A growing trend in international cities to build their own fibre optic networks may spell the end of the current race between carriers to get their own fibre conduits into the ground.
Self-described “smart communities” across the globe, including Chicago, Palo Alto, Calif. and Dublin, Ohio and cities in Sweden and the Netherlands have all committed to installing extensive broadband fibre networks to be owned by the municipality. In most cases, the fibre will be leased to the highest private sector bidder, who will then administer services to end users.
In Canada, cities such as Ottawa and Toronto have indicated their interest in pursuing such options.
Bill St. Arnaud, the senior director of advanced services for CANARIE, a federally supported corporation dedicated to the development of the Internet in Canada, said the trend is a “recognition of the fact that customers or municipalities deploying fibre can dramatically reduce the costs of delivering telecom services to the end user.”
CANARIE is one of 25 corporations in the Ottawa area who recently took part in a private “condominium” fibre build.
“You pay $20,000 for four to six strands of dark fibre for 20 years,” St. Arnaud explained for CANARIE’s involvement in the fibre purchase. “You pay an additional $2,000 for transceivers to light up the fibre. And then you have essentially unlimited bandwidth. You’re not paying any more monthly fees.
“Right now, a T-1 in Ottawa costs $200 a month, a DS-3 would cost $4,500 a month, an OC-3 would cost $12,000 a month. So the payback is usually six to 12 months of what you would normally pay a carrier for a managed service.”
St. Arnaud added many metropolitan areas are exploring the possibility of commissioning the construction of one major city-wide fibre network, so that city roads only have to be dug up one time.
“In Washington, D.C. they’ve had to put a moratorium on all the roads being torn up because it’s being turned into a war zone by the seven different carriers that are deploying fibre there,” he related.
St. Arnaud believes the answer lies in cities treating fibre networks as roads — data roads — that must be maintained and expanded to provide access to all citizens, not just the “shiny buildings” in downtown cores.
“Just like roads allow the private sector to ship goods and stimulate the economy and so forth, we think public ownership of the fibre or under public control will do the same thing for the future of multimedia and data,” he explained.
However, Denis Henry, the vice-president of regulatory law for Bell Canada, said Bell does not believe the public sector should be investing in an area already serviced by a competitive market. He added most of Bell’s large customers are actually trying to move away from having anything to do with managing a network.
“They want to get out of this kind of thing,” Henry said. “It might look attractive at first to look at, ‘What does it cost me to lay some fibre.’ But you’ve got to maintain that and run it, and we’ve got a highly competitive set of private sector companies ready, willing, and able to do that.
“I think the proof is in the pudding,” he continued. “I think (Canada’s) first among G7 countries in Internet penetration, we have the lowest prices in the world for Internet access, and we’re the first country to have all our schools and libraries connected. Our penetration of high speed Internet service is about three times what it is in the U.S.”
John Adams, a city councillor in Toronto and chair of the megacity’s Telecommunications Steering Committee, scoffed at Bell’s and Rogers’ description of high speed home Internet access.
Adams would like to see at minimum, 100Mbps Internet access to Toronto homes and 1,000Mbps to businesses, schools and libraries. He expressed concern that private carriers are only interested in providing broadband Internet access to large businesses in the downtown area, ignoring suburban locations and less profitable locations in the city.
“I’m concerned about kids growing up in social housing,” Adams said. “I want to make sure they can be knowledge workers in the new economy and aren’t left behind on the wrong side of the digital divide.
“(Carriers) aren’t doing a very good job for small and medium businesses,” he added. “Most SMBs can’t afford the (fibre) lease rates. The big carriers have created a market void, and somebody’s going to step into it sooner or later.”