Entries in Broadband Developments (12)


Paul Bunyan Communications Bets on Broadband 

As Traditional Services Decline, Cooperative Says Broadband is THE Future

As our Richelle Elberg reported last week, telcos providing broadband serve about half of all broadband connections in the U.S.—numbers that, so far, are holding steady against cable-provided broadband connections. In the same study, Richelle predicted that ILEC broadband connections would overtake the number of access lines as early as 2015, as ILECs increasingly are deploying fiber and upgrading their broadband offerings.

As a case in point, Paul Bunyan Communications in Minnesota has aggressively incorporated broadband into its business strategy and is about to complete its final year of a fiber-to-the-home upgrade for its entire 4,500-square-mile service area. The cooperative's broadband initiative has been well-received, too, with take-rates at 60%, representing some 17k subscribers.

But Paul Bunyan isn't just a small company benefiting from a forward-thinking business plan; it's an ILEC that attests to the collective power of a cooperative to implement broadband buildouts and forge strategic partnerships with local electric co-ops.

In fact, the Minnesota cooperative has made broadband a focus of service for many years, according to Brian Bissonette, marketing supervisor for the company. Paul Bunyan first started offering broadband in its service areas in 1999, and now Bissonette says that 100% of its service area has broadband access. In the majority of its service area, Paul Bunyan is the only provider of high-speed Internet. “In rural areas [of the state], there are no real competitors. Wireless and satellite service is available, but it's much more expensive, with slower speeds, and less reliability,” Bissonette said.

Paul Bunyan's service packs a good punch too, with speeds up to 10Mbps for both upload and download, and up to 25Mbps service and higher available. The co-op's extensive fiber build has allowed it to offer digital and high-definition television services to all its customers as well, complete with DVR and On Demand. According to Bissonette, these television services have about a 50% take-rate so far. The company now uses vendors like Calix, Minerva, ADB, and Clearfield, but Bissonette said television services will be transitioning to offer the Microsoft Mediaroom IPTV platform.

Last month, Minnesota received some press for the release of Connect Minnesota's Consumer Broadband Adoption Survey, which reported that “only” 28% of Minnesota's consumers do not subscribe to a broadband service. Among those who don't subscribe, the majority said they don't need broadband or that there isn't content relevant to them on the internet; the second reason was that it was too cost-prohibitive. But while that 28% figure is lower than the national average of 35% non-subscribers, once again there was a marked gap in broadband availability in rural communities versus more populated areas. In rural parts of the state, 39% of Minnesotans do not have broadband, usually due to lack of availability, not lack of desire.

Because Paul Bunyan's service area is primarily rural, Bissonette said its diverse services and broadband deployment are even more dependent on federal stimulus monies. Just this year, the cooperative was awarded a $19.7m Rural Utility Service (RUS) grant through the USDA, and will use the funding to expand broadband FTH service into two more underserved areas—rural areas of Park Rapids and Trout Lake.

Overall Paul Bunyan has seen a steady increase in broadband subscribers and revenue, something Bissonette credits to the “millions of dollars” the company has invested in “upgrading and expanding our network to offer broadband services. And they have been well received.” He says that back in 1998, the company had just 8k access lines and no broadband Internet customers. “Today we have more than 28k access lines and more than 17k broadband subs,” Bissonette said. But even while noting these gains, he added, “This could be radically affected by access and universal service reforms if they are unfavorable to high-cost-to-serve rural areas.”

According to Bissonette, service availability is overwhelmingly contingent on sustained FCC funding. “The biggest challenge we face is intercarrier compensation and universal service reform,” he said. “The majority of our service area is rural and high-cost to serve. If these mechanisms are eliminated or drastically reduced, the result would be much higher costs for the services to consumers. That would create a significant barrier to receive the services that most [of our customers] consider essential. We'd also be unable to continue to expand our broadband services to those rural areas, and that includes our planned expansion with the recent $19.7m RUS loan.”

