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Open Access Networks’ Role in Closing the Digital Divide

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Efforts for closing the digital divide are often associated with rural development and navigating terrain barriers. But there are still massive populations in urban and suburban areas unconnected and uninformed on affordable broadband options, according to Flume CEO Prashanth Vijay.

Flume leases out data center space, sources and leases unused [dark] commercial fiber, and plugs it into large residential complexes.

Over the weekend, the company announced expansion plans across Los Angeles, and East Hartford, Conn. In Hartford, Flume aims to deliver broadband available to over 18,000 homes by early next year.

“There’s a lot of government funding coming down the pipe for climate, semiconductors, and broadband. And historically, it’s always gone to an incumbent to say, hey, I’ll promise to connect 200,000 homes here – give me this money. Sometimes it works; sometimes it doesn’t,” Vijay told SDxCentral.

Photo: The Flume team. Source: Flume.

The NYC Housing Authority (NYCHA) has been an anchor customer for Flume since its partnership in 2021, doing work with Affordable Connectivity Program’s (ACP) customers.

“It takes a more hands on approach to get people on-boarded onto these programs,” Vijay explained. “I think the model we’re seeing shift is: can the city or a third party own the infrastructure, and then lease it out to a bunch of different ISPs? We’re big proponents of that.”

Finding Flume’s Fiber Mission  

Vijay started as an engineer at Verizon working on 4G and 5G network operations when he realized a lot of network buildouts, fiber or wireless, “were being hamstrung by not having fiber in the area.”

Following Verizon’s increased fiber builds in the northeast post-Hurricane Sandy, Vijay moved to New York to aid in some of the work. That’s where he first noticed the a lack of players involved.

“Verizon and AT&T were the only people building fiber to the home (FTTH), and they sort of slowed that down around 2015,” he explained, and he saw a budding opportunity to build fiber to underserved residential areas.

“In most cities, the FTTH penetration is between 25 to 40% max, so the other 60% – like where I live in Williamsburg, for example … [it’s] a really expensive neighborhood, but we only have one cable option. And that’s sort of been the case for a long period of time,” he explained.

Vijay asserts the better approach is to build a “carrier neutral infrastructure that fosters more competition.”

Disrupting Incumbents

Working with the NYCHA, Vijay says, “a lot of the affordable housing that were with an incumbent, people were paying $85 to $100 a month for their dual play. So, if there isn’t another challenger ISP that’s kind of aggressively converting people to a free FTTH plan, there isn’t a lot of incentive.”

“If you’re an incumbent, you’re not going to hemorrhage what you’re making from the 80% of the population and cut off making that $80 a month versus $30, just to potentially bring on board this other 20% – which in a lot of these big cities happens to be millions of people,” he added.

For a lot of that 20%, Flume is finding many people signing up have never had home broadband, a finding that Vijay remarks as the real goal of the company.

“I think the way the incumbent penetration and the market is set up, the real solution is bringing in new options, then force the market to shift. You can subsidize the plans, but then for an incumbent who’s making three times as much ARPU per customer, you know, I haven’t seen any cities say, well, we’re forcing them to get 50% of their footprint on this,” he said.

Vijay describes The Infrastructure Investment and Jobs Act – which provides $65 billion to broadband buildout – is sliced up like a “finite equation” in which incumbents will receive a vast majority of the funding, but the remaining that can find its way to carrier-neutral ISPs can still “do a lot of damage.”

“In some of these really rural areas, there is no one else. It’s not going to make money or make sense for someone other than a Verizon, Spectrum, Comcast to go build. So they will get [around] 75% of that [funding],” he explained.

Since 2015, Vijay recalls from a telecom perspective, the fiber-forward push was to go after new developments, or “greenfields.” With this new funding “stirring the pot in a big way,” Flume aims to see more of the funding move towards carrier neutral options.

“Open-access, carrier-neutral stuff is really popular in France, South Africa, Korea. So it really works in other places. It’s just in the U.S., big incumbents and private equity, the goal is to own assets, and that’s how the market cap increases.”

Flume has just sent in its application for the Middle Mile Grant with hopes to proceed to the interview process and start building “early-to-mid next year.”

“I think it can go different ways, but we’re seeing a lot of states buck the trend of their existing C-like licenses and just opt for open access,” he noted.

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