[00:00] Nick Dinsmoor: All right, ladies and gentlemen, my name is Nick Dinsmoor. I’m super excited to welcome everybody to episode four of Beer and Broadband. And it’s beer and broadband for a reason because we have beer and we’re going to talk broadband. So, we will kick it off right away and turn it over to the host, as in CEO of Bonfire Engineering and Construction Mr. Brian Hollister to take it away.
Brian Hollister: Thanks, Nick. Welcome everyone. We’re really excited about this next episode and our topic for today of Open Access. Open access has different meanings to different people. So, we’re going to conquer that today. Talk about those different meanings, the different benefits of open access, and we’ve obviously got a great cast of panelists with us today. We’ve got Greg Whelan. Greg is the owner of Greywale Advisors. Thank you, Greg. We’ve got Jeff Christensen, he’s the president of EntryPoint Networks. So, raise your hand there. All right. Then we’ve got Nate Walowitz. And Nate has the longest title of everybody as the Regional Broadband Director of Northwest Colorado Council of Governments. What we’ll typically do right now, though, is just take a moment to go around with each person and let you do a bit of an intro so that obviously, the audience can learn a little bit more about you. But as Nick said, I am Brian Hollister, and I’m the CEO and owner of Bonfire Engineering and Construction. Why we’re in existence is we’re really focused on helping to make sure that all Americans can get broadband access. We really believe that it should be really a basic right. And obviously, it helps drive economic health and the vitality of communities, right? And it helps to improve education and makes health care more accessible. And of course, now a huge topic is naturally making sure the kids can get access to education.
We are focused on helping to close that divide that’s out there by helping to do things like this, right? Bring information to the community, to help inform, help educate. So, it’s kind of our quest in life and it’s a super exciting one. It’s even more exciting these days with the pandemic and things that are happening. While that’s a negative, it’s a good thing in the essence of bringing the awareness, obviously, to broadband, and then the disconnect that so many Americans unfortunately have. Hopefully today we can talk about some more options of how we can bring communities, service providers together to come up with more creative solutions to help close this digital divide. With that being said, why don’t we just kind of move from left to right. If you’re on my screen, left to right and do intro with each one of you folks. Nick, do you mind kicking it off?
Nate Walowitz: Good. Thanks, Brian. And good to be here. I’m Nate Walowitz. I got my career start in telecom, helping to manage and monitor some of the largest worldwide data networks for folks in the brokerage industry, the banking industry, the telecom industry, airlines, railroads, you name it. If they had a data network, they needed to have it managed. From there, I went on to do a stint with Southwestern Bell, thus the odd shape of my head. While I was in Southwestern Bell, I was the head of Wireless Data Services for Washington, Baltimore. And while I was there, I developed their first white label broadband product. Well, it was internet back then, it wasn’t broadband, that any cell phone provider had ever done. It was called internet by cellular one and it was a great product. It took off amazingly well. I then finally figured out that Colorado was the place to be. So, I ended up out here and I’m with the Northwest Colorado Council of Governments. I provide technical support and technical assistance to communities who are trying to improve their broadband and cellular access in their communities. I’m also the father and creator of project THOR, our open access regional broadband network. We have aggregated
1,879 plus miles of fiber connections to connect communities together in a resilient, affordable, accessible way so that a couple of fiber cuts or a couple of circuits going down won’t cut our communities off, which is something they experienced before. And we try to bring as many providers along with us so that people have a selection when it comes to middle mile. And we won’t cut anybody out, anybody who wants to connect to our network, service provider, government agencies, local organizations. We bring them all on because the internet is an awfully big ecosystem and in small communities where some of the communities that I work with are only a couple of thousands to 5,000 people, that’s an awful. Even one organization not being connected can have a large impact on these communities.
Nick Dinsmoor: And as I told Nate in the very beginning that clearly if you’re a Marvel fan, one of the best project names ever, because he’s putting the hammer down on broadband with Project THOR, so very nice. All right, Greg.
Greg Whelan: We have a downpour, so if it’s loud let me know I close the windows. My name is Greg Whelan, Greywale Advisors. We’re in the Boston area, southern New Hampshire. Of course, the ocean is like two miles that way. I’ve been involved in broadband for a long time. I don’t know it’s how many years. I actually did the first ADSL chipset in the world network back in the day. So, I sort of moved up. I did chips as a product manager for DSLAM, which is a big like a piece of carrier metal. Then I was at large equipment companies basically marketing entire portfolios of large service providers in the world for the broadband all the way to the end, to the core.
So, I was one of the founders of the Broadband Forum and I’ve been in the industry a long time. I got involved with open access quite a long time ago because of Jeff Christensen. I was working on a project and Jeff and I happened to cross paths. I was enamored with the architecture because it just made a lot of sense, right? I do come from the tech side, but also, to me, there’s three architectures. There’s a business architecture and a financial architecture. And no matter how hard I tried to be on the open access model, it wouldn’t break. That’s why I decided to raise a large sum of money to build some in the US with private money. I wasn’t too keen on the municipalities for a number of reasons. I ran into my own set of challenges trying to look at the private equity side, which five years ago I knew nothing about, I would say. Anyway, that’s who I am. I help anyone in the ecosystem is eager to implement open access networks. Private or public, it doesn’t matter.
Nick Dinsmoor: And let’s round out our panel introductions with Jeff.
Jeff Chritensen: Great. Thank you. Yes, Greg and I, it’s probably rounding four to five years since Greg and I have been talking about this stuff and working on this stuff, and Greg’s a great head. He really understands the issues. In its roots, EntryPoint is a software company. And our definition of open access, we’ll probably get into this later because I won’t jump into that. But I think we define open access a little differently than others may. Our start, there’s six founders at EntryPoint. The founder that brought us all together, built the first ISP in Eastern Idaho. And when he did that, the local incumbent telephone company, which was CenturyLink West at the time. They were not excited about having a competitor and they basically cut off his middle mile path. That’s what sent him down a road of trying to figure out what are the root problems here with the current system and how do we help consumers work around those problems? And so, after thinking about the problem and working on it, he arrived at what EntryPoint is all about. I think we’re the first in the world that took software defined networking technologies and applied them to the open access problem. I haven’t seen any data to counter that yet. But we are in the US.