As a cooperative, Paul Bunyan has also realized the advantages that come from local and regional partnerships. Bissonette cited one such example in Paul Bunyan's alliance with Beltrami Electric Cooperative. Together, the two formed Cooperative Development, “a construction company that serves both cooperative's network expansion and replacement needs,” Bissonette said. “This greatly reduces the need for both cooperatives to outsource this work and provides dozens of full-time local jobs during the construction season.”

Paul Bunyan has also partnered with seven regional electric co-ops to form Northern Safety and Security—an entity that provides security systems, smoke and carbon monoxide sensors, a latch-key feature, gas leak monitoring, agricultural environment sensors, camera systems, and more, along with a 24/7 response center. Together, Bissonette said the group “shares investment costs and a resource base providing a variety of services to 52k co-op members and 150k households throughout Minnesota and eastern North Dakota."

Going forward, the cooperative is planning on taking advantage of cloud services for its data hosting and online backups, which it already provides for some of its larger customers. Ultimately, Bissonette said it all returns to broadband and its potential—be it for cloud services, high-speed internet, or IPTV. Facing the current reality for telecommunications providers, Bissonette stated, “We anticipate that wrapping more service around our broadband will be important in the future, as our traditional services decline.”


Building for the Future: Gig.U's Investment in 1GB Networks

Public/Private Partnerships Spur Ultra-High-Speed Internet

When Google (Nasdaq:GOOG) announced in early 2010 that it would build a 1GB fiber network in one lucky city, the company received more than 1,100 applications. Eager citizens and local organizations made the case (sometimes in outlandish ways) for why their cities needed ultra-high-speed networks for their businesses, schools, hospitals, local government, and homes. Elise Kohn, program director for University Community Next Generation Innovation Project (a.k.a., Gig.U), says the Google experiment demonstrated an unprecedented desire for ultra-high-speed networks across the country, making a strong case for why ultra-high-speed networks were essential to U.S. growth. But, as a national investment, who would be willing to pay for such extensive infrastructure? And what sectors would make immediate use of such robust connectivity? According to Kohn and Blair Levin, who is heading up the Gig.U project, research universities and their surrounding communities will be the foundation of the 1GB revolution. These communities conduct top-notch research, scientific innovation, medical advances, and so on, which makes them a vital test-bed for ultra-high-speed capabilities. In short, research universities both “consume and create,” in Kohn's words, and will allow us to see what's capable in the future with 1GB.

“We're not saying everyone in America needs a gig—that's why this is a targeted investment where there's highest demand and highest yield,” Kohn says. At research universities, innovation and development would benefit from faster broadband speeds and even allow new advances in science, engineering, and medicine—key fields to U.S. global competitiveness. “If you look internationally or at what's happening at research universities,” according to Kohn, “there are important reasons that, if you want to be ahead, [1GB] is where it's going.” Not only would an ultra-high-speed network allow for smooth videoconferencing and webcasting, but the improved capabilities and data transfer rates would encourage the development of new applications, research opportunities, and learning tools. As just one example, Kohn sites current innovations in medical technology that, with advanced network capabilities, allow surgeons to practice on life-like 3D projections when training for open-heart surgery.

Kohn also highlights technologies already implemented at Case Western Reserve, a school that she calls “a great champion of Gig.U's plan.” Case Western is one of Gig.U's 30 members and last year set up a pilot program connecting a several block area surrounding campus. The Case Connection Zone now provides 1GB fiber-optic networking to more than 100 homes and has been a test bed for what Gig.U plans to do across the nation. “A number of our members [universities] are very well connected on campus,” Kohn says, “so that's not necessarily where we need to fill a need. But staff, faculty, and researchers go home at night, students live off-campus... and the research and development—the advanced work that they're doing—continues there.”

