By Ben Bawtree-Jobson, CEO at SiFi Networks.
For several years now, a revolution has been slowly building momentum in the battle for internet services being supplied to the home. For decades, consumers have been faced with either a monopoly or duopoly in the form of just a telco and/or cableco offering to their homes. As in any other unregulated monopolistic industry, this has resulted in higher prices for consumers, poorer customer service levels and lack of investment in infrastructure. In short, the customer has paid the price and suffered when compared to the rest of the developed world.
Unfortunately, the barriers to entry for anyone willing to compete have been exceptionally steep, with TV products and content being owned or exclusive to the cable TV companies and the vast amount of capital required to build out separate competing networks, but all of that is changing drastically.
The doom and gloom of yesteryear is over. For years, small networks and internet service providers have been nibbling at the edges of the big incumbent service providers, scrapping and fighting for customers in underserved markets. I don’t phrase it in this way to belittle their efforts — far from it. It’s this environment that has created hundreds of lean, agile and customer-service-focused internet service providers.
Small ISPs are further boosted by the ever-increasing rate of cord-cutting, with streaming services becoming more and more mainstream. Another old barrier to entry, content licenses, is being eviscerated, with content creators and owners such as Disney going directly to customers over the internet via services such as Disney+. Now, all the ISPs lack is the network to reach and compete to win those subscribers, and for that, they need capital or ready-made networks open for them to use.
Cue the entrance of a new way of funding and operating telecommunication networks in the last mile, established overseas but foreign to the shores of the U.S. Open access is a European concept of independently operating networks that wholesale access to ISPs rather than the owner of the network selling services directly to homes and businesses. The U.K., Iceland, Sweden and many more have been on the forefront of open access. But why is this way of building and operating networks any better than before?
The answer is that it enables competition. It breaks the barriers of a duopoly market down to such a level that all manner of ISPs can now gain access to the very latest in fiber-optic networks to provide superfast internet speeds to their customers.
What is even more compelling is the tremendous opportunity it provides to those customer-focused ISPs described earlier. All of their strengths are now unleashed, unrestricted by lack of access to customers. They can now gain access to those same customers that the incumbents have had for decades without having to spend a dollar on building the network.
It’s not just the economics that drastically change for the better for an ISP (some can achieve triple-digit IRRs without breaking a sweat), but the resource allocation internally. ISPs now don’t have to spend their executive and management’s time on raising capital or building or operating networks in new territories. The focus turns 100% to serving the communities they are in with products and services that are most meaningful. It allows a bespoke strategy to be developed for every segment of a community.
It’s an incredible time to be an ISP. The fiber-optic network revolution will propel those early adopters who are deploying competitive networks to phenomenal growth over the next five years, creating real social impact in the process, closing the digital divide throughout the cities they reach.
A common concern I hear from ISPs is that if they are on the same infrastructure as their competitors, it will result in a race to the bottom on price, and nobody will win. While theoretically possible, it simply hasn’t proven to be the case. ISPs are seeking to differentiate based on services and not on price, focusing their attention on the customers’ needs and developing bespoke services such as managed Wi-Fi and home security packages alongside the more traditional internet and VOIP offerings.
There hasn’t been a moment like this in the infrastructure space for over two decades. There’s a huge demand for services currently insufficiently met by the communications infrastructure of today, with billions of dollars of patient infrastructure capital primed to invest.
It’s an exciting time to be an ISP.