Yesterday, Next Century Cities hosted a masterclass at Smart Cities Week Silicon Valley in Santa Clara, California. The masterclass, entitled “Broadband 101: Infrastructure for the Next Century City,” focused on the building blocks a city must have in place in order to pursue smart city technologies, including fast, affordable, reliable broadband and collaborative 5G permitting processes.
Next Century Cities members spoke at the masterclass, offering unique perspectives and critical advice for other municipalities hoping to pursue smart city applications.
The first panel, Broadband 101, explored the variety of models for broadband deployment, such as open access networks, public-private partnerships, incremental builds, institutional networks, municipal networks, and more. The panel was moderated by Next Century Cities’ Policy Director Christopher Mitchell, and featured Tony Batalla, Information Technology Manager for the City of San Leandro, Calif.; Kate Garman, Smart City Coordinator for the City of Seattle, Wash.; Christy Batts, Broadband Division Director for the City of Clarksville, Tenn.; and Tom Mullin, Chief Data Officer for Riverside County, CA.
Panelists discussed the importance of taking small steps to ready a city for deployment. “We should not discount incremental steps toward a solution,” said Batalla. “We should ask ourselves – what are the small changes we can make that over time lead to significant outcomes?” For example, Riverside County implemented a dig once policy to encourage investment, said Mullin. Garman also brought up the importance of encouraging digital literacy across entire communities.
The panelists all emphasized the importance of partnerships — Batts specifically addressed the value of collaborating with utilities.
The next panel discussed how cities can best prepare for 5G networks and small cell deployments. The panel was moderated by Next Century Cities’ Executive Director Deb Socia, and included insights from Courtney Violette, Chief Operating Officer, Magellan Advisors; Mayor Jill Boudreau of Mount Vernon, Wash.; Rebecca Hunter, External Affairs and Strategic Communications, Corporate Development and Strategy, Crown Castle; and Zach Friend, County Supervisor for Santa Cruz County, Calif.
Each panelist offered next steps for communities hoping to pursue 5G deployments:
“This is both a challenge and an opportunity,” said Violette. “Reach out to your peers; they have a lot to share.”
“Keep an eye on what Next Century Cities is working on,” said Mayor Boudreau. “And develop relationships with your state legislators, so that they clearly understand the impact of their decisions on local communities.”
Hunter offered four specific recommendations: “Know what assets you have as a municipality. Convene a working group within your city, because this involves everyone. You don’t have to reinvent the wheel; there are already things working – find them. Finally, know your state laws.”
“Define what your needs and wants are first,” said Friend. “Then work to create something together to address them.”
Next Century Cities was pleased to have the opportunity to bring together community leaders to explore how municipalities can prepare for smart city opportunities. Read more about Smart Cities Week Silicon Valley here.
This memorandum presents a brief framework for pricing and marketing of dark fiber.
Back to Basics Webinar
An increasing number of US cities are considering a deployment of fiber networks to ensure job creation, economic development, and quality of life for their residents. Community leaders realize that the younger generations and businesses of the future will not accept inadequate broadband access. What they also realize is that the incumbent providers will prioritize their investments to the bigger markets or the densest urban areas where the business case is the most favorable. It’s simply how the market dynamics work. For the US to reach its national broadband target and to stay competitive in an increasingly connected world, cities need to build networks. The right model for community networks is Open Access and this blog post will explain why.
What is an Open Access Network?
First, we need to agree on what the Open Access business model is, since there are more interpretations of the term than one could count. Some people consider a model where a network owner builds a fiber ring in the community and allows multiple providers to tap on to that fiber and build their own last mile network to the actual houses, as Open Access. We don’t encourage that approach since it won’t create enough choice for the end user, which is the very definition of Open Access.
The Open Access model described here is a 2 or 3-layer model where there are subscribers, service providers, an operations company, and a network owner. In the 2-layer model the network owner is also the operator managing their own network, while in the 3-layer model the network owner has contracted an external operations company to manage the day-to-day operations of the network.
The network owner will build the actual fiber infrastructure and maintain it. This is the ideal role for the city or community to be in, and often in mature open access markets this is a utility company since they are used to deploying cables or pipes in the ground. The most important thing to remember is to document the network properly so that it will be easy to locate e.g. a fiber cut in the future or how to do construction work without the risk of cutting the optical cables.
The operations company would manage and often supply the active layer equipment in the network. This means the routers and switches that control the actual internet traffic and keep track of which ports should be open or not, among other similar things. When a subscriber orders a service, it’s the operations company that will make sure that service is properly activated with the service delivered by the service provider that was chosen by the subscriber. Large operators often have systems that could automate this, so that the subscriber could get the service activated instantly.
The service providers are generally private companies who specialize in delivery of IP based services such as Internet access, VOIP (Voice over IP, replacing the traditional phone line), IPTV (replacing traditional TV) and other services getting more common today, such as home security, cloud storage, elderly care services, etc.
The very important difference in the Open Access network compared to traditional networks built by a service provider is that the subscriber has a choice. Since the Network Owner (the city) has built the network all the way to the house, they open the market to any service provider to sell services to the subscriber. If you’re not happy with your current provider you can just switch to another one. It’s even possible to buy Internet from one, TV from a second and VOIP from a third provider.
What about the money?
In the Open Access model the subscriber will buy the services from service providers, most commonly from a marketplace provided by the operations company where all the providers and services are published for subscribers to easily compare and choose what suits them best. Just like an Appstore, where all apps are easily available to the smartphone user. Subscribers would pay service providers directly and receive technical support from them as well. The service provider would in turn pay the operations company a fee for being allowed to deliver services over the network, normally a monthly fee per service. Then, if the network owner is a separate entity than the operations company, there is an arrangement between those two, that normally goes two ways. The network owner is paying the operations company money for operating their network, while the network owner is sharing the revenue from the service providers based on how much utilization (customers) there is on the network.
A pothole some network owners and/or operations companies have come across has been sending bills to the subscriber, for example a monthly fee that’s supposed to cover costs for maintaining the fiber infrastructure. This setup is very costly for numerous reasons. One is the cost for the handling of all those invoices, but the major issue is that it creates uncertainty for the subscriber about whom to contact when they have a problem. Because they get invoiced from multiple entities for their broadband related services, they might contact the network owner or the operations company with issues that should be handled by the service provider, and vice versa. This confusion will cause a lot of unnecessary communication between the different parties, perhaps sending the customer back and forth.
The customer should get one single bill from the service provider and all inquiries should go through the service provider. The operations company will need much less staff and focus on the more technical issues the service providers cannot handle.
Who will connect the farmer?
Everyone can agree that the farmers are quite important, since they provide the food we eat. But the farmers are as affected by the new digital era as everyone else. They collect their orders online, they pay their bills online, and have many high tech devices like milking machines that expect network access. Their kids also need to be able to do their homework which is has moved online. But the costs of building to these areas of low population density make a return on investment challenging. Private companies must make money to survive and in all honesty, would you be happy to see your retirement fund investing in companies who wasn’t trying to maximize their profit? No, many profit-maximizing firms will not build to rural areas. But the community has a different agenda. Communities recognize the importance of investments that create indirect benefits as well as direct benefits.
The above scenario also explains why the “dark fiber middle mile” version of Open Access won’t work. Even with a fiber ring, the service providers would only build where they are able to make a quick return, leaving farmers even worse off because cherry-picking off the middle mile would result in less overall revenue for a business model that would connect everyone. Having local government build an open access fiber network to everyone will avoid this problem.
Why Competition is key to success
As in all industries, competition will drive the price down and quality up and competition is only created if the end customer can actually make a choice between different providers. Research from my home country of Sweden, with the most mature open access approach anywhere, shows that there is a clear correlation between the number of service providers and the price of service. Especially when you go from one to two and three providers, but even the ninth and tenth provider will help to push the price down.
In the lowest cost community networks, a 100 Mbps symmetrical Internet service costs approximately $25. In Sweden the hundreds of Open Access community networks have been key to the vast build-out of high-speed broadband and especially fiber networks. Sweden has a population density of only 57 people per square mile (US has 90) but according to PTS (Sweden’s FCC) still 99.99% of the population has access to at least 10 Mbps broadband, 73% to 100 Mbps and 79% have access to fiber (within 45 yards of a fiber line). These numbers are for 2016 and increasing rapidly as both private and public network owners are now competing fiercely to reach the last customers with fiber first. So at a national level the build-out of strong community networks also pushes the private telecom giants to build more and faster and provide higher speed services at competitive prices, which benefits the country as a whole.
