[RTC List] local hosts - Why are we held hostage?

[Pat Bitton]

Amen to that - thanks for a well-constructed response, Larry.

Pat Bitton
Partner, Euresto Partners Inc
Sales & Marketing Strategies for Technology Startups
+1 707 268 8968/+1 408 464 0829 cell
www.eurestopartners.com
 
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-----Original Message-----
From: list-bounces at redwoodtech.org [mailto:list-bounces at redwoodtech.org] On
Behalf Of Larry Goldberg
Sent: Saturday, December 27, 2008 5:46 PM
To: list at redwoodtech.org
Subject: Re: [RTC List] local hosts - Why are we held hostage?

I would like to reply to a couple of the ideas recently posted having to do
with local hosting, peering and fiber access.  Having a little experience in
this matter (most of you know my background so I won't bore you) I've
watched these issues kick around here for many  
years.    I agree with William Van Hefner on one important point: for  
the cost of the past studies (e.g. RCC study at $500k which has taken the
better part of a year to complete with little new knowledge
gained) we could have solved most of the problems we've been talking  
about regarding redundancy, local peering and last-mile rural access.   
Over the past year I've been working with a group of other local IT
professionals to address some of these issues with a private-sector
solution. We developed a business plan which we've discussed with several
RTC members privately and have researched many of the issues discussed in
this list and in the public forums (Times-Standard, public meetings, etc...)
Suffice to say, that at the point of capital development to launch such a
project this past Summer, we had to shelve our plans for the time being
given the Wall St. meltdown, seizing of credit markets and lack of
sufficient local capital.  It could still be done, but won't be anytime soon
given the current economy.

Here are a few of my personal findings:

1) The need for a second fiber line is unrealistic and probably not
necessary.  There are only a handful of companies (notably SuddenLink,
Verizon and several other "big boys") who really need additional bandwidth.
While the area's need for bandwidth is growing, there isn't a reliable
business case to make for the expenditure required (probably >$5 million).
Yes, everyone WANTS more bandwidth, but most people are not prepared to pay
a nickel more for it.  The RCC study, if you believe their results (which I
don't), basically comes to the conclusion that the vast majority of users
(commercial and
residential) are simply unwilling to pay more the $50/mo. for high bandwidth
services.  It is a very slim minority who are willing (or
able) to pay over $75/mo.  The commercial market in this area is very
similar to a residential market - there are too few "heavy users" to justify
the business case for the investment required to provide additional
"alternate/redundant" paths.

2) For YEARS this area was able to exist on microwave transmissions.   
I ran my initial company, Northcoast Internet, completely on Pacific Bell's
service which was exclusively based on microwave links.  Yes, it had
disruptions periodically, but if used in combination with existing fiber, as
available today, it would be sufficient to provide redundancy.  With
multiple microwave paths (e.g. north to Crescent City and east to Redding)
there would likely be ample redundancy to handle virtually any disruption
from any one link (including the fiber). With microwave technology (a well
established and reliable
technology) it would cost a FRACTION of fiber and yet provide plenty of
bandwidth (it's possible to get up to 1 Gb microwave, so it's highly
scalable) and it avoids most of the pitfalls of fiber in an area like this
(rights-of-way, environmental impacts, earthquake vulnerability, etc...)

3) There are currently viable alternate paths ("redundancy") which exist and
are locally supported.  101 NetLink is a local company (out of Garberville)
which offers an independent (non-AT&T) microwave link to the Internet via
Ukiah.  Seth has spoken to our group several times and his technology is
stable and proven.  He currently serves "last- mile" folks in the S.
Humboldt hills and now has moved up to the Humboldt  Bay area and is
providing service in Eureka and Fortuna and parts of Arcata.  If you are
truly concerned about supporting a local business and getting non-AT&T
service, check out 101 NetLink.  As much as I believe we could form another
wireless provider to offer additional services, Seth is doing a fine job
within his market and he's a local guy we should support.

