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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

December 13, 2012 at 10:30 AM

Seattle announces fiber partner, broadband test project

Seattle today announced a new partnership with a company that plans to use parts of the city-owned fiber-optic network to provide “ultra-fast” broadband services starting in 2013.

Details are still being finalized but the city has signed a memorandum of understanding with Gigabit Squared, a Washington, D.C., venture backed by manufacturers of networking gear and other investors.

Gigabit has proposed a test project that will offer fiber-optic broadband service to a relatively small number of homes in 12 neighborhoods. Gigabit also plans to use the city’s network as the foundation for wireless service – like souped-up WiFi – that it would use to provide additional service in some neighborhoods.

Some residents would be able to connect via fiber cables that extend to the home while others would be served by the wireless service. Gigabit Squared is now collecting names of interested residents at Gigabitseattle.com.

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In July Seattle abandoned nearly a decade of planning to develop a citywide, municipal broadband service. Instead, Mayor Mike McGinn opted to begin divvying up access to the government network connecting city facilities, which cost more than $50 million to install.

Developing a citywide, city-operated broadband service was also one of three key campaign promises made by McGinn when he ran for office in 2009. Today’s deal is a far cry from the original vision, though it could prod entrenched providers such as Comcast and CenturyLink to improve their services and compete with the newcomer.

With the project, Seattle joins Kansas City and Chattanooga as one of the leading cities pursuing new broadband systems, according to Blair Levin, a former top staffer at the FCC and co-author of the national broadband plan who is now involved with the Seattle consortium.

U.S. Assistant Secretary of Commerce Lawrence Strickling, administrator of the National Telecommunications & Information Administration, also weighed in with a statement of support.

“Seattle’s announcement today will give it a strategic bandwidth advantage, and we look forward to watching the city leverage its innovation-ripe environment for economic growth,” Strickling said in a release.

Chattanooga built the kind of network Seattle talked about for years. Using a $50 million bond issuance, the local utility in 2008 began extending fiber to every one of its 170,000 customers in the city and suburbs. The fiber piggybacked on a $169 million electrical system upgrade.

Seattle officials decided they couldn’t afford to build a city-operated broadband network here, though they later managed to find $200 million to finance a new privately operated basketball arena.

When Seattle decided last summer to lease excess capacity on its network, Gigabit was one of ten companies that expressed interest. McGinn’s office chose four finalists and is moving ahead with Gigabit Squared.

Gigabit is calling its proposal a “hybrid” network, because it uses fiber and wireless connections.

Gigabit plans to add the wireless antenna systems on top of 38 public-housing facilities and other public buildings in Seattle. The systems would provide pockets of wireless service.

Gigabit will use transmitters on the public buildings to extend its commercial Internet service to nearby apartments and offices, using systems that beam the signal from point to point.

Gigabit will also resell access to the fiber network to other companies. Phone companies, for instance, could install cell sites on the public-housing antennas and bypass the permit process required for cell towers, according to Mark Ansboury, president of Gigabit Squared.

Ansboury said the pilot project could begin next fall. He plans to have fiber lines pass by 6,000 to 10,000 homes in the 12 neighborhoods. But he expects that connections will be made to only 8 percent to 12 percent of the homes – or about 500 to 1,200 homes.

Seattle has around 280,000 housing units so the initial phase may provide fiber to about 0.4 percent of the city.

Ansboury said penetration targets are relatively low because not everyone may want the service. He didn’t specify pricing plans, but said the goal is to charge under $100 for service with 1 gigabit download speeds.

Within two years after the service begins, Gigabit Squared hopes to extend the service to pass around 50,000 homes in the city. Seattle’s agreement with the company calls for the service to eventually “be available to more than 100,000 city residents in selected neighborhoods near or of interest to the University.”

There are no price limitations in the agreement or requirements that the service be extended throughout the city.

“We’re not in a position to require them to deploy fiber-optic cable to the home throughout the city because what they need to do is make it work in these initial neighborhoods,” McGinn said. “They would then have the capacity to look at expansion.”

Specific terms of the proposed lease of city assets weren’t disclosed, but the city will receive a share of revenue, said Erin Devoto, deputy director of the city’s department of information technology.