The Open Access model is also an enabler for the city to control the subscriber price on an aggregate level. If the city wants to subsidize Internet services to increase adoption they can simply lower the cost to the service providers to sell services on the network, which due to competition will drive the end customer price down and lead to higher utilization.
Why Open Access is necessary for Smart Cities
Today there is a big trend towards IoT (Internet of Things) where a lot of different devices and machines are connected. It could be everything from the heating system in your house being accessible to control and monitor via an app in your phone, to the utility placing smart meters in every home, or street lights that are connected to be able to allow much more sophisticated management of traffic, enabling free passage for emergency vehicles. All these smart services that will benefit the community and residents will be easy to implement if the city owns a citywide fiber network, but consider what happens when the entire network, or big parts of the network (in the case where the city only builds the fiber ring) is owned by private providers.
Let’s say you have five different profit-driven providers owning the infrastructure. This means you need to negotiate five different agreements to be able to deploy the services and still you might not be able to do a city wide roll-out, since the private providers will only have built their network in areas where they reach their ROI targets. As a city you might be forced to build those “worst” areas just to be able to deliver those smart services to all who need them and thereby force you into being a network operator anyway. With an open access network reaching every desirable end-point you’re ready for any smart service application the future may hold.
Yes, the private service providers will be able to make money
There is a fear that open access would lead to great service for subscribers but push the prices so low that ISPs will not have enough margin to profit. The answer is yes and no. No, those companies who don’t adapt to the competitive nature of the Open Access networks won’t make money. If you don’t deliver capacity and speeds as promised and don’t have excellent customer service (things not as important if you own the infrastructure and the customers have no other provider to turn to) you probably won’t be very successful in the long run. Also trying to lock customers in with long contracts or using data caps will be a hard sell in a competitive environment.
For those providers who focus on delivering high quality of both service and support at a reasonable price, there is the chance to also be very profitable. By focusing on service delivery, customer care and billing and not having to spend resources on capital intensive construction and maintenance of the physical infrastructure, they can build a highly specialized organization.
It’s also easy for new entrants, since there are no large investments as would have been the case if you are to build your own infrastructure. In Sweden there are numerous nationwide service providers who started with just a few guys in a basement, today creating jobs for hundreds of young, service-minded people. Even though the price for broadband in Sweden is lower than in the US, the profit margin among Service Providers on Open Access networks in Sweden is looked upon with envy by companies in other industries.
Open access is the right choice for cities who consider building their own network infrastructure. It’s important that the network is built all the way to the subscribers’ property. This way the digital future of the city is in their own hands. They can decide which providers are allowed to sell services on their network and adopt smart city services as they please. It will also give more power to the subscriber since there is competition at the subscriber level. This will make sure services are delivered with quality and at reasonable prices. The affordable prices will increase adoption and subsequently create the benefits the new broadband enabled services will bring to the community as a whole.
Isak Finer holds a position as Chief Marketing Officer at the software company COS Systems, founded in Umea. Umea is a city in the northern part of Sweden, and is home to one of the world’s first city owned fiber networks (built in 1994) and now home to a number of open access operations companies as well as some of the largest nationwide service providers. Today COS Systems, through the subsidiary COS Systems Inc has most of their customers in USA. Mr Finer is managing the sales and marketing teams bringing to the market two major innovative cloud-based software platforms; COS Service Zones, for demand aggregation and analysis of the expected costs and revenues of fiber roll out in different zones and COS Business Engine, a business and operations support system enabling open access operations companies to efficiently operate multiple networks with multiple service providers. Isak is also regularly invited to speak at Industry trade shows. He holds a MSc degree in Industrial Engineering and Management from Chalmers University of Technology, Sweden, and has further academic experience within economics and entrepreneurship from Stanford University, CA, University of California Berkeley, CA and Uppsala University, Sweden.
As municipalities work to connect their communities, they often face a common challenge. How can you make your community attractive to providers while maintaining local control and community values? As Huntington Beach learned as we worked toward small cell deployment, bringing as many stakeholders as possible to the table is a necessary step in striking this balance.