Nick Dinsmoor: It’s a good claim.
Jeff Chritensen: Yeah.
[crosstalk 00:09:59] Did you have a question Brian? Sorry.
Brian Hollister: No, no, no. My bad.
Jeff Chritensen: So anyway, that’s really what our focus has been. It has been applying what I’m going to call data center technologies to the open access model.
Nick Dinsmoor: Okay.
Jeff Chritensen: And that includes SDN, automation, virtualization. Those are the three that we focus on. And Greg quickly became kind of a kindred spirit and agreeing on, you know, as we talked through the problem and brainstormed together, I think we sort of we pointed in the same direction on root problems and solutions.
Nick Dinsmoor: Given that, one let’s make sure does everybody have a beer in hand? Because this is again, beer and broadband. So, at least you have something you’re drinking that tastes good. We typically on these episodes we do do a beer check before we really go deep. So, just to run around. I’m drinking a Stella right now. So, Brian what’ve got?
Brian Hollister: I’m drinking El Gose, a German style sour ale. I’ve never had it. So, we’ll see how this goes.
Nick Dinsmoor: From Avery Brewing company, I think right?
Brian Hollister: Avery. And then I’ve got backup of a Tangerine Express IPA. If all of that goes to hell, there’s always Coors Light.
Jeff Chritensen: You are ready Brian.
Nick Dinsmoor: All right, Nate. Nate what you got?
Nate Walowitz: And I’m drinking a Colorado Native Amber.
Nick Dinsmoor: Nice.
Nate Walowitz: It was the first thing I grabbed out of the fridge. You know, we tend to go camping and we kind of pick up beers along the way. And so, usually the first stop is we’re pulling into a town is to a local liquor store to see what’s local. Unfortunately, that’s what’s local here for me right now.
Nick Dinsmoor: Greg, what have you got?
Jeff Chritensen: Everyone’s here. Nate. Where are you?
Nate Walowitz: I’m in Evergreen.
Greg Whelan: I am drinking sparkling water. I wasn’t prepared. Caught off guard.
Jeff Chritensen: I’m going to let you down too. I’ll be on water and it’s not even Colorado water. It’s the other side of the Rockies, Utah water.
Brian Hollister: Oh, come on.
Nick Dinsmoor: Come on. Come on. No, it’s okay. All right, well, Brian, Nate, and I we’ll try to make up for the rest of you guys.
Brian Hollister: Yeah, Colorado authorized–
Nick Dinsmoor: Yeah, Colorado go beer. All right, so let’s jump into it. This is obviously Episode Four. It’s around open access. And you know, Greg obviously has written several articles about open access. I think if you ask 10 people on the street or 10 people that are just in this industry what open access is, I think you may get at least five different answers. You know, it’s clearly more well-known in Europe. But I
think let’s try to just, you know, for the people that are going to be watching this later, let’s define what it is. Let’s be clear before we get into, I guess, real deep. Like, what is open access? How do we define it in layman’s terms? Either Greg or Jeff, any of you guys are willing to jump in, but let’s get a definition.
Greg Whelan: Jeff, why don’t you provide like the second one and then I’ll add a little complexity?
Jeff Chritensen: Okay. I think the traditional definition is that you have access to multiple ISPs. That’s really what came out of Europe is that in Europe, they have separated largely the infrastructure and the services. And so, the infrastructure is not controlled by the service provider and as a consumer you’ve got access to multiple ISPs. I would say, EntryPoint’s definition and Greg will probably talk the same direction. All right, our definition is that you do separate the infrastructure and the services, that’s fundamental and then the service providers are exposed to competition and innovation. That’s our definition. That every service provider in the ecosystem is exposed to competition and to innovation. An innovative threat is really what they’re exposed to. Greg go for it.
Greg Whelan: Yeah, I know. If I can elaborate on that. Actually, you can really slice it and dice it. Well, actually, we did a stack of what you can actually create in an open access environment and I came up with like 11 or 12 different layers. Because you can overlay network in cloud. Looking at it as a model where you’re wholesaling everything, right? That’s one model. And that includes conduit. There is a reason we deal with conduit. It doesn’t have to be
fiber. As you guys know the biggest expense is running the fiber or digging up the streets, right? Or not, or designing it and then building. The tech side [inaudible 00:15:12] pennies compared to the heavy lifting of building it. So, if you’re going to build it, build it everywhere from one thing whether it’s conduit or fiber. So, you’re separating again the network from the services and the services at this time would be internet access, to keep it simple, the extra triple play, right? Just internet access. But in between you get wholesale conduit, you could do dark fiber for the city or some entity. Again, it could be a private entity, deploys dark fiber and wholesales it on a fiber by fiber basis. Or you can all wholesale lit with fiber, which is where Jeff’s technology comes in. It offers like what I call like VLANs and the rest. It’s a big honking Ethernet. The town is a big Ethernet network and you offer VLANs or VPNs or some layers to kind to of protocol.
So, there’s different layers within that and the thing is the service advisor, we [inaudible 00:16:03] service providers are separated from owning the infrastructure. We have one infrastructure, you don’t need two or three sets of quotes, you need one and then you wholesale it to a very reputable and honest inventory basis to all.
Nick Dinsmoor: So, why do you think somebody… I guess, what’s the why? I mean, obviously, Brian talked about the purpose for Bonfire and when we talk about digital divide, I would argue, it’s becoming a digital chasm not even a divide. But what’s the why?
Greg Whelan: There’s an urban divide.
Nick Dinsmoor: Huh?
Greg Whelan: Sorry for interrupting. No, there’s an urban divide. It’s like everything’s divided I think rural. Yes, there is a huge rural divide. It’s also divided in the cities.
Jeff Chritensen: Yeah.
Brian Hollister: Absolutely.
Jeff Chritensen: Yeah, there is.
Nick Dinsmoor: So, what’s the why behind like in that scenario? Let’s talk through the business model of it, right? I mean, you talked about the architecture and the different elements having the different layers, but what’s the model? I mean, we all know there’s obviously people that build networks, there’s people that design networks, there’s people that run networks, there’s people have software that supports networks, but there’s all these different pieces. What’s the model for open access?
Brian Hollister: I mean, isn’t the model and I guess, in my simple mind is really thinking about a water treatment company that is a municipal owned infrastructure. We live in Denver, Denver water. So, they own water and pipes obviously to every single person’s home, but what people choose to do with the water, the services they sell off of that water, Denver water doesn’t care about it, right? They just are owning this infrastructure and they’re allowing lots of innovation and lots of companies and people to use the water, right? So, is this kind of similar? I mean, does it help? I guess a municipality that might have a broadband challenge, help them to get into broadband, put an infrastructure in place that they can understand, oh, this is like my water infrastructure. I’m going to just build this. I’m going to focus on the physical components but I don’t really know anything about an ISP. I don’t even know what ISP means, right? Is it a way to snap them into, I guess, a model that might make sense because they might be the funding party to be able to make that happen?
Greg Whelan: Just to keep the metaphor, the water metaphor it’s almost like a water is the internet, the access, right? Where the idea would be the town would own the water pipes but you could buy water from different reservoirs. And somehow it wouldn’t get mixed along the way. So that’s sort of the metaphor of it. The idea is to see, when I first got into this, Jeff and I in Idaho my reaction was, “No way. Can a city do this?” It’s too complex for the most people I know who work in the cities. They’re not just not enterprise kind of corporate America, [inaudible 00:19:12] you know, profit driven.
But can they manage roads? Yes, they can. Can they manage at least the conduit? Yes, they can? Can they manage dark fiber? Probably. Can they manage lit fiber? Maybe. But they can definitely do the dark. The thing who is going to do it? A large part of America has cable monopolies. I think I do, right? As I’m selfish, I just want a better network. But I have a Comcast monopoly and so a lot of companies do so. They’re not going to do fiber though. They’re not going to give me a gigabit anytime soon cost effectively because they don’t have to [inaudible 00:19:48]. A lot of these towns there’s no one there. And so, you got to map the business with the finances. That was a separate issue, but most suburbia and not too super model, the model will not work.
Nick Dinsmoor: So, let’s break it up into two pieces. I know Nate you wanted to comment as well. But I think there is the rural piece and the urban piece. So, I think maybe you want to talk about the rural piece of it.
Nate Walowitz: Yeah, I can certainly talk to the rural piece. But I agree, even within the urban areas, there’s still a divide. And it’s caused by the lack of infrastructure paths. And that’s really where the open access model it is really applicable and it helps in the rural markets when a municipality or an organ or an organization comes in and they build fiber in a community. Because one of the largest expenses is actually putting fiber in the ground or hanging fiber on the poles and getting it from point A to point B. And when you have a very limited market size, you look at a service provider. How can a service provider affordably build to a community of 2,000 people or 5,000 people or even 10,000 people and businesses? It makes it really challenging. So, by offering an open access model where trying to leverage your… well, it’s waterpipes. It gives multiple providers access. And why open access? I’ll go back a little bit. One of the reasons for open access is everybody has their preference of what they want. It’s no different than I want to subscribe to Netflix. I want to subscribe to HBO Max. I want to subscribe to Disney. I want some other streaming feed. Just having that choice both in pricing and content is part of that. And of course, you then have the other portion of when you look at some community anchor institutions like hospitals or cell phone providers who are also going to come on to the network, they have their own flavor. They want transport or they want their own flavor and because of whatever corporate or organizational discount they’ve obtained, they want to be able to obtain that in every single one of the markets where there are present.
Nick Dinsmoor: So, I guess the question is, can open access work unless you’re altruistic as a business and a community?
Greg Whelan: Well, there’s over a couple 4, 5 billion with a B already invested in open access networks in Europe.
Nick Dinsmoor: You are more altruistic than we are, I guess, right?
Greg Whelan: No, these are private equity funded. These are private equity funded networks. And trust me, [inaudible 00:23:25] private equity, they’re not there for charity, okay? You know, I just have a few, Reykjavik Fiber 10 million, City Fiber has already gone for like 2 billion, Deutsche Glasfaser Fiber or whatever I don’t know if I pronounced that right. They are up to 2 billion. SIRO in Ireland, they’re up to 500 million. These are private companies offering open access. Because they realize if they separated the infrastructure, think of conduit and fiber that last 25 years plus or minus, right? So, you want to finance that. You want to finance them as an asset. Great. So, fiber is a long term asset, super-duper, I’ll finance that long term. If I lay a two Ethernet switch, that’s going to last me two years if I’m lucky. So, I don’t want to finance that. That’s like equipment leasing kind of stuff. So, if I separate the long term stuff, which is infrastructure from the electronic stuff, which is [inaudible 00:24:17], so now I get economic benefits and I have a disaggregated architecture that works.
Nick Dinsmoor: So, let’s talk about, so you gave a couple examples…
Greg Whelan: The thing is, I’m going to do the heavy lifting, but I’m not a venture capital unicorn, right? VC is like, I’m going to give 10 people 5 million knowing nine of them are going to blow it. But one of them is going to make me a billion and I’m good. We’re a part of private equity. Private equity is huge. It’s like here’s a billion, make me 14% for 20 years.
Nick Dinsmoor: So, is there an example in the United States or North America that we can talk about that we’ve tried it here and it’s worked or let’s use an example of if it’s tried here and it didn’t work.
Greg Whelan: They deployed that in Ammon in Idaho. That’s a great model.
Jeff Chritensen: Yeah. So, to briefly answer your why, and then I’ll talk about Ammon. The problem is the monopoly. They’ve got a monopoly both on the infrastructure and on the services. So, you’re breaking that up. It is a natural monopoly, the infrastructure, but the problem with the cable companies is that they are going to keep this 30, 40-year-old coaxial cable in the ground, around the poles as long as people let them. And people don’t understand that fiber has 25,000 times more capacity than coaxial cable. There’s no question that fiber should be the base infrastructure. So, we’re being cheated both at the infrastructure layer and then we’re getting… if you want to get an answer to the question, go look at Spectrum’s five-year stock price or go look at Cable One’s five-year stock price. And we’re not saying, you know, I’m a private company and I’m in here to make money, but the returns they’re getting are monopolistic returns and it’s because people don’t have a choice. To talk about the Ammon example. The cost of connectivity report just came out of the Open Technology Institute out of DC. And we expected Ammon to be the lowest cost in the US in this report. It was actually the lowest cost of fiber in the world.
