Colorado Gigabit Network Shuns Video, Embraces OTT
In a nod to the increasing dominance of over-the-top (OTT) services, the first municipal gigabit fiber-to-the-home (FTTH) network under way in Colorado will not include its own brand of video services.
"We're only going to do a double play," says Tom Roiniotis, general manager of Longmont Power & Communications (LPC), the municipally owned utility that is deploying the network. "We see cable as a declining business -- customers can get all the content they want over the top. That's where a lot of the world is heading."
LPC's tack could become the norm for utilities and municipalities eyeing the gigabit opportunity, thanks to both OTT providers and the cost and complexity of providing video.
"Cable TV is a monster to run, but for years cities would moan and complain about the expense, but still do it," says Craig Settles, an independent industry analyst and host of the online radio program Gigabit Nation. "Cities are starting to question the rationale behind that and decide they're going to make the broadband business successful without it -- that video is going to be someone else's headache."
LPC announced this week that it will deploy access infrastructure from Calix Networks Inc. (NYSE: CALX), Cisco Systems Inc. (Nasdaq: CSCO)'s routing gear, and transport equipment from Cyan Inc. David Russell, solutions marketing director for Calix, notes that in addition to the lack of video services, LPC is unique for the scale of its deployment and for the technical prowess of its staff, many of whom came from the CLEC industry.
"The past six or seven years in the municipal space have been characterized by more deployments of much smaller sizes -- it's been seven years since one of this size has been built," Russell says. "And there are a lot of good networking skills in that part of the country. We go to many areas that don't have technical talent in abundance."
Indeed, LPC has more experience than many municipal utilities when it comes to building and operating networks. The utility deployed a citywide fiber ring in the late 1990s to both provide connectivity to city buildings and tie its substations together: In an industry in which many utilities are slowly crawling toward modernizing their internal communications networks, LPC has been there for more than a decade.
"We had a smart grid before that term was used," Roiniotis says. "That ring will form the backbone for the citywide FTTH network."
The city retained a systems integrator to start building a hybrid fiber coax network in Longmont in the early 2000s, Roiniotis says, but the company went bankrupt and the project stalled. In 2005, Colorado Senate Bill 152 blocked municipalities' ability to offer broadband services, but provided exceptions to allow it by local election. Longmont citizens voted to re-establish the right for the municipality to provide services in 2011, and in a 2013 election two bond issues passed that granted the utility $40.3 million for the buildout.
The network ultimately will pass 39,000 homes and businesses (the population of Longmont is about 90,000) after six phases of construction, which are slated to begin this August and conclude in the first quarter 2017.
"We hope to have every home and business served with a gigabit passive optical network within three years," Roiniotis says.
Good for the economy?
LPC will unveil its marketing strategy and branding campaign within a few months, Roiniotis says, and plans to offer Longmont residents 25Mbit/s symmetrical connections for $39.95 per month and 1Gbit/s symmetrical connections for $99.95 per month. While the network is under construction, however, the utility will offer charter member rates of $49.95 per month for the 1Gbit/s service -- a plan that will be transferable should homeowners sell.
"We're asking people to invest in future-proofing their homes," he says.
LPC's motives in building out the network aren't the same as incumbent service providers, Roiniotis insists.
"We're doing it for a different reason than Comcast and CenturyLink would do it," he says. "Cities like Longmont think having a gigabit network is good for our local economy and will help make businesses more competitive. We can use it to market the city and help attract economic investment. We're not going to judge the success of broadband based solely on the balance sheet."
Even if LPC's efforts to stimulate the economy work, however, it could be several years before results are tangible.
"Everyone feels like this is the magic bullet for economic development," says Teresa Mastrangelo, principal analyst for Broadbandtrends LLC . "If you look at successful cities like Chattanooga, it's taken four or five years to see the investment pay off in terms of economic development. It is a catalyst that starts to stir up some alternate ways of how to do business, but I don't know that it alone drives economic development."
— Jason Meyers, Utility Communications Editor, Light Reading