Huntington Beach’s journey to small cell deployment began when the city finalized its acquisition of 11,000 streetlights from Southern California Edison in 2016. This was a cost-saving measure to the city (approximately $14 million over 20 years in savings!), but also gave us the ability to leverage our vertical assets to create a plan with providers to deploy small cells in Huntington Beach. In 2015, we hired CTC Technology & Energy to create a broadband strategic plan. They emphasized that our greatest asset was the streetlights that the city owned. The lights provided an incredible opportunity to create a public-private partnership to deploy small cells in Huntington Beach. In 2016, we engaged the services of Jory Wolf and Magellan Advisors to further assist us in deploying our plan.
As a city, we prepared for new deployments through several deliberate steps:
We created an internal telecommunications committee to evaluate our permitting processes. At the time, our internal permitting processes didn’t include any protocol for wireless siting in the public right-of-way, so we created an entirely new process for the permitting of wireless facilities through the public works department and amended our zoning code to permit small cells that meet our design standards within the public right-of-way. The committee created a forum that encouraged participation from all city departments – including our fire and police teams – to work together through this process, stay on the same page, and create city policies that worked for everyone. This was key in developing policies that were in line with our community values.
We worked with carriers to develop four pre-approved small cell design standards. These designs are now integrated into our permitting process, so if carriers’ deployments fit one of the four standards, they are free to follow a streamlined, over-the-counter application process to receive permits from the city. As we developed these design standards we had a few carriers push back with their own ideas, and we actually ended up incorporating their designs into our permitting process. Collaborating with carriers to develop these designs was integral to ensuring that the permitting process would work for not only the city, but the providers as well.
We worked with other cities in Orange County to develop best practices in wireless siting. As a group, we worked through similar questions together to problem-solve and create shared resources.
The city’s hard work paid off, and Philips approached Huntington Beach to offer a deal to deploy 200 Smart Fusion Poles – making us the first city in the country to have this technology. The poles include integrated stealth antennas that can support service from several providers at each location; So far, deals have been made with Verizon, AT&T, and Mobilitie. In addition to densifying the cellular network in Huntington Beach, the Smart Fusion Poles offer energy efficient LED lighting and lighting controls.
Not only do the poles create a source of revenue for the city, but more importantly, they provide an improved service to our residents, first responders, and visitors. There was absolutely a demand for a higher capacity network, and now there are services available that make it easier than ever to live, work, and vacation in Huntington Beach.
When the city began this journey, we had zero small cell activity in our area. Now, we are well on our way to a robust downtown network that is both accessible for carriers and beneficial for the city and its residents. Throughout this process, collaboration with stakeholders was important at every turn. After all, at the end of the day, a smart city is one that works well for everyone.
Antonia Graham is the Assistant to the City Manager and the Energy and Sustainability Manager at the City of Huntington Beach, California
CNX is a consulting firm that provides information and resources about telecommunications issues specifically pertaining to municipalities, including small cell deployment and local control.
This memorandum presents a brief framework for pricing and marketing of dark fiber.
In tech media, wireless and mobile technologies continue to make daily headlines in articles peppered with a plethora of terminology, such as: 5G, IoT, DAS, small cells, fixed wireless, licensed and unlicensed spectrum, LTE-U, LTE-M, and LoraWan to name a few. As we are still in the early stages of these networks, it’s easy to forgive local government leaders for writing off these stories as more sizzle than substance; more esoteric than essential.
However, to do so is a mistake because the public right of way is ground zero for the next generation of wireless networks, which will replace LTE 4G. Unlike previous mobile networks, which required macro towers on hilltops and high areas, small cells and 5G radios are designed to be installed on light posts and telephone poles in dense urban and suburban areas. These poles are sometimes city-owned, and as a result private providers are asking cities for more permits than ever before. Yet, cities are not always prepared to issue permits for cellular equipment on street poles. This can lead to deployment delays, lost opportunities, and frustration among the providers, who have already pushed for statewide legislation that would streamline the process (the controversial SB649 was opposed by many cities, including the City of San Leandro, who called it an overreach; it was vetoed by Governor Brown). Finding the right balance between a streamlined process and sufficient local control requires both sides to engage in good faith negotiations.