Nick Dinsmoor: Really?
Jeff Chritensen: So, below Ammon you had Prague, Tokyo, Paris, Copenhagen, and all of these big cities. We had to get below the top 10 to get to the US. So, Idaho is listed number one lowest cost fiber optic internet in the world. And that’s because they’re symmetrical gig is $47. So, anybody in Idaho can get a symmetrical gig for 47 bucks.
Nick Dinsmoor: That’s a pretty good deal.
Brian Hollister: Now how does that work for them Jeff though? I mean, the model, I guess. Because there’s two pieces, right? There’s then a component that obviously is the infrastructure and then of course they choose the ISP. You’re talking about the data component writing over the infrastructure as the lowest cost, right?
Jeff Chritensen: No, total cost.
Brian Hollister: The whole thing, okay.
Jeff Chritensen: It’s 47 bucks.
Brian Hollister: And how does the model work like in Ammon? Does the customer pay two different fees? One for the infrastructure and one for the ISP?
Jeff Chritensen: Yeah, we actually break it up into three categories. We break it up into infrastructure, ongoing maintenance and operations, and then they pay their ISP. The reason Ammon is unique and why we’ve been able to drive the price down so low, is people can switch their ISP on demand. So, if you don’t like your ISP, it literally takes 40 seconds to switch your ISP. And so, there is a [inaudible 00:28:06] marketplace. Let’s just say your ISP goes down. So, there’s a problem at the ISP.
Nick Dinsmoor: So, what’s the incentive for the… unfortunately we don’t have our service provider panelist couldn’t make it today, but what’s the value? And re there incentives if the customer is able to flip from provider to provider in that situation?
Greg Whelan: They can serve the town. So, an ISP can serve the town of Ammon. It’s very similar an MDU, by the way, right? You can serve the town of Ammon, but you don’t have to build the infrastructure.
Nick Dinsmoor: Yeah.
Greg Whelan: I mean, you think of [inaudible 00:28:43] like no brainer. If the is the CFO Verizon goes into this, why are not jumping at it? No idea. Because you could serve Ammon, Idaho with [inaudible 00:28:52] without spending a penny on construction, right? He’s already invested billions in the back end of [inaudible 00:29:00]. So, he doesn’t have to spend another penny on that because it’s already working. All he has to do lease the layers from Ammon. I mean, it’s that easy.
Nick Dinsmoor: I guess to dig into Ammon a little bit, I mean, it’s a fascinating example compared to the Europe and the P. Was it a P-funded initiative or was it a community-funded initiative?
Jeff Chritensen: Yeah, so the city built the backbone for the network with reserves in the water department. And that was about 1 million or two for the initial backbone. And then they use the local improvement district model, which is the only model available to them in Idaho. And so, when a subscriber signs up, they’re signing up acknowledging this is an improvement to my property, and I’m responsible for my connection. This is like my water connection; this is like my sewer connection. Their obligation is to the infrastructure.
Nick Dinsmoor: Got it.
Jeff Chritensen: It’s not [inaudible 00:30:01] or to an ongoing M&O contract. It’s just to the infrastructure, which turns out to be about $21 of the $47 total.
Nick Dinsmoor: So, kind of date me, I guess, but I’m sure all of you can remember the whole lifeline tax, right? Like from the telcos, which ultimately changed to getting broadband. But it’s kind of that, right? I mean, they’re paying for essentially, the infrastructure is like the lifeline and it is the broadband connection, right?
Greg Whelan: So far, they’ve done it opt in. So, it’s voluntary. I mean, the really expensive path is to mandate it for everybody. The city leaders didn’t feel like there was unified support for that so they did an opt in local improvement district. And they’ve ended up with 65% take rate, so they’ve got substantial take rates. But it’s not forced. Nobody’s forced to participate.
Nate Walowitz: Rio Blanco county in rural northwest Colorado is similar story. They’re doing a symmetric gig on their fiber network. I think it’s $65 a month. They actually, they have three provider options on their network. The County provides the infrastructure and has built out the infrastructure and they have three local ISPs. None of the national ISPs have really been interested in coming on the networks and engaging. Greg to your point, I don’t know why Verizon and all these other providers aren’t coming on these smaller networks, but it’s an amazing opportunity. They have a small four-year college in the town of Rangeley and one of the things that this college is pitching to prospective students, or they were pre-COVID-19, I don’t know if they’re still doing it. But they guaranteed a gig to every dormer.
Nick Dinsmoor: Wow. We’ve talked about what it is. We’ve talked about some examples of, obviously Greg mentioned multiple places in Europe that’s invested significantly, and I would agree. I don’t think there’s any PE company in the world that is not in it to make a profit and then with one example here in the US or two, I guess. I mean, so why hasn’t it taken off?
Brian Hollister: Yeah, like in the US specifically, if you’re telling me that the PEs have gotten behind it in a major multibillion-dollar way in Europe they typically repeat their model, right? Rinse and repeat everywhere else. Why is that not happening? I think the other thing that’s really interesting and Nate just said it too is that with Rio Blanco, why or none of the larger ISPs wanting to jump on that, it seems like a no brainer. In [inaudible 00:33:23] UTOPIA fiber is another muni based fiber solution across multiple municipalities that’s done probably one of the largest networks that I know of that’s open access. I think they have 11 different providers and I’m looking at their website right now. I’ve never heard of any of them. They are obviously growing in leaps and bounds. What’s going on, guys? Why are we Americans not all over this? I mean, this [crosstalk 00:33:56] but what’s going on?
Greg Whelan: [inaudible 00:33:57] the companies that develop the ISPs, they are everywhere, right? My background in addition to telecom probably is innovation. Aviation innovation management [inaudible 00:34:09]. I look at things like that and one of the things I’ve learned when I look at this was, I came up with the phrase, I call it the power of being incumbent, the power of incumbency and it applies to any industry. I’ve seen some work with some ocean tech people globally, and they’re like, “Oh, this industry moves so slow,” and I’m like, “No, every big industry moves slow because the dominant players like being the dominant players.” Why did they want the game to change? They own the game. I think in the US what we’re facing is just a misinformation campaign around 5G, which has gone on long enough. It’s a 15-year hype cycle, folks. And so, you have the incumbent spending. Verizon and AT&T spend a billion each year in marketing. Comcast and Charter Spectrum, they just have monopolies about 67, 80% of the country and they are powerful, right?
I mean, you know the game, right? I have a thing. Years ago, I said all local loops are local and I meant technology. This neighborhood for DSL, this neighborhood 4G firm. And then [inaudible 00:35:14] once said [inaudible 00:35:15]. Then all local loops are political. Sadly, that’s true.
Nick Dinsmoor: You guys obviously [crosstalk 00:35:28].
Greg Whelan: Until they play more, they own the game.
Nick Dinsmoor: So, is it an opportunity then guys, that there’s an opportunity in a lot of these rural communities. Obviously, this sounds like it can work in a large metro but obviously, depending on who you listen to, there’s anywhere from 15 to 40 million Americans that lack adequate broadband. It is I guess, a potential catalyst, being able to partner with folks like Nate who’s solve the middle mile problem across many communities because you’ve got to solve that first. Now they’ve got a 100-gig available to the community, but now the community needs potentially help to take that next step. Maybe is rural America potentially a catalyst for getting more open access, I guess to just start gaining more traction?
Jeff Chritensen: Yeah. I’ll give you my answer. Ammon went live at the end of 2016 and so in 2017 we started business development. At the point Ammon went live, all we had was that capability to dynamically switch your ISP. I would say Ammon today has 30% of the technology they will have 12 months from now. There’s a bunch of technology that will be unleashed over the next year, which will be more transformative than what we’ve done in Ammon but on the business development side, so you think about the cycle where if you’re working just with cities, it takes two to three years just the sale cycle. And that’s to get them to start their feasibility. [inaudible 00:37:21] a year working on their feasibility report and then you’ve got to build the network. And you may do that in one, two or three years, depending on the size of the network.
What we’re seeing now, we’ve got two cities in Idaho under construction copying the Ammon model. We’ve got a city in the Midwest, it’s a county, actually. It’s a county of 200,000 copying the Ammon model and we’ve got a project in California that will start as a smaller project and then grow to a countywide project. There’s four that are actually under construction and then there’s about 15 to 16 that are in the feasibility. These are in the process, but you’ve got to walk down the timeline in terms of how long this process takes. The thing that Greg has explored is, the cities take two to three years on the sales cycle. Why don’t we just skip that part, bring in capital and start building networks? That’s the piece, Greg’s been hammering in that, and I’ve spent the last year working on that same problem. If we can align capital with infrastructure projects, then I think you will see a very rapid transformation toward open access. If not, if it stays at the municipal level, it’s going to be a slower slog and it’s going to happen regionally where people see the impact and you started to see it bubbling up regionally.
Greg Whelan: Yeah, [inaudible 00:39:00].
Nick Dinsmoor: Let’s shift gears a little bit though, I guess. Given that, and I think obviously we’re all in the broadband and technology space, there’s a lot, I think Brian mentioned earlier, Jeff mentioned, obviously fiber is fiber. There’s really no comparison of what you can deliver with fiber versus other technologies but that being said, there’s Starlink from Elon Musk, there’s Airband, there’s Terragraph from Facebook, there’s all these new technologies that are basically looking and building solutions that take, yes, they have to have the infrastructure, but they are changing the model of delivering broadband in rural and especially in urban areas. How do these new technologies change the open access model or doesn’t?
Greg Whelan: All the above when you get to rural, it’s whatever works. I have the script where broadband is broken in the cities, it’s broken in suburbia. It’s not broken in rural. It’s never been fixed. Rural telephony never worked. It was subsidized. So, why do you think broadbands are working? Rural is a special case, especially [inaudible 00:40:24]. I don’t know if anyone can solve that, so it’s whatever works. Whether you want to float [inaudible 00:40:31] over there or balloons or the satellite stuff, great. But at the end of the day, it’s fiber to some to some intent. It’s going to be net intended. It could be a Wi-Fi router, or it could be a 5G tower or 6G in 20 years. Or it could be some fixed wireless for that farm down the way. It’s whatever works once you get further and further away, even little towns. All the technology’s great. The more the merrier.
Jeff Chritensen: There’s a lot of misinformation on what Elon Musk is doing, but if you read what they’re saying, so I read a report last week that was information from the company and they mentioned 32 milliseconds of latency. And even saying there it’s a solution for unserved and underserved areas. They did it, in one test they got up to 100 megabits, but the sampling of what they’re getting is in the 16 to 40 megabits per second. I think it’s a fantastic… I’m working with a county in Arizona and parts of that county are so rural. I told the County, “You guys should be looking at what Elon Musk is doing.” It’s not a solution for Maricopa County and Phoenix, but it may be a fantastic solution for people that are 200 miles from Phoenix.
Nick Dinsmoor: I guess I’m just wondering, does it make, from a financial model perspective, again if you use, Wi-Fi 6, if you use, and I obviously, let’s put aside the Starlink stuff, but like more here or even again, the Terragraph stuff that’s using wireless or even local ISPs, there is a way, it’s the avoiding of the truly the ripping up a street and putting in fiber. It is changing the dynamic of that. Now obviously you have to have back haul. You can’t get the speed unless you have the back haul, but from a financial model, does it make it more appealing to someone to invest in an open access if part of that network can be wireless?
Greg Whelan: Think of when you are an investor. What are you investing in? You’re investing in an asset. That’s why I like, like dark fiber or lit fiber, both have a role and you can do both simultaneously. But investors, they want to know what they’re investing in. Dark fiber is very akin to a real estate investment firms. It really is just a dark fiber. You can legally treat it as a real estate. Now, the risk profile, got a buzzword well, it’s better understood. They’re investing in a network. They’re investing in a company that offers open access. That’s a different level of investment. That’s not an infrastructure investment. We haven’t really talked about that. It’s important what you call it. If you call it broadband or you call it internet access, that’s one thing but at the end of the day, it’s infrastructure. I tell cities all over, just if you’re going to call me ever again, use the word infrastructure. Never use the word broadband again.
