April 20, 2014

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Does Your House Need a Tail?

Thus far, the debate over broadband deployment has generally been between those who believe that private telecom incumbents should be in charge of planning, financing and building next-generation broadband infrastructure, and those who advocate a larger role for government in the deployment of broadband infrastructure. These proposals include municipal-owned networks and a variety of subsidies and mandates at the federal level for incumbents to deploy faster broadband.

Tim Wu and Derek Slater have a great new paper out that approaches the problem from a different perspective: that broadband deployments could be planned and financed not by government or private industry, but by consumers themselves. That might sound like a crazy idea at first blush, but Wu and Slater do a great job of explaining how it might work. The key idea is “condominium fiber,” an arrangement in which a number of neighboring households pool their resources to install fiber to all the homes in their neighborhoods. Once constructed, each home would own its own fiber strand, while the shared costs of maintaining the “trunk” cable from the individual homes to a central switching location would be managed in the same way that condominium and homeowners’ associations currently manage the shared areas of condos and gated communities. Indeed, in many cases the developer of a new condominium tower or planned community could lay fiber along with water and power lines, and the fiber would be just one of the shared resources that would be managed collectively by the homeowners.

If that sounds strange, it’s important to remember that there are plenty of examples where things that were formerly rented became owned. For example, fifty years ago in the United States no one owned a telephone. The phone was owned by Ma Bell and if yours broke they’d come and install a new one. But that changed, and now people own their phones and the wiring inside their homes, with your phone company owning the cable outside the home. One way to think about Slater and Wu’s “homes with tails” concept is that it’s just shifting that line of demarcation again. Under their proposal, you’d own the wiring inside your home and the line from you to your broadband provider.

Why would someone want to do such a thing? The biggest advantage, from my perspective, is that it could solve the thorny problem of limited competition in the “last mile” of broadband deployment. Right now, most customers have two options for high-speed Internet access. Getting more options using the traditional, centralized investment model is going to be extremely difficult because it costs a lot to deploy new infrastructure all the way to customers’ homes. But if customers “brought their own” fiber, then the barrier to entry would be much lower. New providers would simply need to bring a single strand of fiber to a neighborhood’s centralized point of presence in order to offer service to all customers in that neighborhood. So it would be much easier to imagine a world in which customers had numerous options to choose from.

The challenge is solving the chicken-and-egg problem: customer owned fiber won’t be attractive until there are several providers to choose from, but it doesn’t make sense for new firms to enter this market until there are a significant number of neighborhoods with customer-owned fiber. Wu and Slater suggest several ways this chicken-and-egg problem might be overcome, but I think it will remain a formidable challenge. My guess is that at least at the outset, the customer-owned model will work best in new residential construction projects, where the costs of deploying fiber will be very low (because they’ll already be digging trenches for power and water).

But the beauty of their model is that unlike a lot of other plans to encourage broadband deployment, this isn’t an all-or-nothing choice. We don’t have to convince an entire nation, state, or even city to sign onto a concept like this. All you need is a neighborhood with a few dozen early-adopting consumers and an ISP willing to serve them. Virtually every cutting-edge technology is taken up by a small number of early adopters (who pay high prices for the privilege of being the first with a new technology) before it spreads to the general public, and the same model is likely to apply to customer-owned fiber. If the concept is viable, someone will figure out how to make it work, and their example will be duplicated elsewhere. So I don’t know if customer-owned fiber is the wave of the future, but I do hope that people start experimenting with it.

You can check out their paper here. You can also check out an article I wrote for Ars Technica this summer that is based on conversations with Slater, Wu, and other pioneers in this area.

Comments

  1. Curt Sampson says:

    This is an excellent idea. There are other approaches, as well, that could help the situation.

    For a long time I’ve advocated regulating a split between businesses that sell local loop service and businesses that sell other services (such as Internet access). Telcos have for a long time been leveraging their ownership of the local loop to give themselves advantages in other areas, and due to the economic incentives involved, that’s not going to change. If the companies that owned the local loops and central offices could engage in only that business, and were forced to rent their CO facilities to others for any non-local-loop communication, competition amongst everything past the local loop would arise, and the local loop owners would no longer be able to take advantage of the end user when it comes to other services.

    This is the current situation with broadband in Japan: when you buy DSL or fibre service from NTT, you chose from more than twenty ISPs for your Internet connection. These offer varying prices and extra services (such as static IP addresses), but they share one thing in common: they’re all reasonably cheap. (Basic Internet service is generally about $8-$16/month, on top of your $20-$60/month local loop charge. Personally, I pay on the higher end because I want a static IP address.)

    This deals well with issues such as bandwidth caps and intentional degradation of certain services (such as peer-to-peer file sharing) as well; if your ISP starts doing something that you don’t like, just switch.

    cjs@cynic.net

  2. Mitch Golden says:

    I live in Manhattan. Is the idea that every building would jackhammer up a section of the street to connect itself to the junction box at the end of the block?

  3. Atis says:

    This idea, if i got it correctly, somehow reminded me fidonet and midnineties in exUSSR when it was normal practice to make a DIY networks in block houses (to play games together or to share internet access).