Privately Owned Fiber Called Key to Innovation

Published March 1, 2009

A new report suggests the best way to increase the spread of high-speed broadband is not federal investment but local efforts that culminate in private ownership of fiber-optic lines to the individual home.

In “Homes with Tails,” Columbia Law School professor and New America Foundation Fellow Tim Wu and Google Policy Analyst Derek Slater lay out a proposal in which a community would establish a collectively owned fiber trunk cable holding individually owned lines leading into people’s homes.

Real-World Data

“There is no fundamental reason why the model cannot work. The scheme has a sound technical basis,” Slater said. “It would empower consumers and be an enticing business model for public and private entities.

“That said, there are many obstacles to successful implementation that cannot be fully evaluated at this time,” Slater added. “In order to determine its viability, one would need more data, and for that one would need to actually attempt to implement it.”

Condo Model

“Just as individuals can own a condominium unit, but share ownership of the common areas in the complex, individuals could own strands of fiber but collectively own the ‘trunk’ cable that holds all those strands,” Slater explained.

“One idea is a tax credit for individual consumers,” Slater said. “Another is for the government to [encourage] telecom companies to deploy multiple strands of fiber to homes, and then sell off the additional strands to others, including to the homeowner.”

Stephen Gongaware, senior business development group director of Pittsburgh-based Management Science Associates, Inc., agrees the idea has merit.

“Privately owned fiber already exists, and we have teamed with some of those firms, so it is viable,” Gongaware said.

Private Path to Success

Sascha Meinrath, research director for the wireless future program at the Washington, DC-based New America Foundation, said private fiber operations get America closer to universal broadband.

“Privately owned fiber is an entirely viable and sustainable business model,” Meinrath said. “Since the Internet is, at its heart, a network of networks, it is in everyone’s best interest to support the diversity of build-out models necessary to provide true universal service.

“Privately owned fiber is already a de facto reality,” Meinrath added. “Most major companies own their own fiber, and regional optical networks have been around for over a decade. In fact, a growing number of home electronics come with fiber connection capabilities.”

Call for Less Regulation

Meinrath suggested the best way government can help promote private fiber ownership is to offer some tax incentives, decrease regulatory barriers, and then get out of the market’s way.

“Tax incentives, increased collaboration among interested parties, decreased barriers to [ISP] access development of open access infrastructure, mapping of existing fiber assets—there’s a whole host of options for public-policy reforms to encourage universal affordable broadband access,” Meinrath said.

Tabassum Rahmani ([email protected]) writes from Dublin, California.

For more information …

“Homes with Tails,” November 2008, Tim Wu and Derek Slater, New America Foundation: