Seattle and the University of Washington have agreed to work with Gigabit Squared on building out the network. The city already owns its own fiber network, which it is leasing to Gigabit Squared. Ansboury estimates that the company will invest $25 million in the project to get it started with more capital required later. Unlike in Chicago, where Gigabit Squared has grant money to work with, it will have to come up with its own capital for the Seattle project. However, the ability to lease the existing Seattle fiber lowers the cost to a point where building out service becomes viable, because Gigabit Squared doesn’t have to dig trenches or string fiber along utility poles.

Thus, Ansboury estimates that he should have permits by mid-summer for the network, and can begin construction. If that schedule works, the city gets gigabit service in late fall. The network here is different from the fiber-to-the-home network Google offers in Kansas City or even from what Gigabit Squared hopes to offer in Chicago. It will have three parts: a fiber-to-the-home component serving roughly 50,000 houses, a point-to-point gigabit wireless service and a Wi-Fi based mobile broadband service in areas where there is existing fiber.

The fiber tech is pretty self-explanatory and the wireless broadband is basically superfast Wi-Fi access points that will attach to that fiber. Subscribers to Gigabit’s home service will have access to that network as part of their home service package but other Seattle residents can also buy access to that Wi-Fi network. That’s an interesting model — will people pay for superfast Wi-Fi in a specific neighborhood where they may not live? Will people who live there buy the Wi-Fi service instead of fiber?

Ansboury says he thinks the Wi-Fi will help drive customer acquisition because people can see how fast a gigabit really is — although he estimates the Wi-Fi network might only offer speeds between 600 and 900 Mbps. He’s also hopeful that he might wholesale that service to other companies, especially during events. In fact as the ISP for the planned network Ansboury is willing to open up access to all of the network, selling wholesale access to others, even to providers that may want to offer competing services he said. Of course, Seattle is also willing to lease its excess capacity to other providers so someone else could come in and do the same thing as Gigabit Squared if they saw economic benefits to doing so.

The other component of the planned network that needs explaining is the point-to-point gigabit wireless rooftop deployment. Ansboury says the company will use a combination of licensed and unlicensed spectrum between 11 and 60 Gigahertz to deliver a gigabit or more between the rooftops of about 39 buildings that make up Seattle’s’ public housing. Such services are not unheard of in major cities, with San Francisco’s WebPass being a good example of such an ISP.

Of course, Gigabit Squared has yet to build a network anywhere, so it remains to be seen how realistic these estimates are. However, it’s clear that cities and service providers are not waiting for the larger, incumbent ISPs to upgrade their infrastructure. As these networks spread and cities can see models to get their own gigabit networks, I’ll be curious how the larger providers respond. Dane Jasper, the CEO of Sonic.Net, which is proposing a fiber-to-the-home network in San Francisco, once told me that for the larger providers to care about these networks they need to take about a fifth of the market.

“Competitors need to take substantial market share before we begin to see large changes in the policies and business practices [of large ISPs],” Jasper said. “If they have 5 percent of the market then there’s not much shift in pricing and things like capping but if competitors take 20 percent with all-you-can-eat plans, the rest of the market changes and consumers will see policy and product and practice changes that are beneficial as a result of the competition threat.”

Hopefully places like Seattle, San Francisco, Chicago, Chattanooga, Tenn. and Kansas City will help get the U.S. to that 20 percent.

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The network has been developed by local electric company, the Bristol Tennessee Essential Services (BTES) using Alcatel’s gigabit passive optical gear. Chattanooga, Tenn. became the first city in the U.S. with gigabit speeds about 18 months ago and alos relied on its local electric utility to build the fiber network. It did so despite aggressive opposition from incumbent broadband providers.

A growing number of smaller towns are moving towards the gigabit broadband. Google Fiber recently went live in Kansas City. Several Ohio college towns are working with Gig.U project and Gigabit Squared on ultrafast broadband networks. The Gig.U group  is working on rolling out networks in the state Maine and the city of Atlanta. Chicago has gotten into gigabit action as well.

