Posted by: Neal Lachman | January 7, 2009

Why it Won’t Fly: Community Fiber & Muni Wi-Fi

The following is taken from our Strategy, Business Development, Marketing & Position Plan, which we plan to release next week. PLEASE NOTE: this section of the document only concerns a  2007  (slightly updated) feasibility analysis and commentary by GigaSpeed on the FTTH & BWA market dynamics and uncertainties on a political level. The rest of the document is not yet released. I uploaded this piece because of the dialogue going on at Om Malik’s GigaOm blog.

GigaSpeed Analysis and Comment on Community Fiber & Muni Wi-Fi.

1.         Introduction.

2.         Municipal Wi-Fi & Community Fiber, and the Digital Divide.

2.1.        Cities and municipalities must facilitate, not compete.

2.2.        BWA and FTTH/O service for all demographics.

2.3.        GigaSpeed’s Open Access/Open Network promise.

2.4.        Digital Divide and Cherry-picking markets.

2.5.        GigaSpeed’s Urban strategy.

2.6.        The Lost cause of Community/Muni Fiber/Wi-Fi


1. Introduction

At GigaSpeed, we have the utmost respect for the persistent drive and determination of citizens and government officials trying to bridge the digital divide and to bring the digital era everywhere and to everyone in the United States as well as globally. Their intentions show great vision, and we congratulate cities such as Cleveland and San Francisco for having been selected as “digital communities” in the past.

The pattern with BWA and FTTH projects organized by Municipalities or Utility companies reveal that these developers are content to remain on a very small scale, almost never involving a larger area than the core market, and not necessarily including businesses and office buildings. These projects often do not even include neighboring cities.

In any case, almost all municipalities that are pursuing or planning a FTTx rollout are doing so because of their frustration with, and disappointment in, the telecom industry. The city-councils often say that the “lack of initiative from the market” is their main reason to try to build their own optical fiber infrastructure.

This section of the document concerns a feasibility analysis and commentary by GigaSpeed on the FTTH & BWA market dynamics and uncertainties on a political level.

2. Municipal Wi-Fi & Community Fiber, and the Digital Divide

The Broadband Wireless Access and Fiber To The Home/Office industries are still in their embryonic stages, and we believe that GigaSpeed, in its self-appointed role as guardian of the industry, has the responsibility to guard the industry against false promises and misleading facts. It is therefore our promise to cities anywhere in the United States to guide and advise them at no cost. GigaSpeed is, however, requesting that the company be assisted in developing the infrastructure on its own merits and discretion and not per the demands and requirements of the local government.

What is believed to be state-of-the-art today is outdated tomorrow and, in the words of Gregory Nemitz, our former CTO, “dinosaur-steak” within 5 years. To prevent is better than to cure. One should build an infrastructure that is future-proof from the get-go. As explained elsewhere in this paper we don’t believe that other WISPs and start-up FTTH projects are built on a future-proof model or critical-mass level.

Nobody -that we are aware of- has the funds or the intellectual capacity to deploy large-scale, future-proof BWA or FTTH infrastructures. We know, because some of the medium-sized hopefuls have approached us for funding. Those who can raise large amounts are the Cable operators, Telcos and wireless cellular operators, but they will most likely not participate in a big, serious way in such deployments because it could cannibalize their wireless and Cable or DSL revenues.

A future-proof, upgradeable wireless infrastructure, as designed by GigaSpeed, will cost much more than the amounts promoted by most muni-Wi-Fi hopefuls, just like Clearwire is overestimating the reach and power of WiMAX transmissions. What they all completely ignore, is the fact that local multi-gigabit backbones are needed if rich-media services are to be deployed or used by mobile and residential or business subscribers. To build a future-proof, high-capacity Broadband Wireless Access infrastructure one must invest heavily in hardware. One must build metro backbones, wide-area-networks, local area networks, place access nodes on each intersection, and install at least one relay-node (or micro or pico-cell) in each building (and/or floor), depending on the number of floors.