For cities, in order to prepare for these increased levels of permit applications, they likely need to update their wireless regulations, including ordinances, municipal codes, and master license agreements. There are several considerations to address, including:
- License fees for usage of street poles, which should be market rate, based on reasonable studies of comparably sized municipalities, and should ultimately be included in the Master Fee Schedule
- The usage of “Integrated poles” versus existing poles (integrated poles are newly deployed poles with the technology built in)
- Design aesthetics & guidelines, which depend on local character and values
- Electricity metering, which requires input with the local utility
- And a discussion of municipal access to related fiber optics cabling, conduits, and networks pulled by the private providers
Ideally, your city will convene a cross-functional team to create these new standards utilizing staff from public works, civil engineering, planning, the city attorney’s office, city manager’s office, and information technology & GIS teams. An internal governance structure like this helps overcome organizational silos. The goal of this internal committee should not only be to create and enforce these new regulations, but to meet regularly to evaluate new permit applications to identify opportunities to further strengthen your municipal network and operations.
This also matters because the very same next generation networks are also highly likely to undergird Internet of Things (IoT) applications, like connected street lights, intelligent traffic signals, smart parking and utility meters, public safety systems, and more. These networks and applications will form basis for the “smart cities” of the future, where IoT, together with data analytics and machine learning, promise to provide new solutions for how we manage transportation, build greener buildings, and provide a higher quality of life in our congested cities. At the same time, as a society, our data consumption has skyrocketed and our residents will thus depend on 5G networks to keep up with our seemingly insatiable data demands.
Many providers are willing to pay reasonable market rates and negotiate certain local control aspects, such as aesthetic guidelines to avoid ugly “Frankenpoles” and per-pole location decisions (e.g., in the event the city deems a particular location is detrimental to a residential unit or wants to ensure an underserved area is connected). However, in return, cities must be able to provide a streamlined, permitting process that is responsive, timely, predictable, and not overly difficult to navigate. Without the right City Staff working cross-functionally to achieve mutually agreeable outcomes, local governments may be unable to provide that level of service. If so, they risk losing out on opportunities to address the digital divide, capture new revenue streams and maintain the character of their community, while lowering the cost to deploy these networks by utilizing existing infrastructure and platforms.
This requires not just strong internal partnerships, but also resetting the relationship with telecommunications providers. By finding the intersection of goals between the public and private sectors, city leaders can negotiate with telecom firms as partners instead of adversaries. Doing so can speed the deployment of 5G networks, while ensuring that benefits to the public are maximized.
With some planning, foresight, and teamwork, the smart city of the future can be an invisible symphony of wireless harmony, transporting our bits and bytes, safely and securely.
But, we have to start practicing for it today.
Tony Batalla is the head of Information Technology for the city of San Leandro, CA. He also serves as the Co-Chair for the Global City Teams Challenge Wireless SuperCluster and has co-authored a blueprint for deploying Public Wi-Fi networks, available as a free download here: https://pages.nist.gov/GCTC/super-clusters/.
On September 21, 2017, Next Century Cities joined the Institute for Local Self Reliance in responding to the FCC’s Notice of Inquiry GN Docket No.17-199 titled “Inquiry Concerning Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion”. Read more about this Notice of Inquiry in Community Broadband Networks here.
In our response, we highlight several points of importance in ensuring all residents have fast, affordable, reliable broadband internet access:
1. Mobile internet access should not qualify a census block as served with advanced telecommunications capability. Mobile internet access is, and should continue to be viewed as a complement to home Internet access. Likewise, the FCC should not include satellite internet access coverage as census blocks considered served.
2. We suggest the FCC encourage state legislatures to repeal state barriers that prevent or discourage local telecommunications authority, either broadly or narrowly.
3. We encourage the FCC to intervene when incumbent or large providers create barriers for new entrants.
4. We believe that the benchmark that defines advanced telecommunications capacity needs to be updated to better reflect how and why the iInternet is used today. Upload speeds are more important now than ever. Reducing the current speeds (directly or by including a lesser mobile benchmark) would be a step backwards for residents and would prevent needed resources from reaching the consumers who need them.
Please read the full comments here and consider adding your voice with a reply comment. To submit a reply comment, follow these directions and select “reply to comments” in the “type of filing” field in the form. If you have questions about this process, please feel free to reach out to Cat Blake, who can assist. The deadline for reply comments is Friday, October 6, 2017.
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