The cities are taking matter into their own hands mostly because the current broadband market is essentially a comfortable duopoly of cable and telecom operators with little competitive pressure and as a result no incentive to boost the bandwidth and cut prices.

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XO sells transport and intra-city capacity to enterprises, cable companies, wireless and wireline carriers, and internet companies looking to move massive amounts of traffic between point A and point B. For the upgrade, XO is using Nokia Siemens Networks’ latest-generation dense wavelength division multiplexing (DWDM) technology to boost the bandwidth carried by a single wavelength of light from 10 Gbps to 100 Gbps. NSN’s platform can support 96 simultaneous wavelengths so the theoretical total capacity of the network is 9.6 Terabits per second.

This isn’t the same thing as the fiber network Google is rolling out in Kansas City, which connects individual homes with high-capacity fiber strands. But fiber-to-the-home services like Google’s will need transport networks like XO’s to move the enormous sums of traffic they generate to their final destinations. In addition, the proliferation of streaming video, cloud computing services and just our general hunger for more data on more devices will feed the demand for souped-up long-haul links.

XO’s may be the first US operator to supercharge its inter-city fiber links with 100G but it certainly won’t be the last.

Photo courtesy of Flickr user Pasukaru76.

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Is tech company incubator Lamp Post grooming the next Facebook?

Google plans to launch its fiber to the home network in Kansas City on Thursday with the goal of seeing what people there can do with a gigabit connection. But as one city that already has a gigabit network can tell you, the answer so far may be, “Not much.”

For the last two years, Chattanooga, Tenn.’s public utility (EPB) has offered customers a gigabit fiber-to-the-home connection costing roughly $300 a month, so I touched base with a group of investors and entrepreneurs who have built a program to try to see what people can do with that fast a connection. So far, the limits of equipment, the lack of other gigabit networks (much of the Internet is reciprocal so it’s no fun if you have the speeds to send a holographic image of yourself but no one on the other end can receive it) and the small number of experiments on the network have left the founders of the Lamp Post Group underwhelmed.

This was the first year that Jack Studer, a partner with the Lamp Post Group, a tech incubator in Chattanooga, and Brian Trautschold, a cofounder at Akimbo, opened their doors to two groups of people from outside the city excited by the prospect of a gigabit connection. The two welcomed a group of 21 entrepreneurs on May 14 and a group of 11 students on June 11 into the incubator. The aim was to get both groups thinking about gigabit applications and opportunities. While Studer was reluctant to out the business plans developed by the entrepreneurs ahead of the upcoming demo day (August 9, for those who want to check it out), he shared some of the things the students were developing. They include:

• Instant universal translation
• Facial recognition in real time at a point of sale or security point
• A better, easier to use electricity systems for the home that incorporates the smart grid as well as device management for consumers
• Workstation apps as a service, such as delivering Photoshop or other CPU-intensive applications via the cloud

Many of these are interesting, but as most people are probably thinking, none of them look like the killer app for a gigabit network. And Studer is well aware of this. He said that so far he’s happy with the program, but he does wish it could see more people participate and produce bigger ideas that really take advantage of the network. In our conversation he explained what needs work.

More brains, more people: This is the first year of the program, and Studer explains that the 30 people who are in the program so far aren’t really enough to generate the kind of creative firepower to remake the world with a gigabit in mind. “We have 30 people, but we need 200 to 300,” Studer said. He also said it was challenging to get mentors to come from outside Chattanooga, especially people from tech hubs, to discuss ideas and influence the people. He said the program has had some good people, but not the quantity he had hoped for.

Better equipment: Another problem with delivering a gigabit is that most computers can’t handle the speeds. “We have bought a lot of SSDs this summer,” quipped Studer, because hard drives aren’t fast enough to store the bits coming in via a gigabit pipe. Think of it like trying to fill a paper cup from a fire hose.