Nick Dinsmoor: So, we’re saying open access has done a poor job of marketing, is what you’re saying? [crosstalk 00:43:52]. It’s like a lot of things–
Greg Whelan: Everybody uses the term you’re right, but for different things. A lot of [inaudible 00:44:01] is open access.
Jeff Chritensen: Yeah. I mean, open access is the biggest nightmare for the incumbent. The model they least want to see deployed because it will commoditize what they do.
Brian Hollister: And they’re not participating in these examples we’ve been talking about
Jeff Chritensen: They’re not participating because they don’t want to see it happen and what we haven’t talked about… When we talk about exposing the service provider to competition and innovation as our definition of open access, what happens when you expose? The ISP up until now has been insulated from innovation. Verizon, AT&T, all of these guys, there’s no outside threat of innovation because they control the infrastructure. When you expose the service provider to innovation, what is it about the ISP that can’t be automated? Let’s think about what they do.
They give you back haul. That’s really partnering generally, whether it’s their back haul. They give you an IP address. Right now, they take care of infrastructure, but if you pull the infrastructure away from them, they may do customer service but what we’re finding out in Ammon is it’s basically a lights-out operation for the ISP. And so, the question is, when you expose the ISP to innovation, what’s going to happen? I think we’re going to get an answer to that question over the next two years. I think you’re going to see, because of these automation technologies, you’re going to see a rethinking and a redefinition of the role of an ISP and the way they play in the ecosystem.
Nate Walowitz: Yeah, that’s an interesting point. I think that you’re right, Jeff. All ISP wants to see the commoditization of what they do. It takes the margin out of it for them and then they have to compete on a different level and they have to find new ways to differentiate their products with. I’ve worked with a number of communities and they’re perfectly fine working with local ISPs in an open access model but they’ve put ISPs out because they wanted to pursue an open access model and they did a national search for those ISPs and when they looked at the list of ISPs that were available, and Jeff certainly, you looked at the model out at UTOPIA, and you’ve never heard of some of these ISPs.
For a municipality that’s concerned about quality of service and what is the public’s impression of broadband and infrastructure versus broadband versus content, they don’t want to have to worry about, “Oh, well, I’m paying $22 a month, but now I’m getting crappy service so I’m going to pick up the phone and I’m going to talk to my town. I’m going to call my town council person, or I’m going to call the mayor and complain about the service provider.” They don’t want that headache so they want the process to be seamless. A lot of what I’ve seen is they’ll put one service provider in as a primary service provider to at least launch the service but the understanding is after 18 months they will open the network up to additional service providers if service providers are interested in coming on the network. It’s a bit of that governance challenge as well and certainly, no municipality… my puppy just joined me. No municipality wants to get a black eye with a broadband project because the public, when a municipality or a county does a broadband project, the general public has a hard time, I believe, comprehending the difference Between infrastructure and service provider content and services.
Nick Dinsmoor: That’s actually, that’s a good shift and it’s hard to believe we’ve almost been talking for an hour, but we can probably talk about this all day. Let’s talk about the future though. Let’s talk about, Nate to your point, clearly when you’re dealing with, and this probably goes with a lot of things in life, when things are complicated it’s hard to dumb it down and I don’t mean that in a bad way. It’s hard just to simplify concepts, especially if you’re not in the business. We all live and breathe in the technology space. We like this stuff. We like to read about it. We like to talk about it. What does the future look like for open access and I guess maybe in future, what can we do to try to encourage it at our different perspectives? Because I would… I joked earlier about the bad marketing, but part of it is. It seems like it’s a bad… It’s not a clear message
and the municipalities, obviously they’re funded by community so it’s risky. PEs, they want to make a profit. What does the future look like and how can we all help to try to encourage a model that by all accounts is a really good model? Maybe Greg or Jeff to start
Jeff Chritensen: Go Greg.
Greg Whelan: That is a really good model. When I was doing this, if you have ever seen the movie, The Big Short? [inaudible 00:50:32]. Seriously, we all knew we were right. It’s just like, just look at the model. I’ve run numbers, these PE maybe crunch numbers that I never knew were there because I’m not a finance guy. I have to admit. I was crunching numbers and doing financial models. It’s like, “Oh my God,” [inaudible 00:50:48] but it was like living the movie, The Big Short, because the numbers just worked like a charm. One of the risks that I felt when I did this was that you can make too much money. Because, check Ammon, like once you build it and now, you’re the fiber guy for everyone by the way, you’re the 5G fiber guy, you’re the enterprise fiber guy, you are the local government fiber guy. You are the fiber guy because you are smart and you deploy a ton of fiber to every possible location. What the future is going to be like, this industry moves slow because it is infrastructure, as Jeff alluded to. You pull the trigger, let’s go do it, five years goes by, and the way these towns are driving you crazy and they’re wasting their money and time they do a survey. That’s a year. Some of these towns around here, Jeff knows them, they have to get a boat to spend 20K to do a survey. That takes a year.
Nick Dinsmoor: To that point, how do you speed that up because the future, if it takes five years to do something, that’s a long time?
Greg Whelan: Well, what I found out, that everyone, every time said no or you’re an idiot, I kept a list. I’m going to overcome these challenges. Anyway, I did a list. They are 10. I came up with the first one and I didn’t want to remember them. I called them challenge zero and I can show you my slides. Challenge zero was the community as you alluded to it. I’ve talked to some smart people just in my town at kids’ games or in town or whatever, no one knows they have a broadband problem. How are they going to like, and they say, “The town is going to do it,” and people say, “Whoa, the town? The local government? No way. They can’t even fill the potholes. I don’t want them to be the ISP.” The community just doesn’t get it. They don’t understand broadband. They don’t understand internet. They don’t understand the cloud. They just don’t understand it. It’s not because they’re dumb, it’s just because they are not techy. The number one thing to get this moving is to get the community… I’m not talking like [inaudible 00:52:53], it’s not a political game. It’s just…
Nick Dinsmoor: Nate’s dying here. He’s like…
Nate Walowitz: My gosh. Yeah, my dog’s dying for attention.
