Can You Do it Yourself?

By now, you’ve probably heard about the Michigan man who built his own ISP when Comcast and AT&T wanted too much money to extend broadband to his neighborhood.

Jared Mauch lives in Scio Township, Michigan, outside of Ann Arbor. Jared is a senior network engineer for Akamai. He bought his house in 2005, and at the time, paid a lot extra for a T1, which delivered 1.5 Mbps. He assumed somebody would eventually bring faster broadband. He contacted Comcast and was quoted a cost of $50,000 to extend the cable network to his home. AT&T finally brought DSL to his neighborhood five years ago, but the top advertised speed was 1.5 Mbps. Jared was eventually able to connect to a WISP that offered 50 Mbps download.

Jared finally decided that he could make this work himself, at least in his small neighborhood. He created Washtenaw Fiber Properties and self-funded and built five miles of fiber that connected the homes in his neighborhood. He’s been able to sign up 70% of homes. He offers 100 Mbps symmetrical for $55 and gigabit service for $79. He charges $199 to help offset the cost of the installation. This made Jared one of the smallest fiber overbuilders around – but he is not unique, and folks have done this in neighborhoods where nobody else would.

Jared got a lot of press when he won a grant from the County in May of this year for $2.6 million to expand his network to reach 417 additional unserved addresses. The expansion will require 38 new miles of fiber, and he has until the end of 2024 to build the network. The grant came from the $71 million that the County received in ARPA funding from the federal government. The County is investing $15 million in rural broadband and also awarded grants to three other ISPs.

Jared’s story is not unique, although most tiny ISPs use wireless technology and not fiber. There are many dozens of similar stories of how rural WISPs got started. An example is Grizzly Broadband, a WISP started in rural Manhattan, Montana. Two decades ago, Craig Corbin founded the WISP when he wanted something faster than dial-up at his home, and he wanted to operate a server at his business. He started with radios on a single tower and grew over time. He eventually has been able to build some fiber-to-the-home and is now expanding the fiber network each year.

I think the Washtenaw story got headlines because a tiny home-grown ISP won a sizable broadband grant. That is, unfortunately, a unique experience in the world of grants. Many federal grant rules say they are open to everybody and support the idea of local broadband solutions. Washtenaw Fiber and Grizzly Broadband are exactly what a local broadband solution looks like – folks bringing broadband to their neighbors when nobody else will.

But the Michigan grant only happened because the County trusted the small local ISP. Unfortunately, for small ISPs like Washtenaw, there is little hope of expanding further using the various federal grants like ReConnect and BEAD. While these grants say that anybody can apply, the specific ways to qualify for these grants say otherwise. An ISP needs to jump through a lot of hoops for a federal broadband grant. That would start with having a history as an ISP – something Grizzly has but Washtenaw doesn’t.

A federal grant applicant has to be able to guarantee the funding through certified letters of credit, and that means getting a financial institution to bless their business to the point of pre-approving a line of credit before any grant is awarded. That is something the Small ISPs can’t do. It was nearly impossible a few years ago when interest rates were low and credit was a little easier, but banks have already started to retract from making new loans as a result of interest rates and tightening by the Federal Reserve. There are a dozen other nuances of federal grant rules that are hard for small companies to navigate and qualify.

I can understand why the NTIA and the USDA favor existing ISPs. The agencies do not want headlines about a grant applicant that fails. But that means the rhetoric that says that the grants are available to anybody is a feel-good fiction. If somebody is not already successful as an ISP with a strong balance sheet, and a reliable banking relationship, then the reality for federal (and most state) broadband grants is that they need not apply.

Leave a Reply