Community Broadband Bits Podcast
Monday, June 17, 2019
Ben Bawtree-Jobson, CEO of SiFi Networks recently spoke with Christopher Mitchell to discuss how SiFi Networks is bringing an open access, 100% fiber network to Fullerton, CA. You can listen to the Podcast here Community Broadband Bits Podcast
Transcript from the show
Christopher Mitchell: Welcome to another episode of the Community Broadband Bits podcast. I’m Chris Mitchell with the Institute for Local Self-Reliance. I’m in Minneapolis, and today I’m talking to Ben Bawtree-Jobson, the CEO at SiFi. Welcome to the show, Ben.
Ben Bawtree-Jobson: Thank you for having me.
Christopher Mitchell: Well, I’m excited to have you. I’m a huge fan of science fiction, and I think we’re going to be talking nothing but future interplanetary plane travel, right?
Ben Bawtree-Jobson: Yeah, perhaps. Yeah, we often get confused with our brand.
Christopher Mitchell: So tell me, what is SiFi — S-I-F-I — what is SiFi all about?
Ben Bawtree-Jobson: SiFi’s name actually comes about through the technology that founded the business, which coincidentally, we don’t actually use a lot of or at all. Sewer Infrastructure Fiber Installation is what it stands for. One of our founders Mike Harris liked the way that the name played up against Wi-Fi etc. But it seems to have stuck, and we like it. And what it really represents now is the future of networking in the USA, where we’re predominantly doing all of our business at the moment.
Christopher Mitchell: And what’s your vision?
Ben Bawtree-Jobson: Well, our business is as a developer, so we’re a fiber optic network developer specializing in developing last mile infrastructure. And we do so using a three layer model, so it’s the separation of infrastructure, operations, and service provision. So our vision really is to create as many last mile fiber optic networks as we can across the USA in a long term sustainable fashion. So we’re all about long term, dry, low yielding, risk mitigated investments, so everything we do is based around 30 year plus type investments, which is a little bit different to your traditional telecoms or technology based investment. So yeah, that’s part of the reasons we set up the business, is we believed that fiber was no longer really an entertainment medium but more of a core utility and so needed an investment structure around it that enabled its characteristics to be best communicated, enhanced, and then invested in by private capital markets.
Christopher Mitchell: And so, you’ve mentioned three different layers. Now you build the physical layer, and what are the other layers?
Ben Bawtree-Jobson: The three layer model? Yeah, we start off with the physical layer, but then we are actually heavily involved through a separate entity, SiFi Networks Operations, or as we call it, SNOW, in the ongoing operations and management of that infrastructure. The way that we treat the project is as a project-based finance, so each city we do is completely self-sufficient and sustainable in its own right. So we have independent contracts from that into all the various partners for the project, including SNO, who conducts the management of the network via the network operating center, and that’s done in partnership with a close partner of ours, Nokia,
Christopher Mitchell: And then the third layer is the independent ISPs right? And I deliberately pluralized that.
Ben Bawtree-Jobson: Yes, exactly. Last but not least, our ISPs, plural. We believe in creating competition, not just in the short term but the long term, so wherever possible, wherever a city has sufficient scale, you know, to justify more than one ISP into the market, we like to ensure that there is competition with a second ISP on day one. And that sort of, I guess, brings us to our first market where we’ve proven that out, are in the process of proving that out with our first two ISPs, Ting and Gigabit Now.
Christopher Mitchell: Great. Well, before we talk about that first market in Fullerton, California, just briefly, how did you get into all this?
Ben Bawtree-Jobson: So I was working with one of the founders and looking to expand out his existing businesses overseas and looking at new opportunities, and one of the new opportunities that was put across his desk was a novel and interesting way to deploy fiber in sewer lines, which is where the business got its name from, and that was presented by Mike Harris. Mike Harris is a telecoms expert based out of the UK. He originally set up his first business, Total Network Solutions, sold that to British Telecom back in 2005, and has been involved in telecom since. And he brings the telecoms side of the business to SiFi, where I was with Roland Pickstock and that was more finance and construction orientated. And so, when we were presented with the opportunity to invest in fiber, Roland and Mike saw, you know, the vision of the merger of fiber being a real estate/infrastructure asset class and it requiring a lot of construction and a lot of finance in order to make a dent in any market. So I was tasked with doing the due diligence on a business plan, which we ultimately decided to go ahead and move forward on and go forth and try and conquer. And we found out pretty swiftly that our first views on the U.S. market, whilst the principals of fiber were correct, probably our views on the executing in the U.S. Market went quite great. And so, we went through a couple of stages of pivoting around PPPs and trying to work with major incumbents to no avail. Ultimately, after setting up a great platform from an operational standpoint and a partner standpoint, we found the right solution and sort of cracked that economic code to unlocking last mile open access networks, which I think is a very new segment really for the U.S. market.
Christopher Mitchell: Yes. I think it’s quite exciting to see. I mean, it’s something that has been tried largely by local governments but I think has tremendous potential moving forward. So let’s talk about where you’re doing it first, and that’s Fullerton. You’ve got about 140,000 people there, a city, in the Los Angeles metro region. What is the plan for Fullerton?
Ben Bawtree-Jobson: Yeah, so the plan for Fullerton is that we’ll pass every single building within the city. We’ll be doing that over the course of the next two years, so it’s a relatively rapid build program.
Christopher Mitchell: Yeah, sorry, let me just jump in — relatively rapid. You know, 140,000 people, so I mean, what, you’re looking at 60 – 70,000 premises in two years. That is a remarkable, and especially with some of the California challenges in terms of extra regulations.
Ben Bawtree-Jobson: Yeah. Relationships are key. I don’t think it’s any sort of secret recipe as to why I’m based in California. I think you need to be on the ground, you need to be working with the cities incredibly closely, especially in terms of getting through expedited permitting processes and understanding some of the nuances about the technology that we do implement and to meet those types of timescales for delivery.
Christopher Mitchell: How exactly do you plan on doing this? Are you gonna be on poles? Are you going to be digging your own trenches? How does it work?
Ben Bawtree-Jobson: We advocate for underground construction at all possible opportunities, so in Fullerton, I think about 99.5 percent of the entirety of the build will be underground. The only parts that will be above ground are really where we aren’t even building it, and that’s our backhaul connectivity out of town. We believe in underground wherever possible because of the security of the asset underground, and the longevity of the assets. It’s a lot easier and more cost effective to maintain than having to have, you know, a dozen bucket trucks running around town to deal with, you know, lines being cut due to squirrels or arborists up in the trees.
Christopher Mitchell: One of the articles — actually I think several of the articles mentioned micro trenching. Is that something you have a lot of confidence in?
Ben Bawtree-Jobson: Yeah, that’s right. We’ve got a lot of faith in that. We’ve seen it, we’ve deployed it. It’s not the golden bullet answer to everything. There’s an awful lot of other ingredients that go into the mix in making one of these projects sustainable, but it does start with having a cost effective means to actually deploy these networks and micro trenching is a fantastic solution to do that. So yeah, we’re not going as shallow as some of the worrying articles you hear about from Google.
Christopher Mitchell: Well, can you just briefly describe the method you use? Because I do think some of the people have different impressions about what it entails. Are you cutting into streets and about how deep?
Ben Bawtree-Jobson: Micro trenching itself for us means one to one and a half inches wide. You hear some mictro trenching units going out there, they’re digging three inches wide, 26 inches deep. It’s really sort of not a micro trench; that’s more of a mini trench, I guess. Micro trenching for us is narrower and shallower, so we’re anywhere from 12 to 16 inches deep, one to one and a half inches wide, when we’re running our micro trenching solution.
Christopher Mitchell: And are you going to be in any of the wastewater infrastructure? I saw that was brought up or that may have just been a reference to, as you said, the legacy of your history.
Ben Bawtree-Jobson: Yeah, exactly. It is more of a legacy at this point. I mean, it’s a very unique piece of technology that enables us to build it in the sewer lines, but whilst it’s got fantastic capabilities, it’s limited in terms of its application. So when you’re building fiber at home in the manner that we do, which is a mesh architecture where you’ve got multiple cabinets creating diversity throughout the city, you’re essentially building up and down both of nearly every single street. And importantly, if you’re doing that, you’re serving hopefully as many homes as you possibly can outside of the Right-of-Way. So that means you’re breaking out at such regular intervals that it doesn’t really make sense to go within the sewer line where you’re restricted from your point of entry and exit by your manholes. So it’s really great for creating metro rings, for fiber to the tower type deployments, but if you’re looking at true Fiber-to-the-Home on a large scale in the last mile, it doesn’t really have much of place, except for, you know, maybe bypassing tricky railroad easements or areas that are troublesome to get through, through more conventional techniques.
Christopher Mitchell: As you’re describing the going down and trying to connect to every home ideally, it makes me wonder if that’s part of the vision you have for why you’re embracing open access is, you know, many of the advocates, particularly in Europe and in Asia from the ones that I’ve heard from, open access is seen as a way of really maximizing take rate because you can offer so many different services and packages.
