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The Dalles Pays off Its Network Debt Ahead of Schedule

Of the more than 400 communities around the country that have built and benefitted from community networks, the town of The Dalles in Oregon may have a case for the title of “most bang for the buck.” Their commitment of $10,000 12 years ago to leverage a $1.8 million “QLife” fiber optic network has lead to a massive, $1.2 billion dollar investment from Google in the form of a huge data center, employing nearly 200 people and generating millions in tax revenues for the local community. And at the end of September, the QLife board of directors announced that they had paid off the loans used for network construction more than three years ahead of schedule. 

We covered part of The Dalles’ network story two years ago: a small city of just 13,000 was told by Sprint in 2000 that it would have to wait 5 to 10 years for broadband Internet access. Meanwhile, local manufacturing was declining and employers were overlooking the town due to its outdated infrastructure. Before building the QLife network, The Dalles had no access to the major long haul fiber pathway that happened to run right through town. As city manager Nolan Young told Andrew Blum in an interview for his book “Tubes,” it was like “being a town that sits next to a freeway but has no on ramp.” 

The city decided enough was enough, and partnered with the county and the local public utility district on a plan for a $1.8 million, 17 mile fiber optic loop through the community that would connect anchor institutions and offer middle mile access to private providers. 

The nascent network faced opposition from a local telecom in the form of a lawsuit, which scared the public utility district away from the partnership. It had another setback when a private partner declared bankruptcy, saddling the public agency with an $800,000 loan. The city and Wasco County pressed forward with their partnership, however, and secured half of the needed $1.8 million in state and federal grants while covering the rest with loans. The city made a one-time contribution of $10,000. QLife pursued a cautious strategy, building in successive phases only after enough subscriber revenue commitments were in place to cover the requisite loan payments.  

The city’s small investment has paid off many, many times over. Major network construction was completed in 2003, and in 2005 Google announced they would locate a major new data center in the town, bringing 150 jobs and a $600 million investment. Pleased with their easy access to major fiber optic infrastructure and seeing massive growth in the demand for cloud-based applications, Google announced last year that they would double down on The Dalles, investing another $600 million and creating dozens more jobs to grow their already huge facility. 

The benefits of the network aren’t limited to a single major employer. Schools, a community college, a hospital, and a network of medical offices all use QLife’s fiber directly for fast, reliable, and secure data services. Seven different telecom and internet providers also lease fiber from QLife, increasing the competition and service quality available in the area.

Even Sprint, the incumbent who told the city to wait a decade for broadband, started upgrading their own network six months after QLife construction began. QLife and Google have even partnered to provide free WiFi throughout downtown and many of the surrounding areas. Now, with their debt retired ahead of schedule, the network is running an operating surplus in the hundreds of thousands that could be put to any number of good uses. 

Of course, not every town that builds a fiber optic network will immediately get a $1.2 billion data center. The Dalles had several factors working in their favor when wooing Google, including cheap hydroelectric power from Bonneville Power Administration dams along the Columbia River and long haul fiber optic lines running right past their doorstep. However, City leaders were smart enough to see the opportunities in front of them and determined enough to persevere in the face of opposition. Their bet has paid off immensely.

Columbia Takes Next Step Toward Municipal Network Infrastructure

A consultant report recommends the City of Columbia tap into its existing fiber resources to develop an open access municipal telecommunications network. The City recently issued a request for proposals for a business plan to press forward with the recommendation, reports the Columbia Daily Tribune.

Last year the City, Boone County, and the University of Missouri jointly hired a firm to conduct a survey and analyze existing connectivity. An August Tribune article by Andrew Denney reported that the the community was found lacking in reliable connectivity. The survey indicated that 84% of businesses reported "moderate, severe, or total disruption of their business from Internet problems related to reliability or speed." The survey also revealed 84% of businesses contend with Internet speeds "insufficient for their business needs due to reliability and speed issues." The reasonable conclusion is that commercial Internet access in Columbia is too expensive, too slow, and too unreliable for local businesses.

The Columbia Water and Light Department (W & L) now leases its dark fiber to approximately 30 entities, reports the Tribune. The leases bring in approximately $876,000 per year. The consultant recommends expanding existing resources in order to entice more providers who want to serve last-mile customers.

The report also examined continuing the W & L dark fiber leasing program without significant changes and expanding the dark fiber leasing program by adding last-mile deployment. Maintaining the current dark fiber program will not require capital but won't stimulate the area's economic development possibilities either.