Another obstacle for most planners is that such kind of ubiquitous infrastructure will need massive investments in the range of tens and even hundreds of millions of dollars, and they will be loss-making for the first three years. GigaSpeed is willing to do this, because it is not just ubiquitous BWA that interests us in the long-term. We are also a Fiber-To-The-Home/Office company, specialized in research and development of future-proof concepts. GigaSpeed stands today, in 2009, at the threshold of a great revolution in Broadband Wireless Access and Fiber-To-The-Home infrastructures. We want to build these infrastructures, but more eagerly, we want to operate and exploit the infrastructures we build; we want to build, own and operate the infrastructures in the USA. We trust that city officials will take our advice to heart and work with GigaSpeed to build the most powerful infrastructures to serve their constituents.

2.1. Cities and municipalities must facilitate, not compete

In the city officials’ noble and ideological ambition to bring broadband to their constituents, they may be achieving just the opposite by insisting on their own terms and conditions. These conditions keep away willing investors and companies such as GigaSpeed.

Cities and local governments should stay out of this business and leave it to innovative companies. Competition should be natural and market-driven: between DTH (Direct-To-Home Satellite), DSL (Telcos), Cable (multi-system operators), BWA (Wireless operators), Mobile/cellular, FTTH/O, and Terrestrial operators. The building and operation of commercial infrastructures (content and data service providers are commercial players) should be a market opportunity, not a government-dictated/monopolized “grab-all” issue of unfair competition. The often cited notion that asphalt infrastructures and highways were also built by the governments is not a correct comparison. There are already several communications infrastructures in place in 90% of the United States, namely the ones described in the first part of this paragraph. Depending on how one looks at it, BWA and FTTH/O services are a privilege, not a primary need or right, regardless what the economic benefits for a region are. It is up to the market, and not the government, to come up with a solution and a service.

GigaSpeed is determined to grab a substantial market share in the United States and believes that this will happen because only GigaSpeed has the technological know-how and business solution to build large-scale, future-proof 1-10 Gbps FTTH/O infrastructures and up to 100 Mbps BWA systems.

2.2. BWA and FTTH/O service for all demographics

GigaSpeed’s grand plan and its perceived economies of scale allowed long-term, city-wide, intra-city, state-wide, and even nationwide projections. The savings of such a grand rollout is what sets GigaSpeed apart in the market. We can provide a staggering wireless service of up to 100 Mbps per user, but we also have an amazing service of up to 10 Mbps per user that costs much less than broadband services today. Our bundled FTTH services will cost much less than operators currently offer, and the Internet data-transfer speed will be a staggering 1-10 Gbps.

Furthermore, GigaSpeed will work with OEM partners, business sponsors, local and national governments and politicians, and others to ensure that low-income households will receive the communication tools needed.

GigaSpeed will put to use its decade-long background of in-depth research in the fields of Wireless, Mobile, Terrestrial (L/MMDS), Fiber-To-The-x, and Satellite technologies. Since 2000 we have focused on BWA and FTTH/O technology solutions and business planning.

The massive infrastructure build-out (with robust access loops at each intersection and virtually every multi-story building in the city), combined with the multi-gigabit local and metro area network backbones (loops), the virtually unlimited bandwidth capacity we connect these BWA networks to, and the nationwide coverage of our voice network, allows us to provide an unbeatable range and quality of BWA services. We have solved the chicken-or-the-egg question by deciding to build the last-mile, connect it to a multi-gigabit-per-second local backbone, and then link to a fiber metro backbone with virtually unlimited capacities.

To overcome the last-mile and last-hundred-feet bottleneck in its BWA and FTTH/O projects, GigaSpeed will build out 15,000 miles of fiber optic cables. It sounds simple, but GigaSpeed has a decade-long background with tremendous research in the fields of Wireless and Mobile, Terrestrial (L/MMDS), Fiber-To-The-x, and Satellite technologies.

2.3. GigaSpeed’s Open Access/Open Network promise

We caution planners for miscalculations and rosy expectations, things we at GigaSpeed have been guilty of at times in the past. However, we have learned the hard way to investigate, investigate, and investigate more, and not to follow hypes and fantastic stories.

GigaSpeed does not require funding or any kind of special treatment from cities and councils. We don’t want tax-payers’ money or to put a city’s treasury in jeopardy by holding our hands out to them or their constituents. The only thing we ask for is to be provided a fair business opportunity and be facilitated to the best of city hall’s ability so that we can deliver the constituents (of all demographics) True-Broadband BWA services (100 Mbps everywhere in the serviced region) in the short term, and sooner rather than later complemented with ultra-high-speed FTTH/O services (at 1 Gbps – upgradeable to 10 Gbps) in the very near future.