Ben Bawtree-Jobson: Yeah, that’s quite right. The more you can have an open environment, you create more natural competitive forces and thus you get improvements in service, improvements and diversity in types of products and price that is going to market. The other thing about when we think about open access, we think about our network as being open not just for Fiber-to-the-Home. It’s open for 5G, it’s open for smart city, it’s open for private health care and educational networks to transverse it. So when we’re building these networks and when creating, you know, an economic case for investment, it isn’t just based around Fiber-to-the-Home. It’s based around creating a network architecture in a city that can actually support all of the future needs of that city in one infrastructure. It’s quite an unfamiliar strategy for deploying infrastructure to us Europeans to have multiple similar infrastructures in place to provide the same service, so having a telco, a cable co, and then a fiber co is something of a odd proposition to a European. And it’s probably no coincidence that our investors are also European at this stage, but we are certainly open to working with U.S. based investors as well, that’s for sure. And we hope that they will be strong advocates of this type of solution as well because we believe, you know, through better market competition and dynamics, you do get a better take rate ultimately. And the more demand points that you can utilize across the city, whether it be Fiber-to-the-Home, whether it be smart city applications or private networks for health and education, ultimately the lower you can start to bring down that wholesale point which then enables more affordable services to then ride over it as well or create new opportunities where services were previously too costly — for example, your smart city services. You know, the main barrier to deploying smart city is the cost of connectivity. Now if you can pay for the vast majority of your returns that you need to meet investors needs through Fiber-to-the-Home and private networks and 5G/4G connectivity, you can bring down that cost of the demand point to a city to such a point where actually deploying smart city applications, like smart metering or SCADA systems or smart street lights, can all become very possible because you’re bringing down that cost.
Christopher Mitchell: You were mentioning some of your investors. I think it’s worth highlighting that you and your investors are taking on the risk. You’re not asking Fullerton to guarantee you any revenue, I don’t think, or to provide you any kind of backstop. Is that right?
Ben Bawtree-Jobson: Yeah, 100 percent. We have a private, 100 percent privately funded model. There is a bit of confusion in the market around SiFi and what we used to do, which was, you know, advocate for and try to work with municipalities for the municipality themselves, taking some ownership and thus risk in the network. We pushed down that river for a long time and didn’t yield any results, so whilst we think that’s a great model, we found a great solution here economically to deliver the same solution to a city but without that city taking on any burden, and that is the case in Fullerton. There’s no financial burden to the city whatsoever.
Christopher Mitchell: And so, would you say that at this point you’ve kind of added a new model and you could return to that, you know, as you build up Fullerton, if a city is saying, no, we’d be open to taking on some risks, that’s still a possibility for working with you in the future?
Ben Bawtree-Jobson: I wouldn’t close the door. I’d say it would have to be a compelling opportunity to, to go down that path again. I think we learned a lot of lessons about thinking the opportunities were there from the various governmental leaders and authorities and then, you know, investing a lot of our time, energy, and efforts into it and unfortunately not getting to an end result despite the project having fantastic merit. So I think if we were approached by a city that is wanting to go down that route, we’d be very open to having a discussion and sharing lessons learned with them, and if those lessons learned, you know, mean that they’re still very eager to push forward and go down that route, then we would be open to looking at it. But I wouldn’t say it’s our first priority. We’re not going out there at the moment seeking those opportunities, but if they come our way we’re happy to have those discussions.
Christopher Mitchell: That makes sense. You know, you have an interesting area from my perspective, because I’m strongly supportive of open access. I’m also very focused on community ownership, and so I’m always curious when I look at an approach that you’re bringing up, because you own the network — I don’t know what your contracts with Ting and Gigabit Now are, but I’m curious if in a few years you were to say, you know what, maybe we want to change our business model and just go with one provider, for instance, what kind of a risk is there of that sort of thing happening?
Ben Bawtree-Jobson: In a given city that we go to that that’s not really possible. So for Fullerton, that won’t be happening due to the nature of our agreements. When we go to other cities, it’s really an economic exercise of what makes sense in that city. You know, you go to a city of a certain size, it’s hard to get a great ISP, like a Gigabit Now, like a Ting, to engage in that if there aren’t enough subscribers available in that market to actually make it worth their investment. While we deploy the capital, you know, they still need to be deploying all the various operational needs for marketing sales in that community. We still bear bear the burden of all the maintenance and etc. of the infrastructure on SiFi’s side, but it’s still a big commitment into a community for an ISP when they think about, you know, the marketing and sales activities they have to deploy. So some of it’s an economies of scale argument. From a philosophical standpoint, myself personally, I believe that the prior model that we had, you know, the PPP model for municipalities was probably the best for the resident. It brought down cost of capital — cost of money is cheaper with a municipal underwrite — and ultimate ownership possibilities that there were in the types of agreements and deals that we had probably led to ultimately the best solution for the end customer in the long run. But unfortunately [there were] too many political barriers in the way to getting those projects off the ground. And I’d say this is probably, I believe, the very next best alternative, where you can have a fully privately funded network and still have the three layer model and still have competition on the network.