Nick Dinsmoor: I thought you were dying about the community comments.
Nate Walowitz: Oh, no. Greg, you’re absolutely on target. It takes a long time to pull a community together and to pull the interest together, because you’re right. I talked to people in multiple communities and they really don’t know that they have it. You don’t know you have broadband problem until you’ve been sensitized to it but then it takes time to bring that community together and then to build enough political will to be able to drive a project forward and raise that capital and then once it happens, then you can’t build it fast enough.
Nick Dinsmoor: Yeah. It’s the hurry up and wait.
Nate Walowitz: Right.
Greg Whelan: There’s a lot of pushback with private equity, by the way. Private equity has baggage too. What I found around England in some of the smaller communities, there was a negative feeling about out of state investors because it is community infrastructure, right? It’s critical community infrastructure. The big thing was you’re going to sell it to Comcast. Private equity is not the answer because they have challenges too. Because it is a tough game, back to the community education and the incumbents. If the incumbent, sadly enough, if they don’t want to play ball, they have the power that does not make this happen.
Nick Dinsmoor: They also had the power to knock Brian off of the Zoom call. They saw that we were talking about this stuff and they’re like, bam, he’s out. They just knocked him right off. [inaudible 00:54:56]
Greg Whelan: They won’t like the fire because they can monitor every packet.
Nick Dinsmoor: I know.
He’s talking to service providers. Jeff, what do you say?
Jeff Chritensen: Two things, one, if states or the federal government wanted to solve the broadband problem, all they would have to do, they wouldn’t even have to give grant money. If they would just give low interest loans to real estate developers for the real estate fiber, so they make low interest loans available to developers, project developers like Greg. If I could give the money to Greg to develop all of North Boston, he would have that done over the next seven years. The states really could just by providing loans, not grants. By just low interest loans they could fix this problem. Our feeling on the future and we’re really interested. We’ll roll this out over the next year. We’ve got a smart device that goes with a home that allows the intelligence to happen in our networks. The ability to switch your ISP on demand is there because, and this is how I met Greg, he was working, he was doing a project for the company that provided that gateway that goes with the home, which is really a mini PC. That same gateway will allow us to do virtualization to the premise.
What that means is that we will be able to do automated private networks on demand at layer two. Without getting too much in the weeds, the Internet’s layer three, we’re going to be able to do true private networks. We’re doing it today. It’s just it doesn’t have the full automation. We basically had to build our own operating system on that gateway because the operating system we were using didn’t enable the automation. That operating system is now deployed in Ammon. We’re now in a position to do this full automation of layer two. What that means is if a teacher wants to do virtual classroom over a private network, they’ll be able to set that up literally in 30 seconds. It will be in a private network. It won’t be across the public internet. The importance of that is privacy and security implications, but also local resilience because the packets are not leaving the city, we’re addressing point to point and so you’re not going to… If you’re in Greeley, you’re not going to go out to Denver and then back to Greeley across the public internet, you’re going to stay in Greeley. You’re going to build this locally resilient network that won’t be taken down if there’s some events with the middle mile connection.
The importance of that though, is we believe once the capability is there… we’ll be able to do this in Ammon on demand, I’m going to say in the next six to nine months. We are doing it today. We’ve got people using them today, but the automation will be real time in the next six to nine months. What that means is you’ll be able to do telemedicine in private networks, you’ll be able to do education networks, public safety networks, whatever. There’s not a limit because they’re software networks. Our belief is that once we move the ball in terms of what is possible, we’ll change it from a nice to have in a luxury to an essential. Meaning, if we can increase security, if we can improve local resilience, if we can do new things with public safety, then we’re going to move the ball in terms of what will be expected from consumers.
A lot of the 5G hype is around this capability, but they want to monetize that capability. In our platform, those layer two networks are free. Once you’re connected on the infrastructure layer it’s built in and it’s included. The two of you, Brian and Nick, you guys could send large emails, 50 Meg, 100 Meg emails back and forth if you’re on one of these networks locally, without going out across the public internet. A part of what I’m really interested in as far as the future goes is what’s going to happen as we expose the ISP to innovation and what will the subsequent impact on price be, but also what’s going to happen as these on demand layer two private networks are real in an open access environment?
Greg Whelan: Let me just add one point in there. What Jeff said is spot on where that’s an elite model again and where the wholesaler is the VLANs [inaudible 00:59:55]. He’s wholesaling VLANs as opposed to the dark fiber.
One of the important things to realize that when you think of broadband, don’t make it synonymous with the internet access. That’s what Comcast wants you to believe, that broadband and internet access are one and the same. They’re separate. Internet access is just one service that runs on the open access fiber network as Jeff alluded to, with that telemedicine, tele education, all these things, local networks, the VLANs, those are layer two services. Those are broadband services. They’re not internet services because they’re layer two, but they are broadband services. That’s the beauty of it. I would charge by the way. It might throw a few in for a three, but there’s nothing wrong with making money. You can make in buck. [crosstalk 01:00:44].
Nate Walowitz: That’s great, and you’re absolutely right, because trying to explain to people who aren’t internet people, in my model I call that transport and bandwidth, and trying to explain to people what transport is and that you don’t need, and that they are two separate things and you can buy them separately. You can’t buy it separately from my network if you’re buying transport today, but you could have your choice of bandwidth providers on the network and Jeff, that’s where this device that you’re coming up with I see is a win-win because today communities are doing direct over the air broadcast for council meetings, for participating in for viewing local sporting events. If you can do point to point, that’s just an extraordinary. That takes this commodity, that takes this open access infrastructure that we’re talking about, and it opens it up to the whole community. It creates this another community online that’s not restricted to some platform that you’re sharing texts and videos, just because the name of your community is on that platform.
