Open-Access, Middle-Mile Networks: Deployment and Competition
Tuesday, December 1, 2020
Open-Access, Middle-Mile Networks: Deployment and Competition
Residential and small-business customers have too few options for fixed, robust broadband service, what we refer to as “High-Performance Broadband.” Solving our deployment and competition problems requires the construction of new broadband networks. In other words, we need more competition, and we need more broadband deployment. Our new policy brief concentrates on one solution—the construction of open-access, middle-mile networks.
“Open-access” means the network permits any broadband provider to connect to the network on nondiscriminatory terms and conditions. “Middle-mile” networks reach from national and major regional internet backbones to a local connection site (which could be a school or library but which could not be, by definition, a residence).
Thus, middle-mile networks bring data to and from an internet backbone to a connection point in a city or town where, in turn, traffic is handed off to the “last mile” network that connects to, say, a home.
The fundamental economic principle is simple: Open-access, middle-mile networks can provide the savings that spur last-mile providers to build further and faster to reach residences. In this way, an open-access, middle-mile model promotes private investment and competition in last-mile service by reducing capital expenditures required to build last-mile connections.
And yet, when we talked to policymakers over the past two years about building open-access, middle-mile networks, county commissioners to members of Congress posed the same question again and again: If we build it, will they (the broadband providers) come? The answer is that they have. Experience supports funding open-access, middle-mile networks—and federal backing of smart state and local strategies that include construction of such networks.
For example, Joe Freddoso, the former president and CEO of MCNC, which operates the North Carolina Research and Education Network, and Joanne Hovis, the president of CTC Technology & Energy, provide validation of the cost savings of middle-mile access:
- Providing Broadband Where Broadband Is Scarce: In Nevada, Route 50 is so remote that it’s been called the loneliest road in America.7 For 257 miles, cutting through the heart of gold- and mineral-mining territory, there is little if any fiber to which last-mile networks can connect. Communities rely on fixed wireless. But when new construction linked a school, the sheriff’s office, and a local mine, the cost for connectivity for the school went down by more than 90 percent.
- The High Cost of Monopoly Middle Mile: Elko, Nevada, offers a different example. There, a single network is available to support last-mile service. Freddoso calculates that “costs on a monopoly route tend to be about 6X more expensive than on routes where there are competitive choices. Transport is now about 25-35 cents a Mbps on competitive routes for 10 Gigabytes…I have seen 10 Gigabyte transport prices at about $1.20 per Mbps in monopoly markets.” Demand among business, the military, and last-mile providers other than the incumbents is strong for leased dark fiber on competitive routes, where competitive pricing can lead incumbent providers8 to halve their prices for middle-mile connections.
- The Savings in Residential Deployment: In Alford, Massachusetts, a rural town of roughly 350 residents, the presence of the MassBroadband 123 middle-mile network saved the town the cost of building fiber to the closest internet point-of-presence—20 miles away. The cost of building that middle-mile connection would have been more than the town’s $1.5 million cost to build fiber-to-the-premises to all residents of Alford.
In addition, savings can be achieved when open-access, middle-mile networks support service to multiple categories of customers, which can include community anchor institutions (such as schools, government buildings, hospitals, and libraries) as well as residential customers. A recent example comes from Minnesota, where a federal grant from the United States Department of Agriculture funded a local telephone company to provide fiber-to-the-home service to residential customers at a lower cost because the new construction would “leverage existing middle-mile infrastructure.” Similarly, the middle-mile network constructed in South Bend, Indiana, received its initial support as a means to connect governmental and large institutions, including the University of Notre Dame. Once built, such networks can serve as launching pads for local broadband expansion. The savings in time and money for a last-mile provider can make more construction more affordable. From its review of state broadband efforts, the Pew Charitable Trusts (Pew) concludes that “investment in middle-mile infrastructure facilitates last-mile deployment.” For example, the Three Ring Binder, a fiber network that runs over a thousand miles in rural Maine, has helped reduce the cost of providing broadband in both unserved and underserved communities.
Not surprisingly, open-access, middle-mile networks have found support from state and local governments that are looking for ways to ensure that their residents have the chance to be served by scalable networks that meet future demand, especially given the increase in broadband usage triggered by the COVID-19 crisis.
As Kathryn de Wit and Anna Read have explained in a 2020 report from Pew, states are leading the way in demonstrating the practical impact of open-access, middle-mile networks. For example, Arizona and New Mexico have both identified the strategic importance of middle-mile to connect rural and Tribal communities moving forward. And Colorado provides funding and technical assistance for middle-mile infrastructure projects.
In our new policy brief, If We Build It, Will They Come? Lessons from Open-Access, Middle-Mile Networks, we explain why and how the federal government should support the construction of open-access, middle-mile networks and how that support can be structured. We provide background on different kinds of open-access, middle-mile networks across the nation. We propose the structure for a federal open-access, middle-mile grant program, incorporating the lessons we have learned about what boosts the chance for open-access, middle-mile success. Our focus is on the reasons the construction of open-access, middle-mile networks furthers deployment and competition.
Jordan Arnold is a Research Associate for the Benton Institute. She holds a B.A. in Economics and Political & Social Thought from the University of Virginia. Her undergraduate thesis on rural municipal networks was supervised by Professor Christopher Ali, Benton Faculty Research Fellow.
Jonathan Sallet is a Benton Senior Fellow. He works to promote broadband access and deployment, to advance competition, including through antitrust, and to preserve and protect internet openness. He is the former-Federal Communications Commission General Counsel (2013-2016), and Deputy Assistant Attorney General for Litigation, Antitrust Division, US Department of Justice (2016-2017).
The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.
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