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Why NYC Holds the Key to Solving the Digital Divide Nationwide

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Well before FCC broadband maps were updated and BEAD planning funding was deployed, even before the pandemic sent us all online, New York City had its own plan for closing the digital divide in the Big Apple. While imperfect, it was admirably ambitious and highlighted the need to bring smaller, locally-owned ISPs into the ring,allowing for more competition and fairer prices.

That plan, however, was scrapped under Mayor Eric Adams, whose Big Apple Connect program directs residents to ISP incumbents Optimum and Spectrum for connection. This program is a step in the wrong direction, but so is waiting for any government entity - city, state, federal or otherwise - to solve the problem.

Instead, local startups in the form of ISPs and proptech companies should band together with real estate developers to create an open access playbook. In doing so, New York could serve as an example to the rest of the nation on how to best (and more efficiently) close the digital divide.

New York is uniquely positioned to serve as the exemplar for several reasons. As mentioned before, a lot of the groundwork has already been laid through the former Internet Master Plan (in fact, it continues to inspire other cities like Los Angeles and Cleveland that have put out copycat future RFP notices). New York also has a larger number of local ISPs. They may not be evenly distributed throughout the boroughs, however, there is a larger diversity of available ISPs than in most places.

Above all, New York is frankly a complicated case. They say if you can make it here, you can make it anywhere, and it certainly holds true for closing the digital divide. The good news is, through creative problem solving, strategic partnerships, and diverse funding options, an open access playbook is both achievable and replicable.

Step one: to dig or not to dig, that is the multi-million dollar question

Unfortunately, so many of our modern day problems remain unsolved because of the cost of digging holes. It sounds absurd to the uninitiated, but it’s true. Across the 5 boroughs there are endless examples of residential buildings that do not have fiber internet connections, despite the fact that their neighbor across the street does. This is because it’s simply too costly to dig the hole required to extend that fiber optic cable.

There are, of course, more obstacles to digging holes than just capital. You can’t simply tear up a city street without first dealing with permits and existing infrastructure (beyond the Subway, there is a labyrinth of infrastructure under our feet). Even if you sorted all of that with relative ease, you would then be faced with the immense task of having to clear an entire city block of cars out of the way (this doesn’t even work with street cleaning tickets), and don’t get me started on historic cobblestone roads.

The cost of fiber optic cable itself is just a few dollars per foot, but when you consider the upfront costs of right-of-way fees, permits, and the nearly impossible labor of digging up enough residential street to extend fiber to unconnected homes, even large ISPs aren’t willing to do it. It would take a decade to get anywhere near a return on investment. So, although this technology is not new, in a major metropolitan city like New York, nearly one-third of homes do not have a broadband internet connection.

Step two: bundle up or buckle up

In the absence of the ability to simply trench through a front yard, creative problem solving is the only way to get all New Yorkers connected to high speed internet. That means looking for alternatives to putting cables underground or trying to pile on top of already overloaded utility poles.

Rooftops offer an excellent alternative as they tend to be under-utilized real estate that can then serve as transmission sites for radio access networks (RAN) or fixed wireless access (FWA) to extend coverage to places that are outside the possibility of fiber connections. There is, however, the issue of large incumbent ISPs who can offer the same alternatives. So what can be done regarding the lack of competition and the unaffordable prices that keep New Yorkers offline?

This is where strategic partnerships come in. While no single small or medium startup can go toe-to-toe with an organization like Charter, we can work together to bundle services that will be more appealing to real estate developers.

For example, smaller ISPs can partner with smart home technology providers to offer bulk deals to property owners to equip entire buildings with high speed internet connections in every unit along with the hardware for those units to be fully connected (smart thermostats, smart locks, security surveillance systems, etc) and the offer of managing the upkeep of all this connection. Not only does this technology tend to be more environmentally friendly and energy-saving, it’s also increasingly an expectation of consumers, a third of whom reported being willing to pay 15% more for these sorts of services.

Partnering to offer fully connected buildings gives startups a more attractive sell than incumbent ISPs, and both parties benefit from the lowered cost of customer acquisition. It’s truly a case of rising seas lifting all startup ships (not to mention benefitting the residents who walk into fully equipped buildings and save money on internet bills).

Step three: money talks - funding options

It has to be said that the hypothetical example above sounds a lot like the luxury housing that’s popped up in Long Island City in recent years, and is not actually serving the families that aren’t connected because they simply can’t afford it.

However, this model can be applied to affordable housing units as well. In 2021, my company, Flume, worked with the Workforce Housing Group and the nonprofit Solar One in order to equip 22 buildings with solar panels and fiber internet. The energy savings from the solar panels were then used by Workforce Housing Group to subsidize the cost of the monthly internet bill so that residents were connected for free.

Before it sounds like I’m just trying to toot my own horn, this model offered some really creative funding options that all emerging ISPs and proptech startups should consider. In this particular case, funding included a loan from the NY Green Bank, which is interested in backing clean energy projects, and New York State Housing Finance Agency.

While the current deployment of BEAD funding is great for communities that are more suburban or rural, large metropolitan cities are not likely to see any of it. So looking for partnerships and options that tap into the funding that’s available for clean energy projects is a worthwhile alternative, especially considering fiber optic cable is more sustainable than copper cables.

State housing authorities like Housing Preservation and Development (HPD) are also working on unlocking new sources of funding to connect underserved areas with fiber. There are also funding programs like the Enabling Middle Mile Broadband Infrastructure Program which is more appropriate for less dense areas that the NTIA is keying in on.

Getting every New Yorker connected to high speed internet is no easy task, however it’s entirely possible with creative problem solving, strategic partnerships, and small startups seeking funding in nontraditional places. While the upfront costs and logistics can be difficult to navigate, the benefits of breaking up these unofficial telecoms monopolies are innumerable. With more folks online, doors can open to more local businesses entering the market that put money back into their communities, more green tech initiatives that make way for a brighter future, and a city we can be even prouder to call our own.

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