Christopher Mitchell: So can you tell us anything about any other projects you’re working on? Any other communities that we should know about?
Ben Bawtree-Jobson: I can’t go into too many details that aren’t already in the public domain, but you know, we’re heavily active in East Hartford in Connecticut. We’re very active in Saratoga Springs, New York, and also in Salem, Massachusetts, where in those three cities we’ve won RFPs for broadband development agreements, and some of them have smart city components on day one, where we will be providing connectivity for smart city applications from day one on those networks. And you know, they’re not in build out stage yet, but stay tuned and they shouldn’t be too far away. And we’re working with, you know, I’d say a few dozen other cities at the moment looking into 2020, so there’s no shortage of cities that need this, Chris. I know you know that already.
Christopher Mitchell: That’s right.
Ben Bawtree-Jobson: So we do have a bit of almost a waitlist accruing, which is a great situation to be in. But yeah, exciting times, I think, now that we’ve managed to sort of crack the economic code on, you know, competitive or open access privately funded networks. It’s going to be a really interesting next couple of years.
Christopher Mitchell: I guess last question that pops into my head is, I presume that other ISPs could join the network. I’m assuming you’re not going to — I mean, 140,000 population. That would be one would be one of the larger municipalities in terms of municipal fiber if it was, and so in my mind, I know that it could support many more ISPs on an open access network.
Ben Bawtree-Jobson: Yeah, I think it’s always that dichotomy of finding an attractive proposition for the ISP at the same time as balancing out the economic situation to ensure that there’s enough security. So yeah, I agree. On a fully open access basis, Fullerton can definitely handle more ISPs on that network. However, getting the ISP engaged and interested to operate in an open access environment with the same credibility and track record as the likes of Gigabit Now and Ting, that’s another story. Yeah, we always have a balancing between those two factions, and what I think will happen is that over the course of the next few years, you’ll see two things happen: One, more confidence in this type of model as we build it out, roll it out, and find success, and two, more ISPs getting more confident in not having to own and control all the infrastructure themselves, which has been the way for so long, you know. Regional ISPs still building out the rural networks or suburban networks in their various markets is quite uncommon in the rest of the planet but very common here. And so I think as we get to scale and then we have more cities that are good working base cases for ISPs to join, then hopefully there’ll be other ISPs that come along and say that they want to be part of the journey.
Christopher Mitchell: I hope so, and I wish you a lot of luck because I’ve long felt that we won’t truly know what’s possible with open access — I mean, in terms of we already know that it can lower prices, and that’s pretty obvious and not hard to prove. But it’ll be curious to see what happens with innovation when we have one million, five million customers on open access networks and we see what comes next. So I really appreciate your contribution to that cause.
Ben Bawtree-Jobson: Yeah, well five million’s not a bad target to get to.
Christopher Mitchell: Yes.
Ben Bawtree-Jobson: If we could get there alone, we’d be elated.
Christopher Mitchell: I’ll bet. Well, thank you for your time today.
Ben Bawtree-Jobson: Thanks a lot, Chris. It’s been great.
Lisa Gonzalez: That was Ben Bawtree-Jobson sharing more about the plan to develop a fiber optic network in Fullerton, California. We have transcripts for this and other podcasts available at muninetworks.orgs/broadbandbits. Email us at firstname.lastname@example.org with your ideas for the show. Follow Chris on Twitter. His handle is @communitynets. Follow muninetworks.org stories on Twitter. The handle is @muninetworks. Subscribe to this podcast and the other podcasts from ILSR, Building Local Power and the Local Energy Rules podcast. You can access them wherever you get your podcasts. You can catch the latest important research from all of our initiatives if you subscribe to our monthly newsletter at ilsr.org. While you’re there, please take a moment to donate. Your support in any amount helps keep us going. Thank you to Arne Huseby for the song Warm Duck Shuffle, licensed through Creative Commons, and thank you for listening to episode 360 of the Community Broadband Bits podcast.