These dynamic research communities can also attract new businesses to a town or city, according to Lev Gonick, chief information officer at Case Western. Gonick said that within three months of implementing Case Connection Zone, three startups moved to the neighborhood. “Gig.U members came together to address our unique connectivity gap. We intimately understand that for American research institutions to continue to provide leadership in areas important to U.S. competitiveness, we have to act to improve the market opportunity for upgrading the networks in our university communities. We believe a small amount of investment can yield big returns for the American economy and our society,” says Gonick.

And Gig.U agrees with Gonick's more national focus. Its entire leadership team has direct experience with America's broadband needs (and lack) from working in various capacities at the FCC. Levin served as director of the FCC's National Broadband Plan, where he asserted that broadband was essential to American growth and competitiveness and that ultra-high-speed would be key to cutting edge research and development. Kohn says the National Broadband Plan also revealed that ultra-high-speed was not something the federal government would be able to invest in, at least in the short term. So early this year, Levin contacted CIOs at several universities to get the conversation going, and at the end of July Gig.U's project was announced publicly.

Gig.U's member universities come from nearly every region of the country—from the deserts of Arizona and New Mexico to the mountains of Colorado, and from the heartland states of Nebraska and Illinois, to coastal communities in Maine, Florida, and Hawaii. Most importantly, the research universities of Gig.U represent midsized communities which could potentially benefit from advanced connectivity, according to Kohn. “The universities in Gig.U have strong relationships with the communities around them,” Kohn says, “so we're allowing the universities to do the outreach to communities and surrounding areas [to explain the Gig.U initiative].”

Karl Kowalski, chief information technology officer for the University of Alaska System, says he thinks Gig.U's public/private partnership will bring value for the community surrounding University of Alaska. “While much has been done to connect the University of Alaska Fairbanks to major research networks,” he says, “our communities, our partners and our state could advance this research through innovative testbeds and community involvement if ultra-high speed networks were available to all.”

At West Virginia University, another of Gig.U's member companies, Chief Information Officer Rehan Khan says that the group is looking for proposals in order "to deploy networks not in decades but rather within the next several years." The school, along with Gig.U's other members, hopes that new networks will spur local economies and job opportunities in their regions. Jay Cole, WVU chief of staff who initiated the University’s involvement in Gig.U said, "It is the general population we are seeking to serve and encourage to use University innovation to create new jobs and improve the economy."

On Aug. 18, Gig.U issued a Request for Information in the form of an open letter, saying the group will “consider ways in which multiple Project communities can work together... to improve the private sector business case for next-generation networks.” Kohn says the group has sought input from a variety of communications providers—from national providers like AT&T (NYSE:T), Comcast (Nasdaq:CMCSA), Frontier (NYSE:FTR), Windstream (Nasdaq:WIN), and Verizon (NYSE:VZ), to regional providers like Blackfoot Telecommunications Group in Montana and Smithville Communications in Indiana. “We are doing direct outreach to them,” Kohn says, “and they are also coming to member companies and expressing interest. We've also talked with Google, Lucent (NYSE:ALU), Cisco (Nasdaq:CSCO), and anyone involved in the ecosystem. If providers in the vicinity of one of our members have an idea for how to meet the needs of that community, together, they should definitely respond. It's a learning exercise.” The Request for Information period will end in November.

It's still hard to tell what Gig.U will look like when implemented, but Kohn says much of that will depend on the specific needs and the network configuration of each member university and its community. The group is not seeking federal funding, however, and new network build outs would be funded by Gig.U members as well as private-sector companies and non-profits who join the project.

When asked about the precariousness of a “build-it-and-they-will-come” approach, Kohn said that scenario isn't really a concern in Gig.U's case. “Research universities and the communities around them already have a history of development, and this really creates a cycle of opportunity.” Kohn says this is not unlike the progression to high-speed from dial-up, in the way that high-speed has become a new standard, while creating new applications and advancements. “The risk/return profile for a private company to help build out these networks is better because of the universities,” according to Kohn. “They're more tech-savvy communities. Give them access now and they'll understand what they can do, and with those advances, more and more will start to need it."


