A couple weeks ago, I received a press release from the city of Beaumont, Alberta, announcing “Beaumont in talks to host one of Canada’s fastest fibre-optic networks.”
The press release reads, in part:
The city is negotiating with a consortium that includes Jacobs and Florida-based Smart City Capital, LLC to build an ultra high-speed, open-access network in Beaumont beginning later this year.
The project would be structured as a Public-Private Partnership (P3), with a major investment from Smart City Capital, Jacobs leading the project design and delivery, and the City of Beaumont providing access to public rights-of-way for the fibre.
This will be an open-access network. Because any internet service provider will be able to access the 10-gig network infrastructure, it will drive competition and support greater consumer choice by allowing internet service providers to sell their products directly to homeowners and businesses.
I have to admit, but not really embarrassed to say, that I needed to look up where Beaumont, Alberta is on the map.
Beaumont is located just south of the Edmonton city limits and just east of Edmonton Airport, which means downtown Beaumont is much closer to Edmonton airport than Edmonton. As an aside, having been to Edmonton quite a number of times, I sometimes joke that it feels like Edmonton airport was built about as far away from Edmonton as they could and still call it Edmonton’s airport. But, I digress.
There are about 18,000 people who live in the 10.5 square kilometre (4.0 sq. mi.) community. Three quarters of the community are homeowners; about half of those who responded to a community census said they worked in Edmonton.
But, let’s get back to that fibre-optic press release.
Beaumont wasn’t saying that it has decided to build this network, just that it is negotiating for one. That is kind of unusual on its own. This wasn’t a disclosure for the purpose of notifying the investment community. Jacobs (NYSE: J) is a US$13B engineering firm; the announcement wasn’t considered material enough for them to issue a news release to the markets.
So what purpose was served by the community issuing a press release?
Beaumont is served by two major facilities based internet service providers: Shaw and TELUS. It appears that Shaw already offers gigabit internet services to the addresses I checked. TELUS offers 75/15 Mbps service. So, this is not really an under-served community. At 1,800 residents per square kilometre, Beaumont isn’t part of rural Alberta.
Looking at the Public-Private Partnership, Beaumont is saying that its contribution is “providing access to public rights-of-way”. But in actual fact, since telecommunications is a federal undertaking, those rights of way should be equally available to any carrier.
Of course, that assumes any other carrier wants to invest further in Beaumont. Beaumont’s release says its plan for an ‘open-access’ network will ‘drive competition’, but in my view, it actually has the potential to reduce facilities competition by creating a disincentive for commercial carriers to continue to invest.
Rob McCann, founder of Clearcable Networks and President of the Hamilton Technology Centre, wrote a relevant commentary last week in Cartt.ca, entitled “Why open access networks may be a thing of the past”. He observed “The open access model, however, divides responsibility for the different layers of service, from the physical network to the services that run on top. Operating a successful open access network thus demands that all the organizations involved in service delivery carefully consider governance, interaction, and service level assurance.”
For many major service providers, it just becomes too complicated to deliver the kinds of service levels required by their customers.
It isn’t clear to me why Smart City Capital would fund a new city-wide fibre build when the community is already served by two major brands with services exceeding the needs of virtually every household and business. I don’t see any rationale for funding to be provided to Beaumont by provincial or federal agencies when so many Canadians are lacking access to broadband services at even 1% of the speeds Shaw offers.
In response to my inquiry, a senior communications strategist for Beaumont said one of the motivations for its project is that “universal fiber will also be needed to connect 5G wireless cell sites.”
I have written before that “Community networks are hard to get right, and very costly when done wrong.”
At the end of the day, if Beaumont’s press release chases away or delays investment by the existing service providers, consumers will be disadvantaged.
When asked why announce now, a Beaumont spokesperson told me: “We recently signed a Letter of Intent and we want to provide an opportunity to inform residents and give them opportunity for input before a contract is finalized.”
Hopefully, residents will provide that input.
With nearly 40 years of experience in the business, I’m still left with the question: “What problem is Beaumont trying to solve?”