More gigabit users out in the rest of the world: The other challenge, which Studer and I had discussed prior to beginning the program, was a lack of gigabit connections elsewhere in the country. Prior to bringing in entrepreneurs and students he was looking for someone to test out Chattanooga’s network connections and equipment, but it was hard to find people, and some weren’t clear what he was trying to test exactly. And as Google builds its network and other efforts such as the Gig.U university broadband plans come online, this problem may gradually disappear.

New tech to cram more bits in your hertz.

Clearly Google may not have the challenges of finding smart people to play with its network — it’s a company that has plenty of genius employees as well as the clout to bring in engineers and geeks from any other tech firm it wants. It builds its own gear so the technical challenges experienced by Chattanooga may not be as much of an issue for the search giant, but the experience in Chattanooga indicates that the mentality of “If you build it, the gigabit applications will come,” may require both more effort and time than people realize.

Of course, apps and broadband speeds evolve in fits and spurts, so it’s hard to say what will trigger the next killer app or when. All we can say for sure is we won’t get gigabit apps until we have gigabit networks. Until then, we can have fun, filling up those pipes by running concurrent gaming and video streams.

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Even at a supposed high point for the cable guys, they just can’t let their beef with Google and Netflix go. Today’s dig comes courtesy of this blog post, which lauds cable’s achievements in today’s FCC report, and then turns around to blame the web world for delivering slow-loading sites and services that can’t make use of the TOTALLY AWESOME speeds cable provides.

From the post:

With two successful tests of wireline broadband providers under its belt, it may be time for the Commission to turn its attention elsewhere. For example, as described in a recent article in the Boston Globe, slow speeds on content provider websites often prevent consumers from receiving the full benefits of the “last mile” broadband access service they have purchased. Consequently, to obtain a fuller picture of the performance consumers are experiencing, the Commission may want to solicit the participation of popular content and application providers, such as Netflix and YouTube, in developing a voluntary testing regime for application providers.

In other words, cable’s service is amazeballs but those lunks in Silicon Valley are gumming up the works, so the FCC should totally stroll over to Mountain View and track how well Google’s site loads. If you click over to the Boston Globe article, you’ll see that the cable guys are distorting the problem (surprise!) that the newspaper is discussing. The Globe’s story focuses on Verizon’s new 300 Mbps service and covers two issues. The first is that customers may not find value in faster speeds because there aren’t a lot of web services out there to take advantage of them, and the second is the idea that those speeds are irrelevant because data centers on the back end can’t ship content at 300 Mbps. From the Globe article:

The problem is that most of the Internet isn’t transmitting data fast enough to take advantage of such rapid broadband speeds, [Roger Entner, an Internet analyst for Recon Analytics LLC] said. If a server computer transmits an Internet video at, say, 20 million bits per second, having a 300-million-bits-a-second connection won’t make any difference. “The website you are connecting to is the bottleneck,” he said.

Hold on there, Entner! The idea that a 300 Mbps connection is pointless because Google isn’t pumping out YouTube streams at 300 Mbps is laughable. Then add NCTA’s idea that the people at the FCC should investigate the contents of Netflix’s data centers in order to ensure that the over-the-top-streaming company is not somehow scamming customers (or interfering with Big Cable’s ability to make money selling faster pipes), and you have a straw man the size of the Empire State Building.

Between your computer and Google’s servers are a lot of steps.

A lot happens between Google’s servers and your router when you request a YouTube video. There are connections between the cores on the chip processing your request, connections between servers in the data center that look up the video you asked for and then the possibility of multiple hops between different providers to get the packets that make up that video from Google to your screen (including that hop on your home wireless network which may also be constrained). And the important thing to realize is that at every one of those points there are multiple providers who compete to deliver the fastest possible speeds while optimizing for cost and quality.

