I was a little late for the TISP meeting on Private Providers & Public Partners. So I’m just going to jump in where I walked in.
Here are the speakers:
Notes:
Gary Evans – HBC should/will pick up the mandate to help rural communities with connectivity. They have worked with municipalities. They helped others learn from their lessons. Technology is the difference between viability and failure.
Jaguar provides services that rural communities lack. They want to help rural areas to be competitive. Businesses looking to relocate are asked about connectivity first. The technology available today has made things different. (They mentioned Calix’s equipment.)
Layers of service (thanks to Mike O’Connor summary of the 7 layer OSI model you might be able to see Mike’s drawing of the layers from the picture at the right. Thanks to Bill Colman for the pic!)
- you Application (high margin work, not much capital investment)
- Internet
- Physical (low margin work; big capital required)
Question: It’s expensive to be an ISP. How can we get the capital to hook up with the physical layer?
HBC: For small companies the issue of infrastructure is all about money. So in the ISP world partnership is the way to go and move ahead. In some ways we start with the money and that’s not the best way. VISION is way more important. We’re most effective when we have a vision – what and why do we want to do?
St Charles is a good example. In 2001 they wanted to be #1 bedroom community to Rochester and needed state of the art telecom to do that. HBC could borrow money less expensively that St Charles. HBC built the network and the City began to market. There were 2 housing developments – now there are 8. It’s a great demo site.
Jaguar: There’s a lot of truth in the layers – but it’s not that simple since we do make money in the physical layer. The physical layer does have less revenue and if that doesn’t change not much more is going to be built.
Google has been clever about this. One issue is Net Neutrality. A user needs to be able to access to things on the net. But you can’t charge the providers for repeat traffic to their content.
Question: Do you think a natural monopoly will emerge? In 100 years, will there be more than one pipe into your home?
Yes. But, we need to transition from today’s situation.
Question: Can we deliver services effectively over open access networks?
There a distinction between a shared network and an open network built by someone else. And for the most part they didn’t talk about a shared network tonight.
ISPs generally provide services over a connection that they don’t manage. (So they are in effect a model for the open access model.) The ISPs are happy to ride on a network and they will provide a higher level of service. It’s easier to do with some physical providers than others because some physical providers are easier to work with. ILECs have more difficulty with the idea of an open network.
It all comes down to the details of how you work with the owners of that network. From the providers perspective service is essential – that may or may not be the case for the physical provider. On top of the service provider (ISP) level is the applications.
One question is how far into the physical level do you let an ISP go? One option migh tbe to a provider own the whole stack to provide triple play. That happens but not to the root level – maybe up to (or down to) Layer 3. The network is more efficient is you leave providers out of Layer 2. (Beyond Layer 2 gets pretty expensive.)
Fixed costs is a based cost to getting into a house; consumers don’t like it – but it’s what it costs, However that’s on the physical layer. At the application layer that isn’t such an issue. On top of infrastructure you have licensing costs, potential upgrades (say in servers of routers) and other.
Question: Utopia offered that model and it didn’t work. What could they have done better?
Provider with infrastructure in place won’t be into the open access model. Providers aren’t anxious to take a chance to compete with so many people on top of the incumbent. So that’s where the customer with the vision can make a difference. Exclusivity is better desired.
Question: How can a city mitigate risks?
iProvo is a model of what not to do.
It’s all about communication. Why am I building this? What do I want to accomplish? Who can help me do this? For HBC there isn’t a cookie cutter approach. So you have to look at it on a case-by-case issue. Some stopper issues have arisen. (Folks want control of customer service. And there are few providers out there that trust other providers.)
Jaguar has built trust with ISP who use their physical structure through tariffs, even on products that generally don’t require tariffs. That way there’s a 3-way contract with the state and everyone knows what the price is – works especially well when there are multiple providers.
Question: Is capital availability the only reason to run on someone else’s network?
Yes it is an issue – but it’s all about goals. It comes down to how you distribute cost.
Question: How do you get capital?
RUS loans and investment of profits. They are ugly to fill out – but clearly worth it. The regulatory issues get tough to wade through.
The cities can make it easy or hard, expensive or cheap to have a provider build out. Potentially there are fees, licenses…
People don’t understand what the real cost per home is. Jaguar is spending $1 billion for a current project. A per house cost of $1000 was thrown out – and not disputed.
Question: Can the Task Force make it easier fpr providers?
They are looking at other state reports. Hawaii just suggested that they align the regs, local, county, statewide…
Question: What about the Obama effect?
The talk is right – but we won’t know until we know.
Obama just talked about looking for shovel-ready projects. It would be nice to be that State.
Question: How does Jaguar make decisions on where to go next?
To start, they picked an area. But since then they have started talking to cities about their requirements to share. Most cities don’t’ want to run a network.
What’s the perfect municipality/partner?
- Have a goal
- Capital
- Political capital
- Good anchor tenants
Perfect woudl be the perfect help from Obama:
- Regulation improvements
- Follow through
CWA just published a list of items for the Obama of things that would help
Recipe for Success:
- Vision
- ISP
- Cooperative Network Owners
- Capable network operators
- Capital
- Successful negotiation
- Exclusivity?
- Good design
- Community buy-in
- Anchor tenants
- Regulatory support
- Follow through