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

[Sean Connors]

Larry, this is maybe the most valuable post I've ever seen to this list.

I've been trying to understand all of these issues for years, and you just 
nailed it all down here very clearly.

I don't see how this could ever be boiled down to an 800 word Tech Beat 
article, but I hope that maybe the Times Standard might run a series of 2-3 
articles based on this if you were interested.

This is really solid and interesting information, IMHO, and I would think 
this info could benefit a lot of folks up in these parts.

Warm regards,

Sean Connors
Sean at WMSmerchantservices.com
www.WMSmerchantservices.com

Web Merchant Services
Supplying the services you need to succeed online

Sales: 1-877-569-6584
Support: 1-707-443-4447
Fax: 1-877-569-6584

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----- Original Message ----- 
From: "Larry Goldberg" <larry at northcoast.com>
To: <list at redwoodtech.org>
Sent: Saturday, December 27, 2008 5:45 PM
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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