Greg Whelan: Thinking of what Jeff can do, what his technology, today, if I want to get to any website, Amazon, whatever, I go from my house through co-ax, I go down to Boston and then I interconnect at some carrier hotel, but it’s an internet service. It’s me, Comcast, Amazon at layer three, where with Jeff, there’s no reason that Amazon or any web company couldn’t serve me at layer two. You think of that. It weakens the economic strength of the ISP, hence that’s the reason the incumbent ISPs don’t want to change the game. Because if ISP, if the internet is just one of your VLANs, you have a direct connection with Amazon, you have a direct connection with Apple, direct connection with Google, a direct meaning layer two, and you have a direct connection to Comcast Internet. That value that Comcast Internet pipe is a heck of a lot less than it was when everything was going on through that line. That’s economic disruption. That’s disruptive innovation.
Brian Hollister: It’s really interesting what’s happening right now. We’re so focused on obviously trying to get more access to more people and where Jeff is going is obviously creating even more and more value. I think what’s happening right now is we’ve had these individual silos, pillars, trying to solve these problems. You’ve had folks that care about internet access. You have people that care about tele-health, you have people that care about education, and those have all been somewhat separate fronts. I think what’s exciting right now that, don’t waste a good crisis, as some folks would say. And with the pandemic, we’re now having tons of challenges happening with obviously education, and we’re getting so many calls from schools needing help calling our company, calling employees. They are just connected to these various communities.
If I feel like when we’ve looked at this problem, we always talk about the cost of putting the fiber end. If you really think about it, the cost for putting the fiber end actually goes down tremendously when we start to solve all of these problems together. We work with a group called
Prime Health which is an organization focused on tele-health innovation and there’s amazing innovation happening in tele-health, but it all falls on this space, of course, if you don’t have a connection, but what we’ve seen just in at least, Colorado, is that we’ve been able to keep the rate of folks being in hospitals associated with COVID. We’ve been able to deal with that so well, because the state rolled out connectivity options for telehealth. Folks that would normally go in, didn’t have to, but they still got the care. Right in the Metro. That obviously helped us deal with this.
If we can all come together, I think the future is quite bright and in a lot of ways, there’s not only new technology options for connectivity, but you’re having a force come together. As a force can come together, come on, we decided to go build highways. Highways are a hell of a lot more expensive than building conduit in these communities. I really think we’re getting close to solving this problem and we need more federal funding, state funding. We need more private funding. I think you’re going to see, and the whole reason we do the Beer & Broadband Series is bringing these ideas together because there’s not a one size fits all. I think open access is super cool and why we wanted to have the diverse group today is because we’re actually solving it from two different areas. Nate’s solving it from a very specific point of view. First, making sure we can even get the access to these rural communities and then obviously Jeff and Greg are really looking at a model that can completely change the entire industry. I think as we can get smarter about simplifying this message to city, state, government, and just consumers and the people that obviously have the pull strings on capitol, I think our future is amazingly great.
Nick Dinsmoor: Yeah. I agree.
Jeff Chritensen: I’d love to see the federal funding and the state stop thinking in terms of grants. Just do low interest loans. They get their money back and everybody gets fiber. If we could switch the mentality to this grant, giving money away, then I think the barriers to achieving that are a lot lower.
Brian Hollister: I would totally agree with you on that. It’s just like when we first put in fiber and we put 12 strands to do an inter-office connect, we thought that was all we were going to need. It’s like build more. You’re going to benefit from it. You’re right, Greg. I think it’s one of the most amazing assets you could possibly have and that’s why I still I’m somewhat dumbfounded that the PE money hasn’t come into this quicker and in the US.
Greg Whelan: It’s the risk associated with it in their mind because you do need take rate, you do all that municipal paperwork.
Nick Dinsmoor: It’s poor marketing.
Brian Hollister: I agree with Nick.
Nick Dinsmoor: All right guys. We’re at the top of the hour. I’ve personally learned a lot. One, open access clearly is a model that can work. Two, I think this is a really important point that I think I miss the least and in reading some of these articles and even how people cover it, I think that what it can do for innovation is actually a huge. I think that’s a big value proposition and one that I think to your point, I mean how service providers and community think like. All joking aside, I do think it is a perception issue, right? It is you have to get people to believe. And what Brian was talking about all the different things that happen and can be supported by broadband. If people don’t believe in it, and Nate obviously deals with communities, it’s hard to move the ball forward. I think obviously lots of great stuff about open access and I’m hoping we can continue to have these conversations. I want to thank Greg, Nate, Jeff and Brian, obviously, for attending and being outstanding panelists for open access. We’ll do one last parting thoughts if you have anything that you want to share with the listeners, and then we will close it out and continue to, at least for Nate and Brian and I, continue to enjoy our beer. Parting thoughts from… we’ll go around the room, starting with Greg.
Greg Whelan: I appreciate the opportunity to talk with you guys. I was enamored with the model just because it solved a lot of problems. I still think it does. The industry does move slow because again, this is infrastructure, this isn’t equipment that you toss out and in two years the software
will be upgraded every week. This is civic infrastructure. The model works. Just do it. [crosstalk 01:10:07] a feasibility study and work, start building.
Brian Hollister: Better marketing right there. Just do it.
Nick Dinsmoor: Just do it. Jeff.
Jeff Chritensen: It is a matter of, we’ve got to hit a critical mass. Fast company did an article in October. We had nothing to do with this in terms of marketing. The title of the article was, The Best Fiber Optic Network in America is in a City you’ve never heard of. I think if more cities replicate what Ammon’s done then we’re going to see a snowballing of this model moving forward.
Nick Dinsmoor: Nate.
Nate Walowitz: I’m going to go with, just do it. It was great to be here. Thanks for the invite.
Nick Dinsmoor: And Mr. Hollister.
Brian Hollister: I so enjoy these. I love coming together and sharing our stories and being able to provide value to the audience. I think you’re right. That articles said it all. I remember seeing that article Jeff, and it’s amazing that in some of these rural areas now, they have some of the very best networks in the world now. I think that is going to continue to gain traction and I think it is all about obviously critical mass. I think we’re making momentum. We’re building. I think the foundation of all these conversations is obviously laying out the right fiber network, engineering it properly, and that’s obviously what we can help with. I appreciate everyone’s time today and I look forward to speaking with all of you soon again.
Nick Dinsmoor: And for future Beer & Broadband episodes, you can visit bonfire-ec.com. Thanks everybody.
Brian Hollister: Thanks Nick.