Most mid-sized cities in the US have it tough when it comes to ultra-high-speed broadband: They're typically not on the short list of targets for the major telecom and cable operators with gigabit network aspirations. Yet they don't get the benefits of FCC designation as "underserved" communities, because they're not altogether ignored by the incumbent providers.
Communities that fall into that in-between category, then, are counting on companies such as LightSpeed Communications LLC if they want to become Gigabit Cities. LightSpeed is based in East Lansing, Michigan, and is currently building out a gigabit network to serve portions of the Greater Lansing region. The area in and around Lansing, Michigan's capital, has a population of about 460,000 people and sits about 90 miles northwest of Detroit.
Incumbents AT&T Inc. (NYSE: T) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) have yet to announce any fiber-to-the-home (FTTH) initiatives in the community, and Lansing failed to woo Google Fiber Inc. -- though Google's efforts did draw attention to the demand and the business model of providing a fat pipe to homes. (See Is Google Good for Gigabit?)
"Google has proved that there is an enormous market for people who just want bandwidth," says Jason Schreiber, co-founder and CEO of LightSpeed. Schreiber and his fellow founders hail from regional optical network operator Arialink, which was swallowed up by Zayo Group Inc. (NYSE: ZAYO) in 2012. (See How Zayo Spent $3.7B on Acquisitions.)
Schreiber says his ambition to target the residential market with fiber-fed broadband dates back to 2007, and persists even as incumbent providers shy away from the opportunity. "Far and away, I've always believed [residential] was the larger market," he says. "The challenge is that you're selling to consumers. That's why a lot of the carriers have ignored it."
To date, LightSpeed has activated service in parts of four neighborhoods in the region, passing about 4,000 homes. The first customers were connected in October, and about 15% of homes passed have subscribed in the first two months, Schreiber says. The company is turning up eight to 10 customers per day, he says.
Customers who sign up online now for LightSpeed's symmetrical gig can lock into a $49/month price for at least two years, with no contracts. The company has 3,200 poles around the Greater Lansing region in various stages of permitting, Schreiber says, and is adding to that at a rate of 50 to 60 per day.
As it is for many communities, the presence of a gigabit network can be critical to economic development when it comes to attracting businesses to a region. "Gigabit-speed, fiber-based service is as important for modern businesses as being adjacent to a railroad station or highway or airport traditionally was," says Jeff Smith, director of the New Economy Division of the Lansing Area Economic Partnership, the economic development organization in Greater Lansing.
And it's an important consideration for residents as well, thanks to trends such as home-based employees, video collaboration and co-working. "That demand from the business side translates to the consumer level," Smith says. "It's now a requirement. Companies coming to this market are demanding it and expecting it when they arrive."
LightSpeed is deploying point-to-point active Ethernet rather than opting for a shared GPON architecture, Schreiber says, so there is a 1Gbit/s Ethernet port for each customer. The fiber cable is outdoor- and indoor-rated, so it can be strung directly into the home, he says. "It changes the economics of the install when you can have one guy who doesn't require splicing skills connect the home," he says.
Plummeting electronics costs have made the gigabit-to-the-home business model more viable, Schreiber says. An optical network terminal that was $900 in 2007 is now $90, for example -- in part due to the efforts of the companies pushing a gig out to more communities across the US. In turn, entities such as LightSpeed are emerging to address demand and seize regional opportunities that the larger broadband providers have yet to lock down. (See Tucows Buys Into Gigabit Services and US Internet Rolls Out 10Gig in Minneapolis.)
"It's literally a fraction of the cost," Schreiber says. "We can thank Google and AT&T for that. They pushed the equipment vendors to innovate and reduce costs."
— Jason Meyers, Senior Editor, Gigabit Cities/IoT, Light Reading