4) For all the talk about the fact that "our community leaders are out of
touch" we're going to need to realize several things:
   a) Local leaders are not technically oriented, but they'll come around
when they understand the nature of the problem and the solution if it's well
presented and backed up with facts.  A good example is how we organized this
area (primarily with Tina's dedicated help) to get the fiber impasse
straighten out when SBC and CalTrans got into a pissing contest which hung
up our fiber line.  We have it now, thanks to the efforts of many community
leaders (including the RTC), and have barely tapped the bandwidth to date.
It's hard to make a case for a second fiber when we haven't tapped out the
existing fiber yet.

   b) AT&T wants to milk the revenue for as long as possible to pay  
off their investment, so I doubt they'll fund a second fiber cable.   
Local leaders can do little more than beg for service and probably the most
effective action they can take is what they're doing now by organizing a
lobbying effort with the California Emerging Technology Fund for leveraging
state money with CETF funds to encourage more competition and get broadband
to the "last mile".  They're working with the CPUC and some results may
eventually come of their efforts, but don't hold your breath.

   c) Much of the problem is NOT with the last mile but with the 'middle
mile" in fact.  In searching for affordable wholesale bandwidth, we found
that it's a very difficult proposition to find bandwidth at an affordable
rate.  The key is to own a separate network (e.g. 101 NetLink) and negotiate
with 3rd party providers in places like Ukiah or Redding.  Local leaders
don't get this and in reality probably can't do anything about it.

  d) Given the current state of the economy, we're all going to be luck to
just hang onto what we currently have.  The state is broke and while new
infrastructure money may be coming from the Obama white house, it's not
going to happen overnight and it won't necessarily flow to this area.  We
need to be realistic about what we can accomplish and focus on a single,
realistic goal.

5) There is a lot on the horizon which could impact many of these
discussions.  There are companies like the one I mentioned several weeks ago
- Open Range - which aren't even on the radar yet who are planning major
moves in providing broadband to rural areas (Open Range is talking about a
WiMax terrestrial distribution network utilizing a satellite-based
backbone).  I don't know whether these kinds of companies are for real, but,
as with Clearwire, they have major backing and with the stroke of a pen,
they could commit millions to the effort without even checking in with us.
As Gregg Foster spoke at the last broadband conference, there is a company
now negotiating to build a new fiber line over PG&E's right-of-way on Hwy
36) - all in "stealth mode" which is opaque to the public.  I'm not in favor
of  
this approach, but it's the reality today in this marketplace.   
Technology is changing too fast to be able to predict the future, but
suffice to say, it's probably not going to be what we expect.

6) The lack of local investment money is a real challenge to developing
local solutions.  I've raised considerable capital in the past, so I have
first-hand experience in what it takes to raise money up here.  Until
recently (!), investors wanted a rate of return commensurate with Wall St.
Any project which can be built locally simply cannot compete with other
investments on Wall St.  This may be changing due to the reality which has
been exposed in the national economic meltdown, but I challenge any of you
to raise the funds necessary to develop a competing service.  Yes, it can
probably be done, but it's takes someone (some group) to do it.  For all the
talk, it's a real challenge to pull it off (and I know having built and sold
three IT companies in this area).  Yes, it would have been far better for
the $500k from the HSU RCC study to have simply built the project, but it
won't happen.

Don't expect someone else to do it - if you think there is a business case,
do it yourself.  Seth at 101 NetLink has done it and to his credit he's
survived this long, but I'm sure he has battle scars to show if you asked
him.  It's tough providing an independent Internet service and there are
plenty of good reasons why others haven't done it, despite the logic of why
it would be such a good idea.  I share many of your frustrations, but have
learned to "break my truth on the rock of reality."  We are nowhere close to
where we want to be, but we're a whole lot further along than we used to be!
Count your blessings and roll up your sleeves to work towards a better
future.



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