ISP Startup Targets Disruption in US Suburbs
You're forgiven if you've never heard of Common Networks. The company was only founded in 2016, and to date it has just one deployment as an Internet service provider -- in Alameda, Calif. However, the ISP's founders, which hail formerly from Square, are nothing if not bullish, and today they've announced a $7 million Series A funding round amid plans to launch in a second market with their wireless broadband service. Common Networks previously raised $2.3 million in seed money, bringing its total venture capital funding to $9.3 million with Eclipse Ventures and Lux Capital as investors.
In an ISP industry that is dominated by a handful of players, the chances for Common Networks to succeed are slim. Yet the company believes it has a differentiated technology approach, and that by targeting suburban markets, it can exploit a customer niche in areas that won't attract the same fiber investments as larger, denser cities.
Common Networks is combining a point-to-point wireless architecture with a software defined networking overlay. In Alameda, it deployed a few redundant fiber lines to local buildings and then started connecting customers with 802.11ac WiFi hardware. The service works by routing traffic through those customer nodes in a peer-to-peer model. The more customers sign up, the better the service gets.
The approach sounds a bit like other community WiFi services. Fon , for example, has long taken advantage of individual customer connections to improve Internet access for its entire customer base. However, Fon sells its service to operators that already offer Internet connections and simply adds wider WiFi coverage to the broadband package by managing guest WiFi access across participating consumer routers and public hotspots.
Common Networks, on the other hand, relies on routing data wirelessly between customer nodes to give all users broadband service. The service is backhauled through connections at IP transit points, and controlled via software that determines the best network path for traffic at any given moment. Founder and CEO Zach Brock points out that the optimal traffic route may be different at 6:00 a.m. than it is at 6:00 p.m., and Common Networks can account for and adapt to that reality.
Brock also emphasizes the cost effectiveness of his company's business model. Compared to fiber, Common Networks' technology is "an order of magnitude cheaper" to deploy, particularly because the price of 802.11ac hardware continues to drop.
"I think that the approach we're taking is something that wasn't feasible even a few years ago," says Brock, adding that, "You're able to get [802.11ac] chips that are capable of doing, with Wave 1, 450 megabits per second, and with Wave 2, theoretically up to a gigabit, for less than a dollar a chip."
That pricing allows Common Networks to deliver broadband speeds in excess of 100 Mbits/s today for a flat fee of $50 per month, with no additional taxes or fees.
So far, Common Networks is doing well. In the one town where service is deployed, the company claims a perfect net promoter score of 100, compared to typical ISP scores that tend to linger in the 0-30 range.
"We've not had a lot of trouble convincing people to give us a shot," says Brock.
However, the challenges ahead are massive. While Brock argues that Common Networks' service works well even before a lot of customers sign up, the reality is that scale is an advantage for the mesh technology, and scale takes time to build. There are also the issues of network maintenance and customer support. Brock says Common Networks is building those processes and systems in house, with a lot of the work being automated and managed through software. Again, that sounds good, but just because the model works in one town doesn't mean Common Networks will be able to extend the strategy across a wider footprint.
And if Common Networks does manage to expand successfully, it will still have to contend with competitive incumbent ISPs. Cablecos and telecom carriers have little to be concerned about from the startup now, but they will apply pressure if and when they deem it necessary: offering discounts, bundling Internet access with other services and more.
Disrupting the ISP market is not for the faint of heart. Common Networks, however, is determined to try. The company says it will use its new funding to introduce service in a second location in the near term, and then see if it can "rubberstamp" the model in further suburban towns across the US.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading