run wild.

Bifferoo said...

We have a real similar concept in central Washington State. All of the electric companies are running Fiber To The Home. However, the governor mandated that the utilities cannot sell retail services over the fiber. So, all of the infrastructure is built and maintained by the electric utility, and any ISP that is interested can sell services over the fiber to anyone connected to the fiber system.

Currently, in Chelan County, Washington, there are 14 different local service providers selling various combinations of internet, phone and cable TV over the open access system. 25,000 of the 40,000 homes in the county have fiber run to their homes, and 7,000 are using it. Customers can switch their service providers easily.

None of the big companies (Verizon, Charter, etc) are on the system. They would rather build their own infrastructure.

So, we do have any active system testing your theory: "If we build it, they will come". The big guys won't, but the smaller providers are able to get a fairly large market share.

Mark said...

Where I live is what can only be described as a valley and a number of factors that I will be explaining below mean that communications seem to be a little bit of an issue. I have a connection to the internet but I am left asking just how fast is my internet connection.
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Trix said...

Bring some love to the midwest!

Robert Little said...

Sounds like the Japanese model.

Maria Shaun said...
This comment has been removed by the author.
Maria Shaun said...

Really nice post,but Japan is providing its services on cheapest rate and that a big deal for US to be there and give its services to these countries.
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Ashley said...

I think the Internet services which will US provide will be the better as compare to Japan






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Nanny said...
This comment has been removed by the author.
Neena said...

Japan and US both of them will have the ability to provide you the best internet service, i would suggest you to check both of them.
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Liza at Fiber High said...

I'm not sure each household needs its own fiber but groups of neighbors or whole neighborhoods might. The biggest obstacle we've found, the cost of the physical connection, can be shared by the group.

We implemented the group idea within our small business incubator, Fiber High, LLC. (See press release posted below.) We think this idea would work well for condos and planned communities. There are some very real advantages (e.g. lower power and air conditioning requirements) to bringing fiber into a neighborhood center with a small colocation facility and then distributing a short distance over wifi or copper.

If you'd like to discuss these topics further, feel free to contact us.

Cheers, Liza

News Release:

Fiber High Meets the Market for High Speed/Low Cost Office Space

September 16, 2008 – Palo Alto, CA: After years of promises of multi-megabit communications from major telecommunications providers, Fiber High LLC, a local 3-person outfit, is now actually delivering. By combining low-cost, no- or short-term lease, shared office space and direct links to the country's fastest public optical fiber network, Fiber High brings serious connectivity within reach of low-budget entrepreneurs and start-ups.

"Our fiber and copper network puts 40 to 100 Mbps on every desk," says managing partner and network designer, David Gjerdrum. "For people who need to move large graphic files or databases, speed is a necessity," Gjerdrum comments. "For others, it's just plain addictive."

Fiber High's style is totally without bling. Its founders noticed that many of their business neighbors moved out of Palo Alto in search of lower cost square footage as landlords spiffed up their aging buildings and raised the rent. As Fiber High's first tenant, a computational chemist developing an 'in silico’ predictive toxicology tool with NIH SBIR funding, put it, "I don't need anything fancy, just a place I can afford to hunker down with my three servers, work on method development and grow my client base. Given the early stage of my business … I'm not in a position to sign a multi-year lease but want to focus on the commercialization stage with the flexibility to move on or expand based on changes in 'market' conditions.

The Fiber High business model is to facilitate small, creative, highly-connected communities. Top capacity at the 989 Commercial St. location is twelve cubicles housing not more than thirty people. Its server room and electrical service can accommodate about 120 rack computers in addition to the desktops. "If we're oversubscribed we'll get an additional building," notes Fiber High partner, Liza Loop. She and Gjerdrum point out that fiber connected distributed computing facilities using existing HVAC equipment to handle a smaller number of machines is truly a "green" alternative to the huge collocation sites that are being built in Silicon Valley. They believe that small, collaborative workplaces will foster the kind of innovation the Bay Area is famous for.

For more information please visit: www.fiberhigh.com or contact Managing Partner, David Gjerdrum, by phone at 650 714 7667 or email at david@fiberhigh.com

--
Fiber High, LLC
Partners: David Gjerdrum, Brian Skiba, Liza Loop
989 Commercial St.
Palo Alto, CA 94303
Tel: 650 964 5623
email: Fiberhigh@gmail.com