Expanding the dark fiber program would improve the broadband infrastructure situation because providers would be able to offer leases to customer premises rather than only within the middle-mile network. This type of change would not improve affordability because it would not increase competition.

The August Tribune article reported:

[The consultant] suggests if the city decides to light up its fiber network, it would be able to enter into public-private partnerships with service providers but remain a neutral party to providers. The network would increase competition by allowing users to access multiple providers over the city’s network, the consultants’ report said.

More recently, the Tribune reported:

[The consultant] estimates that the city would be able to develop a broadband network to serve businesses and organizations based in the “downtown core” for a price ranging between $2.5 million and $3.5 million, which the firm suggested could be paid through debt instruments like loans and bond sales.

At an August 18th City Council meeting, CenturyLink area operations manager Kevin Czaicki addressed the Council before they voted to instruct staff to move forward. In true incumbent fashion, Czaicki told the Council that a network would create financial challenges for the city. The Tribune reported:

Czaicki also said that, if the city proceeded with the idea, it would amount to a taxpayer-subsidized entity wading into competition with private business. “This violates the spirit of the law, if not the rule,” Czaicki said.

Last August, CenturyLink announced some properties in Columbia and Jefferson City would obtain access to gigabit service. Once again, the prospect of a municipal network appears to inspire private investment.

“We would be paving a road that currently, in our opinion, does not exist now,” [W & L Assistant Director Ryan] Williams said.

Read the PDF of the report Executive Summary online for more details.

City Net Brings 100 Gbps to Santa Monica, California

For one of the fastest municipal networks in the U.S., travel to Santa Monica and sample City Net. The City just announced network capacity and speed upgrades to 100 Gbps. City Net is available to many local businesses and connects key community anchor institutions.

The entertainment, tech, and healthcare industries have a strong presence in Santa Monica and City Net officials expect them to be among the first to take advantage of the upgrade. Other area businesses are applauding the upgrade. From the press release:

Jeremy Foint, IT Manager of Loews Santa Monica Beach Hotel overwhelmingly approves, “With the annual American Film Market campus, tech expos, and Fortune500 corporate events convening in Santa Monica, it’s comforting to know Loews can accommodate the most demanding network requirements. I know CityNet will take care of us.”

We dug deep into the story of this publicly owned network for our case study, Santa Monica City Net: In Incremental Approach to Building a Fiber Optic Network. We also spoke with CIO Jory Wolf for episode #90 of the Community Broadband Bits podcast. Santa Monica took a measured approach by reinvesting funds they saved when they ended leased services. They now offer dark and lit fiber. The community has won numerous awards.

Community-Owned Dark Fiber Expands in Vermont

Last week, we criticized the draft version of the Vermont Telecommunications Plan for its conflicting goals, misplaced priorities, and all-around lack of vision. Fortunately for Vermonters, there are good things happening in the state as well: the Vermont Telecommunications Authority (VTA) and EC Fiber are partnering on a new 51 mile run of dark fiber that will bring new connection options to over 1,000 businesses and residences. 

VTA will be building the central fiber lien, which runs North-South along the I-91/I-89 corridor, and will be open to any carrier. EC Fiber, a nonprofit, community-owned open access network, will be an anchor tenant on the new fiber optic line, and will contribute $200,000 to project costs and be responsible for making last mile connections to the premises of homes and businesses that purchase them. 

The new fiber line will connect designated “Broadband Business Improvement Districts” in the towns of Braintree, Pomfret, Brookfield, North Randolph, and Sharon, making speeds of up to 400 mbps symmetrical available along the way. The project is expected to be completed in the first half of 2015, along with dark fiber projects in Reading, Stockbridge, Rochester and Hancock.   

These projects show that at least some in Vermont are aware of the need for fiber, and why the focus on new investments in last generation technologies embodied in the draft Vermont Telecommunications Plan are so misguided. 

Rockport Builds Maine’s First Municipal Network

Rockport, a coastal town of just 3,300, became a statewide leader last month by launching Maine’s first municipal broadband network. Offering symmetrical gigabit speeds to businesses and residents, Rockport’s network is a carrier-neutral dark fiber system, with local private provider GWI offering retail services. 

The reach of the network is limited, as it consists of only 1.2 miles of fiber. While only about 70 homes and businesses currently have the option to purchase a connection, GWI offers symmetrical gigabit per second internet access for just $69 per month and the city has left the option open to expand the network in the future.

