The Hole in the Fiber Doughnut

[July 23rd, 2008] Led by Commissioner Dan Saltzman, the city of Portland is set to mount a fresh expedition into the dark heart of Internetland. Saltzman learned just how perilous this territory could be two months ago, after the untimely death of Portland’s free wi-fi service, MetroFi.

But the intrepid commissioner is undaunted. “People are being kicked off of [Internet] providers because they’re using up too much bandwidth,” says Saltzman’s chief of staff, Brendan Finn. “Until you have that [fiber] infrastructure, you’re not going to be competitive as a city.”

In early August, the city will start looking for a partner to conceive what techies call a “fiber-to-the-premises” network, but what local boosters call a “community fiber network,” or CFN. (Maybe “sustainable fiber community network” sounded too much like a hemp-weaving class.)

The complex fiber project, if Council approves it at year’s end, would make the MetroFi venture look as simple as a lemonade stand by comparison.

MetroFi pulled its wi-fi project in May after 17 months of fits and starts (mostly fits). Its wi-fi cloud was built on the cheap, by plugging wireless nodes into existing networks, and at little direct cost to the city.

“We learned a lesson from that,” Finn says. “You can’t just trust a private company to come in and do something. We’re going to be really careful this time.”

The CFN, by contrast, would put Portland into the telecom business—stringing mile after mile of high-speed fiber-optic cables over the city’s utility poles and into every home and business.

“It’s not the same kind of project, but the lesson to learn from [MetroFi] is these things don’t always pan out as promised,” says Bob Gravely, an Oregon spokesman for Qwest. “It is a huge undertaking.”

It’s not surprising that the telecommunications giant opposes the CFN proposal, since it could represent a new, publicly financed competitor. But Gravely is putting it mildly when he says building a CFN is a “huge undertaking.”

The fiber project will require the city to incur debt upward of $500 million—more than the city’s annual general fund budget—plus hiring 86 employees with annual salaries totaling $3.4 million. The plan calls for the debt to be repaid over 15 or 20 years through fees from companies that want to use the network.

“Nobody’s ever hid the ball about what it would take to do this,” says David Olson, who runs Portland’s cable and franchise office.

As Olson sees it, the alternative—to do nothing—leads to doom. “Portland could become the technological bedroom suburb of Gresham and Beaverton,” says Olson.

Grim prophecies aside, it’s obvious by looking at the map that Portland is, as Olson puts it, a “copper hole in a fiber doughnut.”

Inside Portland, Qwest and Comcast reign. They use lots of fiber for their Internet offerings, but only for the backbone of the system. What runs into your home is most likely coaxial cable or plain copper wire. Translation: slow.

But out in the ’burbs, Verizon can run high-speed fiber directly to people’s homes. In Portland, the company has deferred to its competitors.

Verizon says 4,500 Portlanders in outer Southeast, near Gresham, are hooked up to its fiber Internet. That’s a tiny fraction of Portland’s broadband subscribers. But Verizon doesn’t plan to move into competitors’ Portland turf anytime soon, says company spokesman Kevin Laverty.

In the meantime, Portland is sick of waiting on Qwest or Comcast to expand their networks. A public fiber network, which could be running as early as 2010, could shake up the duopoly. Alternately, if one of the companies—or maybe Verizon—wanted to play along and respond to the city’s solicitation, it could provide an incentive for private investment.

Another reason CFN has better odds of success than MetroFi: Portland isn’t plunging into unknown territory. Though municipal fiber networks have been hit-or-miss in the U.S., they’re common in Europe and Asia. Seattle and San Francisco are considering similar schemes, and tech officials in the two West Coast cities are trying to coordinate their efforts with Portland’s. (Portland and San Francisco also happen to share a consultant, the Columbia Telecommunications Corporation of Maryland.)

Olson says the three West Coast mayors are planning a teleconference sometime in the next two months that will produce a “broadband bill of rights”—which should, at the least, provide a PR boost.

As the city’s proposal moves forward, expect some serious pushback from the big telecoms. After all, if a successful, publicly owned network is built without their cooperation, they could lose a couple hundred thousand potential customers.

“We already have a network, and so does Comcast—so why spend half a billion dollars more? You have roads and bridges that need fixing,” says Qwest’s Gravely. “We find it curious that this is how the city would want to commit these kind of resources.” Comcast takes a similar line.

Olson knows he’s picked a tough fight. “Everybody’s from Missouri on these. You gotta show ’em.”