The primary point is there isn’t a lot of competition is the last mile, where the packets hop onto a cable, DSL or fiber network. And that’s why the FCC needs to keep its eye on cable, DSL and fiber providers. Because the truth is that as long as ISPs cap their services and drag their feet when it comes to speed upgrades (Time Warner’s transition to DOCSIS 3.0 was a long time coming in AT&T dominated markets), some of the services such as 4K video streams that require at least a 12 Mbps connection and can consume several gigabytes of data per movie, won’t launch. It’s hard to push the fast and fat apps before the broadband cart.

Don’t miss the big picture

So the big picture on the FCC’s broadband quality report has nothing to do with Google’s servers and everything to do with Google, Netflix and others trying to serve their customers in a market where broadband resources are constrained by caps or where operators refuse to invest in their networks. If you doubt me, look at Netflix begrudgingly lowering the quality of its streams in Canada or Google building out its own fiber network just to get people thinking about what apps a superfast gigabit network could enable.

Only in a market where their access to the end customers is interrupted by a monopoly would it make sense for Netflix to deliver a lower quality product or Google to spend billions in a working around that provider. So yeah, cable, congratulate yourselves on being better than DSL, but don’t try to get all high and mighty trashing the companies that make your product worth buying.

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Last week’s announcement that a $200 million broadband investment fund is in play courtesy of Gigabit Squared is part of a quiet trend of communities searching for new ways to fund broadband.

Technologies such as desktop PCs, local area networks and mobile applications moved from their infancy to full-blown industries thanks to venture capitalists, investment firms and angel investors who drop big-to-huge bucks on promising startups. For better or worse, these investors drove industries to maturity. Expect the investment scenario for broadband to be different.

Few view broadband networks as startup businesses, but maybe more should. Many communities believe broadband is critical infrastructure, the same as water, electricity and highways. Enlightened communities also know these networks are business operations, even when in pursuit of the common good. The networks must generate revenue, though the financial goal for community-run and muni-run networks is more sustainability for the infrastructure rather than profit.

Gigabit Squared views broadband networks as technology ventures in need of investors and investments, but in a different vein than VCs. Gigabit Squared CEO Mark Ansboury explains that the company targeted private companies for investments that have a business stake in the growth of networks rather than aloof VCs only concerned with the IPO payday.

Gigabit Squared is similar to angel investors who value bringing their time and expertise into the thick of things to help startups. However, the amount of each investment in a broadband network is higher, and the experience the company brings is broader than what comes with typical angel investments.

Think different – more than a slogan.

These towns called on someone who cared about their broadband quality.

“Non-traditional” business  investments in broadband have been around for a while. Early in 2011, Corning, Inc. invested $10 million to three rural upstate New York countiesto build a fiber network, including the county from which Corning operates.  “We saw this as an investment not only in the community’s future, but in Corning’s future,” says Corning’s Dan Collins.

This “we win, the community wins” philosophy was showcased at last week’s Freedom to Connect conference in Washington, D.C., as a session panelist described how his software company is investing an undisclosed amount to build a fiber network throughout San Leandro, Calif,. Pat Kennedy, CEO of OSIsoft, says his company needs gigabit speed to continue to grow and compete effectively. Kennedy feels that, as a longtime resident, property owner and successful business in the city, he should give something back to the city. Lit San Leandro is his investment. How many communities could move their broadband projects forward by finding more such investors?

Here’s another example. Four friends in Emporia, Kan. who until several years ago held management roles in a successful small local telecom company, had become very unhappy with the poor quality of broadband in their town of 30,000. The large incumbent refused to upgrade its network to address the community’s needs. So the four started a new company – Valu-Net, LLC – with $500,000 of their own money. Then they proceeded to raise an additional $6.3 million from investors who had to put in at least $50,000 to participate.

This is more traditional tech startup fundraising. What wasn’t typical were the investors. Co-founder Rick Tidwell states, “The people who put money in … you wouldn’t expect to have this much to invest. There were small business owners, farmers who’d done well. Mostly average Emporia residents who invested because they believe in the founders and believe that it [the network] eventually helps the community.”