West Virginia and Appalachia: The New Broadband “Frontier"

Frontier Communications Boasts Improvements in Rural Broadband

West Virginia is a state of many contrasts, and when it comes to technology, the Mountain State is both forward-looking and caught in the broadband gap. This month, the state's flagship school—West Virginia University—was named one of the nation's “most wired” by Hospitals and Heath Networks Magazine for its technologically innovative healthcare facilities; WVU is also a founding member of Gig U, an initiative that seeks to bring ultra-high-speed broadband to campuses and communities to spur economic growth. On a state level, the West Virginia Small Business Technology Education and Competitiveness Initiative has worked to promote broadband in the region through WV Connectivity. And still, a recent survey of economic development professionals in West Virginia found that many areas continue to be unserved or underserved, with one respondent declaring, “Prospects don’t look here because of the lack of high-speed, affordable, reliable broadband…. Current speeds of up to 3 Mbps, while [they] may be suitable for residential use, are not suitable for business.”

Enter Frontier Communications (NYSE:FTR), which has taken some dramatic steps to improve rural broadband availability in the past year. Company executives at Frontier like to point to what could be a game-changing statistic for West Virginia: broadband access is up 1500 basis points since June of 2010; now 76% of West Virginians have access, as opposed to only 62% less than a year ago. Frontier projects that the current levels will increase, too, stating that by the end of next year, penetration rates should be 85%—a goal set by the FCC when Frontier purchased a large portion of rural lines from Verizon Communications (NYSE:VZ) in 2010. Of Frontier's new customers, 85k homes and businesses now have DSL broadband that previously did not have access to wired broadband.

It was just last May that the FCC approved Frontier's acquisition of 4.8m Verizon lines, most of which were in rural and smaller-city areas across the country, and 600k of which were in West Virginia. The sale totaled $8.6b and included “significant deployment commitments from Frontier” that would “advance the goals of the National Broadband Plan” in 14 states in the South, Midwest and West, according to the FCC. This past year, Stamford, CT-based Frontier built 305 remote broadband delivery sites and overall is investing more than $300m in rural broadband—a commitment that Frontier says will catapult West Virginia to one of the top five states in the nation for speed and connectivity. As a boon to local employment levels, Frontier also boasts that it has returned 250 jobs from overseas to a third-party provider located in West Virginia.

Frontier vp Dana Waldo calls rural areas “our niche, our business model,” and adds, “We are keeping our commitment to the state, to our customers and to rural America. We want to keep West Virginia competitive by helping home businesses expand and small businesses flourish. Our broadband will enhance the use of e-mail, movie downloads, photo-sharing and website creation and content choices.” Similarly, the company's general manager Mitch Carmichael states, “We're probably the most impactful corporate entities in West Virginia”—a dramatic claim in a state that has, for decades, struggled to create new development sectors and new employment opportunities.

And it's true that West Virginians have cheered Frontier's broadband improvement, with many citizens, educators, and small business owners praising the company for finally bringing faster internet to their homes, schools, and workplaces. But some subscribers are still frustrated with the reliability of their new service and others say that their Internet speeds and levels of their current service don't qualify as “high-speed” Internet. The majority of customers outside of West Virginia's cities, such as Charleston, Morgantown, Huntington, Wheeling, and Parkersburg, only have DSL speeds of 3Mbps. Steve Andrews, a Beckley, WV, resident recently complained, “This company’s idea of broadband access is up to 3Mbps DSL while nearby states like Virginia and Pennsylvania are getting fiber or cable broadband speeds ten times faster.” Andrews then added that, on most days, his broadband speed is more like 800kbps, not the advertized 3Mbps Frontier promotes.

As for a more big-picture assessment, a staff editorial for The Register-Herald in Beckley offered glowing praise for Frontier's work in the state: “Frontier has more than lived up to its promise and, based on the most recent information released by the telecommunications company, the expenditures and system improvements that have been made are far ahead of schedule. […] Significant work has been performed on the landline system that serves the vast majority of West Virginia, but the exponential growth and offering of high-speed Internet access to Frontier's Mountain State customers will, in all likelihood, lead to huge economic opportunities.”

