By Howard Baldwin, Contributing Columnist
Fact: laying fiber communications infrastructure is expensive. Fantasy: the ability to know ahead of time how many property owners in a given neighborhood would pay for a new fiber infrastructure by subscribing to services or even – and here’s a real fantasy – paying more to get the fiber laid initially.
Except it’s not a fantasy. If you’re a telecom carrier, a cable company, a municipality, even a group of community activists, Greg Richardson is here to offer a compelling approach to capital investment in new infrastructure. And he’s done it with an idea that’s almost embarrassingly simple.
Richardson is the founder of a site called CrowdFiber (his day job: managing partner of Civitium, a Rome, Ga.-based telecom consultancy). He and his partner Bailey White started working on it in September of 2012, and the first beta version launched in June of 2013.
Although the name is a play on “crowdfunding” Richardson agrees that it’s unlikely that a neighborhood group could pull together enough money to finance a fiber network infrastructure installation or upgrade. Granted, there may be a business case for small networks.
But they can use the site to promote that installation and compile commitments from property owners about their willingness to pay a certain amount of money per month for better connectivity.
“Service providers don’t need consumers to pay for the network,” says Richardson. “They have access to capital. They look at your potential as a lifetime subscriber, not the $3000 per house it costs to lay fiber. We give service providers the ability to aggregate demand.”
If the service provider knows that a certain percentage (which shifts based on property density) of a neighborhood will commit to the services fiber brings, the service provider then has a better sense of its potential payback for the project.
Small service providers can use that information to secure financing. Richardson recalls talking to one ISP that resells DSL service in several markets. “He said that if he knew that 30% of a subdivision would buy his product, he could build his own network and increase his profits.”
Building Broadband Constituencies
Another CrowdFiber client is Todd Pealock, CEO of Habersham EMC, a 75-year-old rural electric cooperative based in Clarkesville, Ga., serving 34,000 customers. “We’ve seen the most immediate impact internally, because it’s a great tool for when customers call to ask about service. Our customer service representatives can pull up the CrowdFiber application and see how far the customer is from our nearest fiber infrastructure. That helps us categorize the customer as someone whom we could serve immediately, in the near future, or the distant future.”
The value, says Pealock, is that the utility can communicate with customers and prospects better. “If we need a 30% take rate in a zone [neighborhood], they can see the progress of the campaign on the CrowdFiber site. We also work with volunteers in the neighborhood to build enthusiasm, because it’s easier for people to reach out locally.”
But CrowdFiber works for all constituencies, not just the service provider. Dr. Philip Spevak is a Baltimore pediatric oncologist who is frustrated that both his home and his work have a single choice for broadband services, and one that wasn’t very fast. He co-leads the Baltimore Broadband Coalition, which is using CrowdFiber to publicize and track the group’s efforts to bring fiber to several Baltimore neighborhoods.
“We found it to be a really good match to what we’re doing. If we reach our goal of 20% of houses committing, we’ll develop an RFP for any service provider that’s interested. We’ve already had one contact us, and we see that as a good sign.” Currently, 210 property owners have signed on in Spevak’s neighborhood, with a goal of at least 700 and preferably 1,000, he says.
Despite the excitement, it hasn’t all been easy. In his own neighborhood, Spevak says, they have been publicizing the effort on its Web site, through a local listserv, and through Facebook and Twitter. It became clear, though, that not everyone was online, so members of his local group have published articles in the quarterly community newsletter and met with elected neighborhood representatives to spread the word.
Richardson says that the Baltimore group is also publicizing the effort through door hangers and yard signs, prompting people to visit the CrowdFiber site.
Inspired by Google Fiber
Richardson says that his efforts in part were inspired by what Google did to identify where it would install its fiber network. “They used techniques to engage the community and get neighborhoods competing with each other,” he says, adding that “there are lots of community organizations who’ve tried to build community networks of their own. They need better tools for better action. You’ve got to get the city working with the utility, with community groups, with consumers and businesses.”
The question, of course, is: will it work? Pealock is optimistic, because the information Habersham EMC acquires from CrowdFiber minimizes its risk. “We establish a take rate to make our numbers work, so it’s less speculative,” he says, adding that he can also ask for additional pledges for specific lengths of time to diminish risk even further. “We’re just ramping up to find out how fast this thing will go.”
Even Richardson admits that CrowdFiber is “a grand experiment” based on two trends: crowdfunding and social networks. “Crowdfunding has democratized financing, and social networks have democratized communications. Democratizing technology is a way to make markets move,” he says. “We want to provoke the telecom market by giving people more power. We know it’s very blue sky and very early, but that’s our vision.”
Seeking out creative ways to validate the required capital investment in new infrastructure seems like an approach that’s particularly suited to remote or rural areas. As always, we welcome your comments.