LA City Council officials are working on a Request for Proposals. They want companies to offer bids on an extremely ambitious project, namely lighting up fiber optic broadband internet for every business and residential area in the Los Angeles city limits. No piecemeal, staged, “testing” of the viability for the potential, to maybe, some day, consider, trying a starter market in one corner of a McMansion in Beverly Hills. They want to go whole hog, all or nothing.
The plan for the proposal so far would be to offer up a baseline low level service for everyone for free. It could be ad supported to offset costs, and most likely speeds would top out around 2Mbps, yet it would be available for everyone. This could be a huge boon for those in lower income neighborhoods, areas not often well supported by current ISP’s, and tremendously helpful in an economy where many have to choose between home internet and low cost cell phone service to remain competitive in the job market.
For those who can afford it, higher tiers of service will be made available, most likely topping out at gigabit bandwidth, resembling services like Google Fiber. This backbone could also be used to power WiFi hotspots in public areas.
The implications of such a move could be remarkable.
LA Officials estimate that the roll out could cost as much as $5 Billion, but those costs would have to shouldered by which ever vendor is awarded the contract. At first glance it wouldn’t seem like current ISP’s would want to disrupt their current strangle hold on the LA market. Neighborhoods are clearly divided up between various data providers, which allows for limited competition. Prices can remain high, and these companies don’t have to invest much in improvements. Even in the best case scenarios, consumers likely only have access to 50Mbps, and many areas only see a fraction of that speed. Prices on these types of plans typically run higher than what customers pay for 1000Mbps connections on Fiber providers.
While the costs are high, there’s a lot of risk, and digging up lines to roll Fiber is a slow and frustrating process, whichever company is rewarded the contract will most likely become the most sought after communications provider in the city. Any companies looking to offer up similar services following the roll out will probably have to lease bandwidth from the winner. They’ll service every major business, and even the non-paying residential customers will probably be supplying ad revenue. It could prove fantastically lucrative, and the potential money up for grabs might be too tempting for an industrious up start to pass up.
There’s also the potential for an established player to take the reigns on a project like this. The current division of neighborhoods for services has been a long standing agreement between the various ISP’s and carriers. With so much at stake, the entire future of the LA market, it could be enough pressure to finally break down these long standing borders, finally offering consumers actual competition for who they might choose to do business with. Google could potentially walk into this market, but it would require them to change up their policy on business services. Currently Google only offers residential Fiber broadband.
The LA City Council has approved a measure to draft the proposal request. In a few weeks they’ll revisit it to determine if it’s ready for applicants. Following a three month window for accepting bids, it’ll like be another nine months to review those bids and award the contract. This means ground wont break until middle 2015 at the earliest, but considering the glacial pace of politics, it’s a relatively short time frame.
Once Fiber rolls out however, every company in the market is going to have to step up their game or risk becoming obsolete.