As noted in a Bloomberg View article on the network, it massively outpaces the only broadband competitor in Rockport, Time Warner Cable. Time Warner also offers a $70 service package, but its download speeds are 20 times slower and its upload speeds 200 times slower.  

The network was the product of a partnership between the town board, GWI, the University of Maine system, and Maine Media Workshops + College. Maine Media is a nonprofit college with 1,500 students learning photography, videography, and other digital media skills, and has a large economic footprint in such a small town.

Students’ coursework requires the storing and sharing of massive files, something that was previously difficult or impossible to accomplish given limited network capacity. Town officials are hoping that the new network will not only allow students to learn more easily, but enable them and others to establish small businesses in town.    

U.S. Senator Angus King, a vocal champion of broadband access, was among the officials on hand last week for the official unveiling ceremony. Speaking to the need for greater internet access, Senator King stated:

“In my opinion it’s exactly like water, it’s exactly like electricity, it is a public utility that is necessary in order for our economy and our country to flourish…We want to work where we live, rather than live where we work."

The total cost of the project is estimated at $60,000, half of which came from the University of Maine’s Networkmaine program and half of which came from the Town of Rockport. Interestingly, the town’s contribution came from tax increment financing (TIF), and required town voters to approve two measures to rewrite the local TIF statute and allow funds to be used for fiber optic investments.

Despite this encouraging sign in Rockport, a recent report from a Montana-based research firm ranked Maine 49th out of the 50 states in broadband availability and speed. Hopefully other Maine communities will be inspired by Rockport to look at their own broadband landscape and have a conversation about how they can expand internet access. 

Local TV covered the network unveiling. For those interested in the bigger picture, a piece from Engine.is, a technology research and advocacy group based in San Francisco, looks at Rockport’s network in the context of the larger nationwide need for fiber infrastructure and broadband competition. 

Fiber Infrastructure Helping Turn San Leandro into Tech Hub

San Leandro, a Bay Area city of about 85,000 bordering Oakland, is in the news for its fiber optic infrastructure policies. A recent article in the San Jose Mercury News describes how this post-industrial city is turning itself into a center for tech jobs and investment through cheap rents, streamlined permitting, and the ease and low cost of fiber connectivity for businesses in some areas of town. 

We featured San Leandro in an episode of our Broadband Bits podcast last year, when Christopher spoke with San Leandro Chief Innovation Officer Deborah Acosta and a Lit San Leandro consultant Judi Clark. Acosta and Clark gave the details on San Leandro’s innovative public-private partnership, which combines smart public investments in conduits and “dig once” concepts with private investment in the actual fiber optic strands themselves. The city has been able to access fiber for it’s own needs at minimal cost, while some businesses have access to up to 10Gbps connectivity, either through privately provided lit fiber or leasing their own dark fiber. 

As the Mercury News article notes, the fiber assets have begun to pay off. Several technology parks have taken up residence in the area, including a hub of 3-D printing companies, sharing space and ideas while taking advantage of incredible data transfer speeds. One entrepreneur quoted in the article describes the office park, located in a former car factory, as “the world's largest cluster of 3-D desktop printer companies.”

The article also notes the growing awareness of San Leandro’s economic comeback, and the role played by fiber optic infrastructure: 

"San Leandro is establishing itself as a city-scale lab for innovation. Only months ago, (it) was a relatively unknown Bay Area city," said Greg Delaune, CEO of UIX Global.

Lit San Leandro, the private company that worked with the city to do the initial fiber runs, is apparently also in talks with other Bay Area cities on potential similar projects. However, it is worth noting that there is no plan for connecting residents and this model may in fact make it more difficult to expand residental gigabit access.

The business case for residential access is always hard but is improved when high margin businesses can be connected at the same time. But when high margin businesses have their needs met first, there is little incentive for a profit-maximizing firm to invest in connecting lower margin customers, a phenomenon called cream-skimming in economics. 

Communities should understand there is no magic bullet in solving the problem of expanding high quality Internet access. Lit San Leandro is seeing success but may not be the best model for all communities.

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.

Read the transcript for episode 111 here, courtesy of Jeff Hoel.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 20 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Waylon Thornton for the music, licensed using Creative Commons. The song is "Bronco Romp."

Westminster Budgets for Open Access Fiber Network

On Monday, May 12, Westminster moved another step closer to deploying its open access citywide fiber network in Maryland. The Common Council approved a FY15 budget that includes $6.3 million for an FTTH network. The Carroll County Times reported that the $64.8 million budget was adopted 5-1. The opposing Council Member voted no on a different issue.