A “request for information” is a repeated “cry-out for solutions” by hundreds of cities and organizations. There must be a reason why the market still does not have a clue how to build these infrastructures. The reason is simple; nobody is capable to both advice and deliver. Everything delivered or built today is half-baked and not future-proof. As a matter of fact, we feel that those rolling out services, at what will be a great loss for investors or those who pay for the infrastructures, are doing their backers a great disservice and even contributing to a “Wi-Fi bubble” and/or “FTTH inflation”.

GigaSpeed International, Inc. developed the FiberBroadband Strategy, an endeavor that required more than 90,000 man-hours over the course of more than 8.5 years (from April 2000 till August 2009). The Intellectual Property we developed and own is priceless. The unique infrastructures we can build thanks to our amassed IP also require gigantic investments. In order to build 20 million Fiber-To-The-Home connections (at 1 Gigabit per second, each) and city-wide ubiquitous Broadband Wireless Access networks (at up to 100 Mbps per subscriber), we are required and willing to invest more than $1.5B investment capital over the course of two years. The grand sum, the total cost, of investment, however, exceeds $40B over the spread of the rollout time, approximately six years; the BWA part alone will take a chunk of more than $4 billion from the overall $40B investment.

This massive investment cannot be recouped if and when GigaSpeed would be forced to provide open access to others. The FCC, in its 2003 Biennial Review of the 1996 Telecom Act, ruled that FTTH system operators cannot be forced to provide open access. On August 4, 2005, the same kind of ruling came into law to the advantage of xDSL providers (Telcos). A similar ruling was already in place for the Cable TV industry. Thus, the politicians are supporting and acknowledging that investments in High-Speed infrastructures would stall or diminish if the industries were forced to provide others access to their expensive infrastructures. However, while we understand the threats, we also see business potential in a certain form of “open networks”.

The GigaSpeed competitive strategy is to compete head-to-head wherever possible, but also to partner with our competitors when sensible, using the methodology of principled partnering. (See description at the bottom of this post). 

A competitive strategy that GigaSpeed has developed to mitigate the whole risk and challenge domain is what we call Co-opetition and Open Access/Open Network. GigaSpeed understands co-opetition as cooperation and competition occurring simultaneously.

Business-wise, GigaSpeed intends to seek out companies like Google, Yahoo and Microsoft with whom the company could partner, and even perceived competitors, such as T-Mobile and Verizon Wireless, that have an existing cellular wireless infrastructure. We also consider companies such as Virgin Mobile, operators that have no proprietary or own infrastructures in place. In fact, among our partner targets, who we believe will seek us out when they understand the simple win-win-win design of our business model, are those companies that need to reach customers on their devices to deliver services on GigaSpeed’s ultra-highspeed wireless infrastructure, e.g. for mobile search, web browsing, and mobile videoconferencing.

GigaSpeed may also make its ultra-high-speed FTTH/O systems available to players like Comcast, Charter Communications, Time Warner, AT&T, and independent VoIP (voice–over-Internet-protocol) or CLEC service providers; companies that could provide a particular (bundle of) service(s) over GigaSpeed’s infrastructure.

2.4. Digital Divide and Cherry-picking markets

The selection of commercially attractive areas as the target market is often called “cherry-picking”. With this term it is implied, especially in the FTTH industry, that companies leave out the less commercially attractive (often lower-income) neighborhoods. Cherry-picking is an important bottle-neck in negotiations with city councils and local governments because the officials believe that their lower-income constituents are not going to benefit from the leap forward in terms of digitalization. Thus, they claim, digital divide will grow instead of being narrowed. Companies, on the other hand, claim that they have the right to build infrastructures, but because that is very expensive, they choose the obvious: the commercially attractive areas in the city, which almost guarantees them a homerun, the jackpot. The dichotomic digital-divide and cherry-picking stance of both parties has lead to stagnation in the industry.

Although GigaSpeed is a very commercial and profit-focused company, “cherry-picking” is not part of our business model. GigaSpeed plans to roll-out citywide and connect every house, office, building, school, institution, or structure on our route to our fiber-optic systems, and every intersection and cross-section, every building at a certain distance and a certain height to our Broadband Wireless Access systems. We want to be the dominant force in the FTTH/O and BWA in the entire region, with the best and most reliable coverage and the most advanced and highest-speed services.