Frontier's plan for West Virginia and other rural areas is only in its early stages. As per the company's FCC agreement, Frontier is committed to deploying fiber to hospitals, libraries, and government buildings, with its MetroEthernet connecting businesses and schools to high-capacity internet through “traditional copper.” In recent months, Frontier also stated that it is completing a fiber optic ring between Clarksburg, Charleston, Bluefield, and Martinsburg called ROADM (Ring for Reconfigurable Optical Add Drop Multiplexer), referring to the electronic equipment in each of the four cities. ROADM will allow 88 different frequencies, each with a bandwidth capacity of 80Mbps.


Rural LECs to Invest $192m in Broadband Infrastructure

Projects Viewed as Drivers of Rural Economies

Montana citizens were the largest benefactors from the last week’s round of financing provided under the USDA’s Telecommunications Infrastructure Loan Program. Fairfield, MT based 3 Rivers Telephone Cooperative was awarded a $70m loan to fund the expansion of high speed Internet and television access to Montana residents. Seven additional rural telcos landed rural development loans totaling around $122m, a good portion of which will be used for cable and fiber optic build outs.

3 Rivers will use the funds to build a fiber optic network and also upgrade its buildings and equipment. The 1,700 miles worth of cable will improve service for 3 Rivers’ 17k customers around Great Falls, Big Sky and Ennis. The co-op views the investment in cable infrastructure as integral to the rural economy.

“This will help push out broadband to rural Montana with fiber to the home,” said Mike Henning, 3 River’s interim general manager. “It helps the ranchers. It helps the farmers. It helps rural Montana. It will keep the rural economy going.”

The loan program, administered by USDA Rural Development's Rural Utilities Service (RUS), has been successfully utilized by Montana telcos over the past two years. In 2009, Triangle Communications used a $47.9m infrastructure loan to upgrade its current copper cable network to a high speed fiber optic cable network, while a $38m loan awarded in 2010 to a Triangle subsidiary financed a fiber optic cable project in Fort Benton.

In addition to 3 River’s fiber optic build out, the latest round of financing will also fund cable and fiber builds in Kansas and Oregon. Kansas-based Wilson Telephone Company will spend its $14.3m allocation to build a fiber network across its territory that spans 1,000 square miles and encompasses 1,500 households. Molalla Telephone company, an Oregon telco, will use loan proceeds to expand its FTTP broadband network to 85% of its customer base—about 4k households.

In Wisconsin, Baldwin Telecom will utilize its loan to build infrastructure that will allow for higher Internet speeds in the northwestern part of the state. A strong supporter of the loan program, Wisconsin Senator Herb Kohl believes that the lack of broadband access can be detrimental to rural citizens.

"Technology has become a necessity for employers, entrepreneurs and schools. In today's economy, the lack of access to broadband services can be defeating. That's why this funding is critical to assure that people in all corners of our state can capitalize on their ideas and ambitions,” said Kohl—also Chairman of the Senate Agriculture Appropriations Subcommittee, which helps budget for the USDA loan programs.

With billions of stimulus dollars dedicated to expanding broadband access, a round of $192m loans may seem marginal by comparison; however, seeing the loans on a per capita basis brings perspective to the scale of these investments. 

Maintaining only 529 broadband connections, Texas based Coleman County Telephone will spend near $42,609 per broadband connection to upgrade its infrastructure and expand broadband to the rest of its 1,900 customers. Iowa-based IAMO Telephone Company, which has around 1,100 subscribers, received $13k per customer to invest in broadband. While 3 Rivers received by far the largest allocation of funds, it will spend $4,032 per customer on its projects—a sizable amount for sure, but still the lowest investment per customer of the recipients.

The loan per customer data highlights what we already know—developing infrastructure to deliver quality communications services to unserved and underserved areas is a costly proposition. But as Senator Kohl and 3 River’s Mike Henning suggest, the impact of not providing broadband services to rural areas could prove even more costly to those communities and their rural economies.


