How The US Gets Its Fibre

If you thought Australia was the only country getting all hot under the collar about broadband, you’d be mistaken.

Across the Pacific, the United States is engaged in an equally fiery debate. The debate there is not about the method of delivery of superfast broadband — most experts agree that fibre to the home is the end goal — it’s about who will deliver this technology.

Julius Genachowski, the outgoing chairman of the US Federal Communications Commission, recently said, “We are in a global bandwidth race, which will help determine who creates jobs and grows GDP in this flat, competitive, innovation-driven global economy”.

During the 1990s technology boom, hundreds of thousands of kilometres of fibre optic cables were laid across America and under seas connecting the US to countries around the world.

These fibre networks led to significant benefits for some countries. In his book, The World Is Flat, Thomas Friedman argues that India exists as the IT centre it is today because of that fibre optic cable.

But fibre optics failed to deliver equivalent benefits to American households, Friedman says, because the companies laying the cables in the 90s didn’t deliver the “last mile service”. That is, they failed to take fibre to the home. The result is that many US cities have a ring of fibre surrounding them that is currently idle.

Private enterprise was expected to extend this fibre ring to people’s homes. The fact that it has failed to do so now sees the US running at middle of the pack in terms of the speed and cost of broadband services, according to Susan Crawford, former special assistant to President Obama.

Crawford is critical of the carriers providing broadband services in the US and of various government policies that have supported them. “Having a communications system that knits the country together is not just about economic growth, it’s about the social fabric of the country,” Crawford told Bill Moyers.

She is critical of the digital divide in the US and says of the current system: “The rich are getting gouged, the poor are very often left out, and this means that we’re creating, yet again, two Americas, and deepening inequality through this communications inequality.”

With the national broadband carriers failing to offer fibre connections to American homes, Google has stepped in. In what was seen as an attempt to shame internet service providers into moving forward with their fibre networks, Google has launched its own Google Fiber Project.

In 2011, it asked cities all over the United States to bid to have Google install a fibre network with speeds of up to 1 gigabit-per-second (Gbps) or 1,000 megabits-per-second (Mbps) in their towns. To put these speeds in perspective, the fastest access you can get in Australia now is 100Mbps (although NBN Co has said it will be able to deliver 1Gbps by the end of the year).

Competition for Google’s fibre network was tough. The mayor of Topeka in the state of Kansas even changed the city’s name to Google for a month. Another mayor jumped into a shark tank — literally! Kansas City eventually won the bid, and Google offered its first customers 1Gbps speeds at the end of last year for as little as $70 a month. If households agree to pay the $300 connection fee, they can get free connection for speeds up to 5Mbps — faster than the current average Australian connection speed of 4.2Mbps. Young internet entrepreneurs and technology start-ups flocked to Kansas City to take advantage.

The fibre project was seen as such a success by Google that this month it announced it would take Google Fiber to Austin, Texas.

But this Google project only delivers to neighbourhoods with high demand, as well as certain schools and hospitals. More recently, Google has announced its intent to buy up the fibre network in Provo, Utah.

Today in America, there is only one city that provides internet speeds of up to 1Gbps to any household or business that wants it. The city is Chattanooga – of choo choo fame – and it built its own fibre network that runs past every premise in the 600 square mile (1554 square kilometres) radius of its jurisdiction. The network covers half a million people.

Chattanooga’s city-owned electrics utility, EPB, built and runs the network.

"A big part of the reason we decided to build the network was to improve our electric power system," says Danna Bailey, a spokesperson for EBP.

A study from UC Berkeley Lab found that communities across the US lose roughly $80 billion a year due to power interruptions; one of EBP’s goals was to reduce that impact by about 40 per cent. Today, they’re seeing reductions of up to 65 per cent and higher, explains Bailey.

Chattanooga now has a wireless network off the back of the fibre and is using it to improve city services. It is offering free wifi in public places downtown, and police are using it to control traffic lights according to real time data, as well as for other public safety applications.

Jack Studer, a former investment banker at Credit Suisse and a recently returned Chattanooga resident, says:

"I do believe that it was necessary for EPB to build their network because the incumbent telcos (Comcast, AT&T, Verizon) have near monopoly level market domination and have made only half-hearted attempts to deliver next generation fibre networks to their paying customers.

"Someone had to take the first step forward and EPB did just that.  You can see that Google is following in EPB's footsteps by rolling out (or buying up, as is the case in Provo, Utah) fibre networks around the country."

EPB raised a bond issuance to finance the investment in 2009 and has been making a profit since April 2011. While EPB’s primary market is in direct sales, it has a handful of wholesale customers. Since EPB Fiber Optics launched in September 2009, 46,000 homes and 4,000 businesses have signed up for one of the three services it offers: telephone, TV and internet. The current take-up rate is growing at about 200 customers per week. Internet pricesstart at $57.99 for 50Mbps and go to $299 for the full "gig" (1Gbps) service.

"The economy of Chattanooga is booming," says Studer. Chattanooga has seen "massive job growth, a burgeoning entrepreneurial ecosystem and massive investments from Volkswagon and Amazon.com while the rest of our country is trying to recover from the Great Recession."

Bailey points to social benefits for individuals and households as well. For instance, a doctor who can diagnose patients in 15 minutes instead of 24 hours because he can access MRIs and other high-resolution images very quickly. There are also obvious benefits for people working from home or accessing applications and data in the cloud.

"People also enjoy downloading movies very fast as well as songs and other media. For people who play multi-player online video games, the low latency of our network means that our customers have an advantage over customers using older, slower networks, like cable or DSL."

"The thing that is most interesting, though, is the platform for innovation that this network makes possible."

Chattanooga’s GigTank program is now an annual event that invites entrepreneurs to the city to test the network over the summer. On 6 August, teams and individuals will demonstrate the applications and products they’ve developed.

Of course, there’s a profit incentive for Google in delivering its fibre project – more bandwidth equals more potential for advertising revenue, which is how Google makes its money.

Other municipalities around the US are trying to get into the gigabit race by either signing public-private-partnerships, which is the case in Seattle, or using Chattanooga’s public utilities model to build their own, as in Lafayette.

In Australia, if the National Broadband Network is delivered as planned, residents and businesses should see all of the benefits 1Gbps speeds can deliver and forget, once and for all, the digital divide.