As recently as a few years ago, I was able to say that the large ISPs never used networks owned by somebody else. But that is no longer the case, and we’re starting to see partnerships with big ISPs spring up around the country.
The most recent announcement of a fiber partnership is between Cox and the Indian Electric Cooperative in Oklahoma. The cooperative is building a fiber network to connect its substations and other key electric system components to fiber. The cooperative will lease the remaining fiber capacity to Cox to provide last-mile broadband connections to cooperative members. The partnership will start in the small town of Fairfax, with the intention of going cooperative-wide, if possible.
The cooperative is borrowing the money to pay for the first 80 miles of fiber backbone. The coop has already applied for grants and expects to aggressively pursue more grant funding. Cox will pay for the infrastructure to connect customers as well as all of the electronics. There are also several tribes located in parts of the coop area, and the coop hopes that some of the tribes will pursue grants and follow the same partnership model.
The announced partnership model is that Cox will pay a fee to the cooperative for every customer connected to the network. In rural areas with no other broadband alternative, it’s hard to think that this won’t eventually mean 70%, 80%, or more of households getting broadband through the partnership.
This kind of partnership makes sense for both parties. The cooperative gets a modern smart grid network that is going to be essential in the long run for all electric grid. Smart grids protect against outages, allow for faster repairs when there are problems, and allow for the seamless integration of alternate energy sources – something that is a lot harder than might be imagined.
Cox gets access to customers but saves on building the expensive fiber distribution network that goes up each street. It becomes a lot more feasible for Cox to consider rural markets when it doesn’t have to cover all of the construction costs. Both parties benefit from grant funding, which can reduce the cost of fiber to make a feasible business case.
These kinds of partnerships with giant ISPs are still not common, but they are popping up more and more. CenturyLink (now Brightspeed) is sharing a municipal network built by the City of Springfield, Missouri. Windstream announced a deal similar to this one with an electric cooperative in Georgia. Consolidated Communications has partnered with some cities in New Hampshire. Mediacom is placing fiber in the conduit system built by the city of West Des Moines, Iowa. I’m aware of discussions of several other partnerships with big ISPs that are under consideration.
The biggest hangup for these kinds of partnerships is that the big companies are highly leery of using a fiber network where somebody else operates the electronics, controls the installation process, or maintains the network. It’s a lot harder to attract a big ISP partner if the network owner wants to keep control of the fiber deployment and maintenance.
There are a lot more partnerships being formed between municipalities, cooperatives, and smaller ISPs. I’m aware of dozens of such relationships and wouldn’t be surprised to find that there are hundreds of partnerships operating, with many more underway due to grant funding.