NetBlazr: A Grassroots Approach to Delivering Broadband

Startup Offers Complementary Services to ISPs

At a time when private firms and municipalities across the country are busy spending over-$7b in federal stimulus to expand broadband access, a startup company in Boston is taking a unique approach to delivering faster broadband to small and medium businesses on a much smaller budget.

What’s so unique about netBlazr? A majority of its customers receive broadband access for free… Call me a skeptic, but generally when a business claims to give something away, it’s usually too good to be true, or worthless. In netBlazr’s case however, the broadband service truly is free, but customers must contribute to the build out of its wireless network.

NetBlazr’s cooperative network infrastructure enables it’s “freemium” business model. Here’s how it works: Interested businesses pay an upfront fee of $300 to install a node (router and system of radios) in their office building that allows point-to-point communication throughout netBlazr’s network of customers. The more nodes that are installed, and the more reliable the network becomes.  Co-op members that are content with basic services get broadband access for free, while those opting for premium services—dedicated circuits or higher download speeds (50-60 mbps) — pay a tiered-monthly rate.  

Jim Hanley, co-founder and ceo of netBlazr, stated in a recent phone conversation that despite ongoing fiber buildouts in Boston, most office buildings are still not connected to high speed offerings—leaving SMB’s seeking better quality Internet.  Hanley reached out to a number of IT departments at Boston businesses a few years back, and was alarmed at the high percentage of companies reporting low levels of broadband service. Soon after, netBlazr was formed.

The lack of affordable, high speed options for small businesses was viewed by netBlazr’s co-founders as a great business opportunity.  “If you are in one of the few buildings that are ‘on-net’ for competitive carriers like Cogent, Level 3, Veroxity, Abovenet, etc, you do ok. If you are in a nearby building that has only Verizon, your cost per Mbps can be 30x-40x higher. That's an enormous arbitrage opportunity,” Brough Turner, co-founder and cto of netBlazr, recently commented.

The cooperative infrastructure ultimately drives netBlazr’s growth. It purchases access to high-bandwidth, optical circuits from Congent Communications, and then dilutes the costs between its cooperative members—eight Boston-based companies thus far with six more lined up. The nodes scattered across the co-op members’ buildings provides the infrastructure that allows the reliable broadband service.

There is a clear grassroots, small-versus-big feel to netBlazr, yet its services are more complimentary than competitive to the broadband services of cablecos, ILECs and DBS providers. Its website even cautions perspective customers against cancelling services from their current ISPs. 

Turner recently clarified where he feels netBlazr fits within the current broadband landscape.  “We're offering an augmentation service. We want to be your co-primary provider, allowing medium and smaller businesses to afford the reliability that comes with having two upstream providers. That allows us to use an Internet support model, a freemium sales model and a coop model for our infrastructure, so our costs are radically lower than the typical ISP.”

Essentially, netBlazr is betting that SMB’s are willing to pay for their current broadband service, in addition to its own services, in order to obtain a faster and more reliable broadband connection. The premise of its argument is that one ISP cannot provide the level of service required by most SMB’s, and through its deeply discounted pricing, netBlazr renders using two providers affordable.

Taking on an additional cost, albeit only $300 upfront, may however be difficult for cash strapped small businesses.  Adding netBlazr’s services also implies another relationship for SMB’s to manage, at a time when companies are increasingly choosing bundled communications services.  Whether businesses will demand netBlazr’s services on a larger scale will become more evident as it communicates its value offering to companies in the Boston area, and the 50 U.S. areas to which it plans to expand.

To date, fourteen companies were interested enough to install netBlazr routers and radios in their buildings. Company management remains confident that this customer base will grow, and has its sights set high. “We are like Skype for broadband,” netBlazr proclaims on Twitter bio.  If SMB’s overwhelmingly agree, the company could have a very bright future.