GigaSpeed has developed a rollout and investment strategy that allows for the building of infrastructures in multiple areas at the same time. The company is dedicated to bring its incredible services to everyone, to people of all demographics and social status in the regions in which it operates.

2.5. GigaSpeed’s Urban strategy

For economical reasons, GigaSpeed plans to focus on markets with high-density, but the company is also willing to connect rural areas in most of the states where it will operate.

According to the Census Bureau and data released from its 2000 Census, more than two out of three Americans live in urbanized areas, totaling at around 210 million people. Another amazing fact is that urbanized areas cover just two percent of the USA and on average consists of approximately 2,700 people per square mile. Nationwide, nearly 60 million people, or 20 percent of the population, live in rural areas, while in California 94% of the people live in urban areas.

The high-density of its target markets allows GigaSpeed to “subsidize” rollouts in less attractive markets such as lower-income neighborhoods and rural areas. The company is also willing to build middle-mile infrastructures as well as last-mile infrastructures in rural areas which would otherwise be left out of the digital race.

GigaSpeed’s business model focuses around 20 million FTTH/O connections to be realized in five years, and also 20 million customers on its ubiquitous, seamless high-speed wireless infrastructures. The majority of which will be achieved in urban markets in approximately twenty metro areas.

2.6. The Lost cause of Community/Muni Fiber/Wi-Fi

Community fiber is an outdated concept similar to community or municipal-Wi-Fi. While the ideology behind community Wi-Fi and community fiber are quite praiseworthy and also seem to make sense at first look, there are major issues with such ownership programs. Some proponents balk at the potential ownership of these important infrastructures by commercial entities. Thus, they argue, the community or the government should own this infrastructure.

The concept of ownership of entities by the community for the community is similar to the concept of Communism, which, as described in the Oxford Dictionary, is “a political and social system whereby all property is owned by the community and each person contributes and receives according to their ability and needs.” Not that we are calling proponents of community owned networks communists, but the communist ideology is similar. While Communism is in principle a good concept that seems to strive to give people the ownership of the greater good, the concept and ideology didn’t pan out. And that must have been for a reason.

Back to Community/Muni FTTH/Wi-Fi: there is no business case here. The common household that needs to pay for the construction of FTTH and/or BWA systems also has to pay for -and arrange- its ongoing operations, and that would be done or have to be organized as a highly specialized local operating company with approximately 100 – 200 employees, including:

·         engineers

·         management team

·         maintenance crews

·         operational staff

·         support and help desk

·         task teams (such as organization and planning teams)

·         connectivity agreements etc.

·         Higher-level architecture, such as Network Operation Centers, data centers, Head-ends, Security, Video gateways, telephone switching, colos, routing and switching, etc.

Proponents of community/muni FTTH/Wi-Fi also have a disconnect with reality. If “control” is what the community fiber proponents want, then why stop with Fiber-to-the-Home or Wireless Systems? Why not the roads too, and the utility company? Or even the local gym, grocery store or supermarket? It is a fact that we need food, products and goods every single day, from milk to toilet paper. So, while the community fiber and wireless people are at it, perhaps it would be wise to own and operate a large farm, gas company, and auto company too.

Notwithstanding the satirical paragraph above, community fiber or muni wi-fi would maybe have been appropriate if it had been organized properly ten or five years ago, when there were almost no projects planned by private/public businesses. However, in 2009 it is too late and unnecessary for the people to organize this themselves. The argument that “the government also built the highway and road infrastructures and therefore should also build the digital infrastructure” does not hold water when it comes to FTTH and muni-Wi-Fi. The cable/DSL duopoly may be a problem, but the competition amongst them forces them to have a reasonably priced service and ever-increasing speed. Even in markets where no duopoly exists, the price or level of broadband service does not justify local government’s involvement in a commercial affair. There is a bigger need to organize infrastructure upgrades and maintenance. There are bridges collapsing in the USA, with fatalities. Senate Majority Leader Harry Reid is quoted in a 2007 CNN article, stating that infrastructure all over the country needs attention.

