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I am so bored of hearing that FTTH, particularly in rural areas, is not economically viable. It is simply not true and even incumbents are learning to accept the inescapable evidence around the world. So to hear it constantly being spouted as fact has led me to this post about where and how the money flows when you deploy FTTH. And in year 1, 2, 3 and beyond.
This blog post can be read at 5tth.blogspot.com
It is not all about ARPU, as the many fibre networks who have climbed out of that particularly restrictive box have discovered. It is also not about what occurs on the provider's balance sheets, P & L or bank statements to prove or disprove economic viability.
In fact, much of the money generated and saved may well be invisible to the actual fibre provider. This does not mean that ergo it is not economically viable to deploy; it means that the accounts for the provider alone do not show the whole picture of wealth generation, profitability, new jobs created etc when FTTH is deployed in an area.
And it is vitally important to understand the big picture in order to make sure that the investment is successfully deployed where it will bring most bang for the buck. In fact, if all you look at is what the telco says it is worth, to them, you would miss far too much of the picture to make an informed decision about deployment. Instead of full fat fibre, or pure glass, and the long-term gains, you might be tempted to go for a cheaper option, with limited short-term gains and few, if any, long-term ones. Because that is all the telco will tell you it can afford to do with your money, innit? And any half decent accountant or Finance Officer would tell you not to waste your (taxpayers') money.
So, for instance, a telco in Minnesota who deployed to 1400 premises gave me the figures for telecom savings for those 1400 properties since the fibre was deployed 9 months ago. $250,000. The money has not flowed into the telco account, it has stayed within the community for those 1400 properties to decide how to spend it themselves. And most importantly, the local provider had not deployed predatory pricing to give the local people cheaper packages so the sustainability of the local network was not threatened in any way, shape or form whilst saving the community all that money.
The local council have been connected to the fibre - offices, fire department, police, locally owned utility infrastructure etc thereby saving the council several million dollars over the next 5 years. But that money is not in the telco's account either.
In Chattanooga, EPB's chief fibre engineer, Colman Keane, took me into the bowels of the EPB set up - and boy was it exciting getting to the heart of the ChooChooGig, and very, very cold! After seeing the extraordinarily secure medical records set-up that has been rented out (as a surprise benefit of the gigabit fat pipe and the secure space available when your central office is re-used to best purpose), we came upon the racks and racks of colo servers. EPB had never planned to do any colo and it does not figure on the business plan for Chattanooga's fibre deployment, but they can barely get new racks fitted quickly enough to meet demand.
Each server is labelled and I was scanning down the racks asking questions about the different customers, who ranged from toy shops to community TV to the more usual hosting and software companies. The toy store was a goodie. Less footfall in shop so they had expanded online and were now running at least 2 servers out of the data centre to manage the e-commerce side of the business. And had presumably upskilled the toy store staff to take on the ICT side of it too as it was colo. Nice.
I'm a bit bored of ranting on about the need for local data centres, in particular in rural areas, for on-net savings e.g. focussing on the savings when Bit Miles (data transit, like food miles etc) are reduced, but for any community network (whether municipal, incumbent or community-owned, like B4RN) the colo and hosting side of the business needs to also go in the business plan. It really had been a surprise to Chattanooga how much revenue it was generating and I found that elsewhere too.
Aside from racks, cooling, fire suppressants (hell, they were truly scary - less than 0 seconds to get out of the server rooms if fire breaks out as all the oxygen is removed from the room instantly), billing, and all the other nuances of running a business, colo is a very cheap earner once you have a central office set up on a fat fibre. And tie that in to affordable back-ups for homes (photos, videos, laptops etc) as well as Software as a Service packages for SMEs, homes, community organisations etc and well, you're on to a winner.
The network does not need to even run this side of it; it could easily be a whole new start-up triggered by the FTTH existence. In fact, most of the examples can be run as stand-alone businesses and that is worth bearing in mind when BT come along and try to chuck a cabinet in your street or fleece your council of millions of pounds through the BDUK debacle - can they offer this level of income generation for you, with anywhere close to similar benefits to the wider community?
All these are the added extras to put in the income side for any community deploying FTTH who can think beyond the b0rked telco 1.0 models so I'll keep mentioning a few.
TV stations - saw a few of these and even got to sit in on the live broadcast of the lunchtime news at TV25 in Winona, MN. The budget at TV25 went a very, very long way because of joined up thinking. First, find an existing under-used asset in the community - the media studio at the local college which was looking to become an ICT College of Excellence. Second, work in partnership with the local community, the institution, the broadband company and the local businesses to define what is required and set up affordable ad space to fund it. $75 a slot for any local business means that it is a no brainer for local companies to advertise on the channel, so they do. The students and media professionals work together not just to make ads, but also content. Genius!
Super-local content means that it is a must watch channel for the news - 30 mins made at lunchtime and re-aired 4 times till closedown at 8pm. All the local sports matches, parades, shows, and events are attended by the OB vans and the students get to learn on the job. No leaving college without practical experience here; these are hardened media professionals by the time they graduate. And this includes building sets in the studio for their own schools' programmes etc too.