“We’re not making money off of this but we’re recouping original cost,” she said.

Ansboury said his company may sell advertising on the network and offer some sort of video services.

Gigabit Squared could have built the network backbone and extended fiber itself in Seattle. Ansboury said that would have cost perhaps $15 million to $20 million and taken two years.

The initial 12 neighborhoods (as described by the city) are: The University of Washington’s “West Campus District”; South Lake Union; First Hill/Capitol Hill/Central Area; The UW’s Metropolitan Tract in downtown Seattle; the UW’s Family Housing at Sand Point; Northgate; Volunteer Park Area; Beacon Hill and SODO Light Rail Station; and an area including Mount Baker, Columbia City, Othello and Rainier Beach.

Cities have been clamoring for gigabit broadband service since Google decided in 2010 to build a test network somewhere in the country. Seattle was among the hordes and was a finalist, according to Devoto.

Kansas City landed the Google deal and now has gigabit broadband available from the search and advertising company for $70 per month. Gigabit broadband plus TV service is available there for $120 per month and Google provides free Internet access at slower speeds.

Google may extend the program to other cities. It’s not clear if Seattle’s chances will diminish now that it’s letting other companies get a head start on lucrative, high-density neighborhoods.

Other communities may chuckle at Seattle’s pursuit of fiber broadband. Across Lake Washington, fiber broadband has been available since 2006 from Verizon and now Frontier.

When Verizon’s fiber service was announced, Gov. Gregoire touted a new era of innovation that would bring benefits such as lower healthcare costs from new services that fast broadband would enable.

Residents in Grant County should have the biggest laugh. While Seattle was jawing about broadband, the public utility district in 2005 began developing one of the world’s fastest broadband services. In Ephrata, ultra fast broadband is available for $45 per month.

Meanwhile private companies have stepped up in Seattle. They’re already providing gigabit broadband in some areas, including the South Lake Union neighborhood that’s targeted by Gigabit Squared.

CondoInternet now offers gigabit-speed service to more than 8,000 housing units in Seattle, according to John Van Oppen, chief executive of parent company Spectrum Networks. It provides up to gigabit speeds for $200 per month, or 100 megabit service for $60 per month, although the company was mulling a price drop for gigabit service before the city’s deal was announced.

Seattle-based Spectrum responded to the city’s last request for broadband proposals but never heard back from the city, Van Oppen said.

He believes areas like South Lake Union don’t need any subsidy because they’re so lucrative for broadband providers but lower-income neighborhoods may need a nudge to get ultrafast service.

Although Spectrum now provides gigabit speeds, most consumers are fine with 100 megabit per second service, Van Oppen said. That’s enough to stream high quality video to every screen in a home, which is how most of America’s broadband capacity is used today.

“Once you pass 100 (Mbps) it doesn’t matter so much – it’s more bragging rights,” he said.

Comcast provides up to 105 megabits per second downloads to all of its Seattle customers for $200 per month or $105 as part of a service bundle.

Businesses and the University of Washington also have access to some of the world’s fastest network connections in Seattle.

Last week, Washington state was ranked first in the nation for its broadband-enabled tech economy that includes bleeding edge, online businesses in and around Seattle. The ranking was by industry group TechNet.

Even so, public officials continue to characterize the region’s broadband situation as a crisis that they’re addressing with public-private partnerships.

“This is a very promising proposal that can help bring 21st century infrastructure to Seattle,” McGinn said in today’s release.

Gigabit Squared is partnering with Levin’s Gig U, a politically connected Washington, D.C., organization promoting broadband projects with universities.

In November 2011, Seattle and the UW announced that they were working together on ways to share access to city fiber, a partnership that precipitated the demise of Seattle’s vision for citywide, municipal broadband.

Six months later Seattle pulled the plug on free public wireless Internet service it had been offering in the University District and Columbia City and began working legislation to divvy up the city’s network.

In May, Gig U and Gigabit Squared announced that they had raised $200 million to build and test gigabit-speed broadband services in select neighborhoods.

Ansboury said that money won’t be used for Seattle’s project. Instead, his company wants to raise another $25 million from investors for the Seattle project.

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Comments | Topics: Broadband, Clearwire, Comcast

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