“[I] think we should look at this tragedy that occurred as a wake-up call for us. We have — all over the country — crumbling infrastructure, highways, bridges, dams, and we really need to take a hard look at this…”

Since there are more than 70,000 bridges across the country that are rated structurally deficient like the span that collapsed in Minneapolis, community/muni fiber/Wi-Fi proponents should rather focus on saving them. There may be one or more structurally deficient bridges in their community that need their attention.

A more catastrophic example of the dire status of infrastructure is New Orleans and the levies that were to protect the city. The Obama transmission team has been very focused on rebuilding infrastructure and everything imaginable, but it’s easier said than done. Here is what reporter Harry Shearer wrote about Obama’s plans.

“… [B]arack Obama gave a few more details about his new New Deal program for massive federal spending for infrastructure. What caught my ear:  his pledge that the program would go beyond “roads and bridges” to other programs with “long-term payoffs for taxpayers”. That list included the now-familiar broadband Internet buildout, getting medical records into electronic form, school construction, and “making our economy more energy efficient.”

Gee, that’s the whole “progressive” shopping list for federal infrastructure–except for one nagging little thing. For those whose memories are short, here’s a clue, from Saturday’sTimes-Picayune:

A long-delayed Army Corps of Engineers plan for protection against a Category 5 hurricane — a storm as large as or larger than Hurricane Katrina — will be delayed until at least June, and maybe longer, the project’s manager says.

Further, the final document won’t be a plan at all, but rather a menu of about two dozen alternatives for Congress to further study and debate, a recipe for additional delay.

Yes, the same Corps of Engineers that made (and ultimately took long-delayed responsibility for) crucial engineering and design mistakes that led to the 2005 flooding of New Orleans is now slow-walking plans to rectify its handiwork. And nowhere in President-Elect Obama’s laundry list of infrastructure expenditures is a commitment to ramp up work on flood protection and coastal wetlands restoration for the area that supplies–sorry, Governor Palin–as much as 40% of this country’s domestic oil production.

Friends of mine assure me that that little item is a stealth priority–“he doesn’t want to rile up all the anti-New Orleans sentiment before he takes office”–that, like John Kerry, who never mentioned the Supreme Court during his campaign, New Orleans is an issue that this guy cares so deeply about he dare not mention it yet.

New Orleanians, always met with “why should we give you money so your corrupt politicians can hijack it?”, have done their share, throwing Dollar Bill Jefferson out of office in a stunning election upset. Now what’s Washington’s excuse?”


New York Times reporters, David Stout and Edmund L. Andrews, report that the U.S. deficit will be around $1.2 trillion (with a T), while Obama has to work his way with his New Deal program.

“[M]r. Obama faces a confluence of bad economic news and problems. Tax revenue is declining, public confidence in the financial system is shaky and the president-elect has called for spending close to $800 billion to stimulate the economy and create some three million jobs. The budget office predicted that the unemployment rate, which was 6.7 percent in November, would climb above 9 percent by the end of 2009.”

GigaSpeed acknowledges the importance of FTTH and BWA infrastructures, but it is aware that, at the end of the day, it is just a business, and while it may be life-changing, it is not directly a life-saving infrastructure. Those who think that FTTH needs to be funded by the people and the government because it is such an important infrastructure should first donate to efforts such as building and raising levies in places like New Orleans. Alternately, if people want to make things happen, they could support a next-generation network company to go public and then buy shares.

Our message to community fiber and muni-Wi-Fi proponents is to leave BWA and FTTH/O to specialist companies. In fact, our message to the Obama team is to give us a call. GigaSpeed will build future-proof BWA and FTTH/O infrastructures, which cannot be built by just anyone; not by Verizon, not AT&T, not the utility company, not the municipality, and also not the government.



Principled Partnering is a methodology based on the Harvard University Negotiation Project “Getting to Yes.” In this approach, partners focus on interests rather than positions and all attempts are made to converge these interests for the good of customers and consumers and for the partners themselves.

Urbanized areas include contiguous areas of 50,000 people or more at densities of 1,000 people per square mile or more. Also see: – accessed on March 30, 2007.


Source: CNN website: – accessed August 2, 2007

Source: “What’s missing from Obama’s Infrastructure Plans”: – accessed at January 7, 2009

$1.2 Trillion Deficit Forecast as Obama Weighs Options: NYT, January 7, 2009 – – Accessed January 7, 2009

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