Wide area bandwidth is hot. Carriers, enterprises and even residential customers can’t seem to get enough of it. Both Incumbent Local Exchange Carriers (ILECs) and Competitive Local Exchange Carriers (CLECs) are continually negotiating rights to new fibre resources with fibre network builders and utilities to fill the demands of their customers who want to run the latest bandwidth-intensive applications. And if the ILECs and CLECs aren’t bidding for fibre routes, they’re bidding for broadband wireless spectrum to allow them to reach even more potential clients.
Given this insatiable demand for bandwidth, it’s not surprising that some municipalities (including Toronto and Ottawa) are investigating the possibility of building their own fibre networks, which would then be leased to the highest private sector bidders, who would fulfil end user requirements. Despite some potential hurdles the municipalities may have to overcome in setting up the networks, the concept of city-owned networks makes good sense – both from a financial and civic perspective.
The largest hurdle a municipality building its own network would have to overcome is justifying the cost of the build. The Canadian telecommunications market is very competitive and prices for both business and residential WAN services continue to drop. But, as Bill St. Arnaud, senior director of advanced services for CANARIE, which is a federally-funded corporation designed to foster the growth of the Internet in Canada, pointed out in a July 28 Network World Canada article, a T-1 in Ottawa still costs $200 per month, a DS-3 costs $4,500 and an OC-3 costs $12,000.
St. Arnaud added four to six strands of dark fibre would cost about $20,000 for a 20-year lease and transceivers to light the fibre would cost about $2,000. With the optical networking gear available today, the bandwidth available over those four to six strands would be almost unlimited, so if the demand for the bandwidth were there, a business case could be made for a municipal build.
A secondary hurdle would be finding the staff to manage the network. This is where the private sector firm comes in. As long as there’s still a reasonable rate of return to be made for the private sector firm, the municipality should have no trouble finding bidders.
The potential benefits of municipal network builds far outweigh the potential hurdles. A pragmatic benefit is that the municipality handling the build can install fibre once and then lease the fibre to private sector firms, meaning roads only get torn up once, rather than each time a new private sector firm wants to build its own network.
More importantly, if a municipality builds out its own network it can ensure all residents of the municipality have equal opportunity to get high-speed access. When private sector firms build out networks, they hit the biggest bandwidth consumers – large enterprise – and little else. There’s nothing wrong with these private sector firms making a living, but by concentrating on big business, they prevent small and medium enterprises, as well as residential customers, from having access to cheap, high-speed bandwidth.
Canada seems to pride itself on offering equal access to services to all citizens. Why shouldn’t this include network services?