Cook’s Collaborative Edge

Today Chris Savage posted a query to Cybertelecom in which he asked (in short form): “suppose ubiquitous non-metered tax-funded municipal provision of high-bandwidth connectivity. On that assumption: (a) in the short run, what happens to the business models of existing players and (b) in the long run, what information/communication business models work?”

“My preliminary answer to (a) is the ILECs are hosed because their business model fundamentally depends on controlling a scarce last/first mile, while cable ops are OK because their fundamental business model is packaging and marketing content, which they could still do. As to (b) I don’t have much of a clue.”

I responded: James Hettrick has a new business model that i am writing up this month that means new housing developments do this automatically. And when you talk about lending wireless at the end (of your full sscenario) Jin Ho Hur CEO of FON Korea is doing just that to disseminate always on FON wi-fi boxes for the 80 percent of Koreans who are broadband connectedto attach to their networks.

What you scenario doesn’t cover however is the need for upstream backbone connections from these towns - how is that gonna get done? The town buys a connection from the local monopolist whose business hit has just killed? This is one reason why the possibility of towns buying a cooperative national backbone over NLR’s independent national network is so important.

Furthermore what you propoise what you propose has been done by Vasteras Sweden for about three years now and as clever designs bring down the cost of bringing fiber to new and existing homes overbuilds become more feasible.

John K. Friedman responded: Many new housing developments are routinely building FTTH; a number are including an in-house fiber “harness” for the home as well. Developers like near-zero churn and higher monthly owners’ associations dues. I’m aware of one municipality in California that today requires all new-build homes to have a fiber harness installed with a wire closet and network control panel in the master bedroom suite — the town’s idea to drive up property values apparently.

Cook’s Edge: Yes, that town is Loma Linda… where James Hettrick cut his teeth - so to speak.

Now imagine a situation where a company does deals with money managers to fund the development of utility districts that include water, sewers, electricity, roads AND FIBER everywhere for everything. The company says to the land developer sign with us, we will invest and build the utilities and fund doing that from the cash flow income we have from having done prior utilities. You do not have to lay out the money upfront. We will operate the utilities for you and give you a percentage when the development is done meanwhile you can start selling lots to builders.

Then imagine that that company hires Hettrick’s 20 person consulting company to be the technology selection, planning scheduling coordinator for the build. Hettrick interviews the developer , the builder, the local businesses talks to the people in the nearest city where the new development must interface its utilities, looks at all the environmental variables as well as at the business schools university and potential customers and figures out what vendors have the best set of products to be melded into a package that not only does triple play , but reads all the meters, does scada for the water electric and sewers and sensor networks where needed. Imagine then that his firm produces an proposed well costed integrated package that shows how the project can be built to reap the maximum economic effectiveness from the carefully planned integrated approach. Flavor the whole package with fiber connectors that allow burried fiber to be brought in from small cylinders in the street that can feed 12 houses per cylinder avoiding all fusion splices from the street to the houses. Yield is a 40 to 50 per-cent decrease in the cost of bring fiber to each new house.

The result looks to me like an extremely interesting business model where the biggest threat to it would be a total collapse of the housing industry in the US. Even if the bottom would fall out i would still think that new developments built with this approach would be the most likely to be built.

let me make clear that while i admire what james is doing i am not an investor and not on any payroll retainer or other arrangement save that he is a subscriber and that i am planning a meeting in loma linda in march.

I think his approach could be replicated, but i also suspect that he has a very strong first mover advantage becauyse what makes his approach especially viable is that he has a background of dealing with and thinking about all aspects of these kinds of situations that has far more breadth and depth than anything else i have seen anywhere. I think what we are seeing is the development of a new role of technology planner, evaluator, integrator, coordinator scheduler who knows and understand the myriad of variable that must be dealt with in building cost effective integrated infrastructure into new communities.

Why am i going on like this? Because I got briefed on the details by James in a two hour long interview on Sept 22 and will publish the result by the end of this month.

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