Last summer, the community launched two pilot projects; they installed fiber in a local retirement community and in the Westminster Technology Park. Community leaders decided to expand the pilots to the Air Business Center. They are already seeing results, with a women's fashion distribution center that decided to move from New York City to Westminster for the network.

We touched base with Dr. Robert Wack, Westminster Common Council President and the person spearheading the project. Dr. Wack told us businesses have been clamoring to get fiber service. Connectivity in the area is so bad, "they are desperate."

Community leaders want to connect 9,000 homes and 500 businesses. Dr. Wack told us the community expects to break even in 3 - 5 years; the build out should be complete in 2 years. Westminster expects to release an RFP for construction within the next week. They will release an RFP for a network operator in June.

Another Carroll County Times article described the basic plan for the project:

Westminster’s fiber network will be a “last mile” project, with the city paying to install “dark fiber” to the door of every home and business in the city and connect to the county’s fiber optic backbone, the “middle mile,” according to Wack.

Dark fiber is fiber optic cables which are connected but not in use, or “lit,” he said.

Wack compared the network to roads, explaining that 10 years ago — though fiber technology existed — if Westminster had laid the cables they would have been useless, similar to constructing roads in the city with no connection to the outside world.

Once the infrastructure is in place, a third-party service provider will install the necessary electronics and run the network, according to Wack.

Westminster's pilot project fiber is located near the Carroll County Public Network, allowing an easy connection to a more extensive infrastructure. From the Times article:

“We see the need and we’re ready to spend the money to get it done,” Westminster Common Council President Robert Wack said.

Connecting Arlington, From Anchors to Businesses - Community Broadband Bits Podcast #97

Located just outside Washington DC, Arlington is the dense, high tech county that houses the Pentagon. This week's Community Broadband Bits podcast features Arlington County CIO Jack Belcher. Having already built a top-notch fiber network to connect community anchor institutions, the County is now preparing to improve connectivity for local businesses.

We discuss a range of topics from how local governments can take advantage of all kinds of capital projects to expand conduit and fiber assets to how Arlington County responded to 9/11 as it happened.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Valley Lodge for the music, licensed using Creative Commons. The song is "Sweet Elizabeth."

Crain's New York Business: New York City Conduit Jam Packed

Crain's New York Business recently published an article on the crowded conduit under New York City. The article complements the April 7 edition of This Week in Crain's New York podcast, hosted by Don Mathisen.

Empire City Subway (ECS), the crumbling subterranean network of conduit for telephone wires constructed in 1888, is so crowded underground construction crews regularly need to detour to reach their destination. Routes are no longer direct, adding precious nanoseconds to data delivery - a significant problem for competitive finance companies.

Verizon owns ECS and, according to the article, does not operate with competitors in mind:

But businesses that lease space in the ECS network for their own fiber-optic cable say that Verizon doesn't worry about keeping the system clear for others. Conduits are filled with cables from defunct Internet providers that went belly-up after the dot-com bust in 2000. Verizon itself left severed copper wire in lower Manhattan ducts after installing a fiber-optic network following Superstorm Sandy. (The company says the cables could be easily removed, if needed.)

Stealth Communications spent an extra $100,000 in March to re-route its fiber from Rockefeller Center to Columbus Circle. Conduit was so congested along the planned route, the independent ISP needed to go 6,500 feet out of its way. The re-route added almost two weeks to the project.

Crain's contacted Chris Mitchell from ILSR:

"It's foolish to think that we can just leave it to the market to use this limited space under the street efficiently," Mr. Mitchell said. "The fiber needs are tremendous, and if New York over time can expand access to a lot of fiber at low cost, we'll see all kinds of [innovation]."

He added that New York might be best served by the public-utility model embraced by Stockholm and Santa Monica, Calif., and under consideration now in Baltimore, in which the city builds a fiber backbone. Internet service providers lease access to that fiber at low cost and compete to offer specialized services as part of the "last-mile" connection to the home or business.

Possible solutions being considered include municipal fiber to lower income neighborhoods, requiring changes from ECS, and stringing fiber along aboveground transportation tracks. The ultimate goal is to create conditions that will increase competition

But something must be done to improve ECS, industry veterans say; otherwise, the conduits will only become harder to use. "The more you have to get around, the more cable you put in the street," said Brad Ickes, president of independent provider Optical Communications Group. (OCG and Verizon have been locked in a legal dispute since 2008.) "And then everything gets more congested, because everyone is going that way."