Not only does this all provide a community service with programmes, but also the college get a second to none course to offer, local businesses reach their target market in an affordable manner, and it saves the community broadband company an absolute fortune in advertising and branding in the give and take way of things within communities. Their ads appeared in every ad break!
Whilst in Winona, I sat in on a marketing meeting which was fascinating in itself having seen their TV offerings and the billboards around the city. Watching how an established community fibre company does marketing highlighted the importance of professionalism and these guys (actually, nearly all girls) had it in spades. Monitoring, testing, evaluating every step of the way means that the budget is eked out to its full potential, therefore costs cut = profit margins increased, sustainability improved, jobs created, community benefits returned in both monetary and social ways. And from all of this had come the Wizards.
I loved the Wizards! Such a perfectly obvious and brilliant solution to a global problem - tech support. My computer is bust, my router won't work, how do you use this mobile phone, how do I do xyz? Every community network I visited had a foyer/lobby/reception area that was a) welcoming and professional, even the tiniest networks and b) staffed by helpful people solving billing, connection and general IT and mobile problems. Hiawatha had identified that because of their successful marketing and the fab fibre network they have built, the footfall to the general office had increased with people looking for answers not directly related to their package. Answer? Bring in the Wizards! And make it a stand-alone business. Simples. And a huge thank you to Gary Evans and everyone else in Winona who spared their time to let me in to the heart of the Hiawatha machine.
Hot desking and shared office space was another great revenue stream. Got a fat pipe into your building (well, you would have as it is the CO!) and spare floorspace - you rented a much bigger building than you needed, didn't you, because you knew this would put money in the coffers?! Rent out hotdesks to passing broadband tourists, or rent out office space to companies looking for that connectivity and the buzz that invariably comes with it. Then, you create a cluster of companies all bouncing off each other and inevitably that attracts more so grab that next door building when it comes up for sale too. This can only get bigger and works even better in rural areas than urban ones as office space and networking opportunities are more limited outside of towns so it has a far bigger knock on effect out in the sticks.
Oh look, more money that doesn't necessarily go into the telco's account (you did rent that office next door to them, didn't you, when you realised the business opportunity?!) - business rates to the local authority and income tax to the Treasury. New cafes and eateries pop up around such spaces too as there are two things that people in any online business need - coffee and food! That's yet more non-telco money - do you still believe the argument it is not economically viable?!!
Farmers, who in case you have forgotten, provide the food for the UK table, are beginning to explore the many benefits of true connectivity over fibre (not that half-assed copper Semi Fast Broadband stuff, which is just like that milk with a green lid compared to real milk). We talked about 3D print shops based in rural areas so farmers can source and manufacture parts, especially rare ones, locally, thereby creating a valuable farm diversifiction opportunity (as well as bringing back manufacturing to Britain), time and cash-savings for time and cash-strapped farmers, and a neat new business to bolt on to the fibre. We discussed and saw GPS-enhanced crops and fertilising techniques, which can help to improve harvest yields and land use considerably. We looked at farm and rural security that the fibre can provide - diesel thefts are not as prevalent in the USA as here, nor is sheep rustling, but the loss of both stock and machinery is a common bane for all farmers, whether the causes are crime, nasty weather or lack of human resource as the kids have moved away.
I was a tad freaked by the stories of parking your snow mobile on the roof during an average Minnnesota winter (19feet of snow is not uncommon in the north of North America), and that led in to dealing with crises and emergencies when you live miles from a hospital and the helicopter cannot land. This prompted discussions about smart grids and the fact that one network is so resilient it has been down for 17 seconds in 7 years, even with power cuts, huge storms and the supposed (and also untrue) non-maturity of FTTH networks.
The astronomical cost-savings from deploying fibre rather than copper, or a smart grid instead of just smart meters, need adding in to the business plan for FTTH deployment because those numbers affect every aspect of every community. Within a few miles of every single one of you, dear readers, will be a company who stand to lose anywhere up to millions of pounds if the phone system, internet or electricity are out for minutes, sometimes only for seconds. It may be a manufacturing business, a bank (notwithstanding RBS software upgrade failures), a farmer, an e-commerce trader, a health provider, an insurance company, a bookie, or any one of those pesky teenagers setting up businesses in their bedrooms. 4 9s simply ain't good enough any more. It must be 5 9s and it must be across all the utiities. You can ONLY ONLY ONLY do that with fibre.
Then there is the Broadband Tourism aspect of it. B4RN is already discovering this - people come to visit. And they need places to stay, and meals, and fuel. All money in the local pot, whether it is to visit a broadband project, as I was in USA and many have already to Lancashire, or because of a business visit to a company located on a fat pipe, such as Chattanooga, Lafayette and others are finding. And that's without counting the re-location factor - estate agents, office refurbs, electricians, signwriters etc etc, all needed when youur fat pipe attracts new businesses into the area. Yet more non-telco money...getting the picture yet? And I haven't even started on healthcare, public sector and education, when phenomenal savings from non-telco accounts really starts to get in to big numbers once the pure glass is in place, and especially when it is community or locally owned....that's a double whammy then.
I hope someone is keeping this spreadsheet up to date with all these invisible numbers.......
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