Roughly 27% of the U.S. population lives in some sort of homeowner, condo association, or housing cooperative, according to research from the Foundation for Community Association Research. These associations are fundamentally about managing the ownership of shared property and associated assets. As seen in the above interview, Isfandiyar (Asfi) Shaheen believes a similar customer-ownership model could reduce or, in some cases, eliminate the need for government subsidies for extending broadband to rural areas.
Shaheen has some creative ideas on non-monetary ways government can help facilitate rollouts, such as guaranteeing demand on given fiber builds. In many ways, his ideas are not too different than what electric and telecom cooperatives are doing today to serve thousands of communities. The difference is that Shaheen and his company, NetEquity, are finding ways to bring long-term financing to broadband.
In the above interview, he also touches upon the new construction techniques invented by Facebook to reduce the cost of fiber deployment by using robotics and following the electrical grid. Shaheen is pragmatic about technology approaches and is excited about alternative ways of networking, such as the peer-to-peer approach embraced by Althea. He has found that a common denominator to network success, regardless of funding or technology, is a champion with the vision and grit to see a project from idea to reality.
Highlights of the above Interview are below. Click on the timecode to jump to that particular section of the video.
01:13 – Asfi explains the concept of a fiber condo association. He references the 2008 Tim Wu and Derek Slater paper, Homes with Tails, as inspiration and how he is looking at the financial requirements to make their idea a reality. His focus is on 20 and 30-year money whereby financial products like home equity-type loans would be able to finance installs, without the need for government money. Or, if government money is needed, not as much would be necessary. His focus is on creating cost-based networks to ensure affordability.
Property/Equity-Based Funding Approach
04:27 – The discussion shifts to the concept of bringing PACE-type funding, which is a way to pay back private financing through a property tax assessment, as described in this Viodi article. Fiber makes homes more valuable; a sort of latent value that can be brought forth by long-term financing. He looked at the concept of fractional ownership (examples of firms providing this sort of financing are here) early on, but the concern is that these concepts have not gained traction in rural areas.
Networks Based on Individual Ownership
09:14 – One attribute that distinguishes Shaheen’s approach from traditional government financing of broadband networks is that individuals who don’t want to be part of the network, do not have to assume the risk of failure. Shaheen believes that anchor tenants, like universities, could be big drivers for the community-funded networks. He describes a sort of hybrid approach where those who could afford it could shoulder the upfront costs for others who later join the network. In this scenario, the early participants would be paid back their upfront investment as additional members joined. The network itself might also be a hybrid configuration with a mix of fiber and wireless.
Examples of Alternatively-Funded Networks
12:14 – The type of business models that Shaheen is promoting wouldn’t have been practical 20-years ago when there were active components in the last-mile, it was difficult to remotely provision service, and practically impossible to do remote monitoring/troubleshooting. As Asfi indicates, modern networks allow the separation of services from infrastructure
This is shown in Idaho, where the city of Ammon and the larger, adjacent city of Idaho Falls through its municipal power utility, have multiple ISPs riding on their respective fiber networks. The city of Ammon, like many broadband ISPs around the country, is deciding where to add fiber based on community demand. What makes it unique is that each fiber network is owned by a Local Improvement District, essentially it is owned by those who take service in a given neighborhood.
Idaho Falls Fiber is owned by the non-profit Idaho Falls Utility, the electricity provider for Idaho Falls. Pricing is $25 per month for the infrastructure, plus $38 to $69.95 for access to the Internet via the ISP. The city of Ammon estimates a total of about $49.50 per month, which assumes
- $23 for upfront capital (averaged)
- $16.5 for operations and maintenance
- $9.99 for Intenet service (+- depending upon which ISP selected, service package, etc.)
Shaheen points to the Althea network as another way of creating a grassroots network using a blockchain-based payment system, combined with least-cost routing and mesh networking. This network started with wireless and now they are looking at fiber-fed nodes as well. As Asfi says on Twitter, “every home is an Internet exchange.” Spain-based guifi.net is another example of such a community-built, peer-to-peer, last-mile network.
Constraints Beyond Technical or Financial
15:16 – The constraints to building broadband often aren’t technical or even financial. CEQA (the California Environmental Quality Act) studies can add a significant cost for small deployments and small entities. Shaheen points out that one of America’s strengths is that there are 50-states and each one has the potential to be a laboratory of sorts for trying different approaches to solve various problems.
Shaheen suggests that over the past year there has been a universal realization that access to affordable broadband is something that is necessary. There is an opportunity for governments to be creative and not just give away money, but look at alternatives.
For instance, providing tax credits to property owners to incent the creation of networks where they wouldn’t otherwise be feasible. He describes how a network could start with as few as 32 neighbors. Again, this wouldn’t have been practical in years past when networks were more complex.
Existing Cooperative Models & the Rise of Zoomtowns
19:40 – Fiber, telecommunications’ and electric cooperatives are examples of business organizations that innovate while providing reliable and relatively affordable service. He calls Silicon Valley and the U.S. the best place to start a new business, although neither can rest of their laurels thanks to broadband and the rise of “Zoomtowns”.
Robots Building Fiber on the Electrical Grid
21:40 – One significant cost-saving opportunity is the potential to wrap fiber cable around support cable on medium-voltage power lines. Shaheen discusses Facebook’s work in this area and his involvement in their amazing robotic project that could eliminate much of the make-ready requirements and reduce the time it takes to deploy fiber. Check out this article and video for more detail on how Facebook and partners have reimagined fiber deployment.
Shaheen suggests that governments can remove the demand risk for new networks that might be otherwise difficult to justify. This especially important to bring mid-mile bandwidth to unserved areas. In a sense, a guarantee is similar to the concept of having anchor tenants to justify infrastructure. The stability of knowing there is a customer makes the financing relatively easy. Shaheen points to the East Palapa Ring Project as an example of a network that had minimum bandwidth guaranteed by a government entity.
Fiber to the Premise Equals Simplicity
28:52 – Fiber to the premise is a much simpler network, which enables new models. Fiber is an asset that will last decades and justifies long-term financing.
Last-Mile Needs Mid-Mile
30:45 – There are really two issues, accessibility and affordability. Indatel is mentioned as a network of networks connecting thousands of rural locales. The last-mile could be built, to some extent, on “acts of kindness” suggests Asfi. Broadband for the Rural North in England is a great example of such an approach. In some ways, these efforts are bigger than the network and are about building community.
Asfi points out that it is easier to get started on a neighborhood basis. It is organic in a way that is similar to how the Internet got its start. He explains the economic model and how he sees his company, NetEquity playing a role. It is clear that Shaheen’s focus first and foremost is to extend broadband everywhere.
Getting Started Could be the Biggest Challenge
35:10 – The biggest challenge may be getting groups organized. There are clearly many companies that could help with the engineering and operation of a system. With a model whereby the customers own the network, an ISP might become more of the equivalent of a condo association manager, operating, maintaining, and managing the system.
Regardless of the ownership structure, having a champion is a key to success in building new last-mile networks.