Issuing municipal bonds to fund networks is on the wane because of politics and the poor economy. But what if communities flip the script, take government out of the picture (directly), create a nonprofit corporation that is owned by local citizens and businesses, and replace bonds with promissory notes. You would have ECFiber in Vermont. To date the not for profit corporation has raised over $2 million for a fiber network selling $2,500-notes to rural residents who average two notes per purchase.

Make a deal for better broadband.

Flip the script again. IPOs are the stuff of legend in the tech industry. In England, Broadband for the Rural North, LTD (B4RN) sold enough shares of stock to finance its initial network buildout. The main fact is when communities think outside of the box, good things can happen.

Control vs capital.

While these are definitely winners, from the perspective of those who champion the public good, the level of success is directly dependent on control. As with traditional tech startups, whether you take investment money – and from which investors – often comes down to how much you give up in exchange for the money.

How much communities control and direct the use of the network depends on who calls the shots. As Ann Millspaugh, Online Community Manager for EdLab Group, said after listening to Ansboury last week, “It seems like Gigabit Squared’s comprehensive, integrated buildout will make the community dependent on its infrastructure. The lack of transparency and input towards management/governance easily could lead to characteristics that have been defining the digital divide, particularly fiber deployment to areas that will be most profitable, and unchecked pricing structures.”

The trick for building networks that maximize benefits for the public good seems to be to create a strong governing body for the organization that owns the network, whether a co-op, nonprofit, community foundation, even a public-private partnership. Community stakeholders can’t be so enamored with the technology that they don’t pay close attention to the design of the infrastructure and business practices. How communities respond to options such as Gigabit Squared likely will depend on how they resolve the issue of control.

Craig Settles is a consultant who helps organizations develop broadband strategies, host of radio talk show Gigabit Nation and a broadband industry analyst. Follow him on Twitter (@cjsettles) or via his blog.

Handshake image courtesy of Shutterstock and skyshak roman.

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The Sonic.net employees. Look for them in your neighborhood, San Francisco.

Sonic.net, an independent Internet service provider in San Francisco, has said it plans to roll out a gigabit network to the city, putting the hub of today’s tech and web community on equal footing with Chattanooga, Tenn., and eventually both Kansas City, Mo., and Kansas City, Kan., where Google plans to build a fiber network. Sonic.net has applied to lay fiber to 2,000 homes in the Sunset District and plans to reach most of the city’s buildings within five years.

Perhaps the question of which needs to come first, the gigabit network or the applications that will cause customers to pay for such a network, can finally be put to rest. If the geeks in San Francisco have such a sandbox to play in, as well as a few gigabit hubs in the rest of the U.S., surely we will get to answer the question of what a gigabit can do.

The eventual all-fiber network would be served from approximately 188 outdoor utility cabinets, and construction of the network will begin next year if Sonic.net can get the permits. That is not a given, considering San Francisco’s reputation for frustrating technology projects. Sonic.net is a familiar entity for many Bay Area residents, as the company has been offering copper-line DSL and telephone service to people. Its CEO, Dane Jasper, has also been very outspoken on several consumer issues such as broadband caps and ISPs’ trying to use deep packet inspection technologies to try to deliver ads. From the release:

“San Francisco is our fastest-growing market for copper delivered Fusion Broadband+Phone service today, so we are very excited to bring our Fiber-optic upgrade process to the city,” said Dane Jasper, CEO & Co-Founder of Sonic.net. “There is a huge demand in San Francisco for higher bandwidth services, and fiber is the only long-term way to meet this demand.”

Sonic.net also has deployed fiber to the home in Sebastopol, Calif., at two price packages — one delivering 100 Mbps (and voice) for $40 per month and one delivering a full gig for $70 per month. The company also plans to expand its operations out of the state, Jasper told me earlier this year. Regardless, other San Francisco providers such as Comcast and AT&T should be worried. They are getting some real competition, and I can’t wait to see the results.

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