Last week the Local Swedish Fiber Alliance celebrated their 20th anniversary in my home town Umea. They are a non-profit organizing many of the community networks in Sweden. My strongest take-away from the conference was how important the communities perceived their control of this infrastructure to be, especially now when smart city applications are being introduced across the networks.
“We’ve built an eight file super highway, but up until now we’ve only been riding one of the files – by bike.” This was said by someone from a muni owned network on the conference I attended last week. It was a 700 attendee conference and the 20th anniversary of the Local Swedish Fiber Alliance, a non-profit organization with 155 community networks and 130 vendors as members. It was held in my home town Umea, which is not the largest Swedish city, but one of the first in the world to get high speed broadband. Already in 1994 the local utility started to lay fiber, long before Facebook, Instagram and the dotcom bubble and burst. I remember how most people hardly knew what the Internet was back then! This visionary bet on fiber made the city of Umea and our mainly rural county rank among the highest in the world in terms of average broadband speed and fiber coverage for decades. Since then many cities, towns and counties have followed in their steps and today there are close to 200 muni networks in the country. Already in 2016 80% of Sweden had access to fiber according to PTS (The FCC of Sweden). There is a race now to fiber up the rest of the country and the latest I’ve heard, that number is getting closer to 90%.
The community owned networks are definitely still a driving force in the build-outs that are now taking fiber to small villages deep in the Swedish pine forests and remote coastal areas with summer houses. According to a recent press release by the Local Swedish Fiber Alliance the community networks connected 100 000 homes to fiber during 2017 and the planned construction for 2018 is the same number of households and investments of $500 M USD (Swedish only https://www.ssnf.org/press–opinion/pressmeddelanden/arkiv/2017/kommunala-stadsnat-planerar-att-investera-miljarder-i-bredbandsutbyggnad-under-2018/)
What strikes me is that what the cities envisioned and wanted to achieve by building this infrastructure has been realized. That said, the real revolution is still to happen – likely in only the next few years. The muni networks were mainly built because the city leaders realized that without high speed broadband, both resident and business would move elsewhere. Leaving their digital future in the hands of the incumbent telecom providers would mean too much of a risk the city leaders weren’t willing to take. Critical infrastructure is not something you happily gamble with. On the conference it was very interesting to hear the stories from the smaller communities, often with as few as a couple of thousand households or less. They all agreed their communities would have looked very different if they hadn’t built their networks, with much fewer jobs and many employers that would never have stayed or established their business in their community.
Back to my quote in the beginning of this post. It’s obvious that it’s now the full potential of these networks are beginning to be realized. The consensus seemed to be that “smart city” and “IoT” that has been talked about so much for years, is now starting to happen. With billions of new devices coming online, these fiber super highways will for the first time really be used to their full potential, something that simply would not be possible with legacy technology. It was also made obvious with new vendors on the show, displaying alarms, sensors, smart hubs, etc. There was also a strong consensus among the community networks that their ownership of the networks had never been as important as now. How would it be possible as a community to roll-out smart city services without being in control of the network and where it is deployed. Many smart city services build on ubiquitous access in order to fully deliver the potential benefits, which could never have been guaranteed if profit driven private telecom providers had been setting the agenda for the buildout or what services makes it onto the network and at what price. And the smallest communities would have been the biggest losers.
Another strong take-away was the importance of the business model. The vast majority of the networks in Sweden are operated on a True Open Access model, where a neutral operations company is responsible for deployment and maintenance of the active layer and provisioning of services, while multiple service providers sell services to the subscribers over one single infrastructure, owned by the community. In the early years the communities did their own operations, but over time many have outsourced this to one of the nationwide operations companies that can be found in Sweden. Still, by owning the network and deciding how and where the network is built out, the communities can be in charge of where service is available. With an open access model the retail service providers pay a wholesale fee to the network operator for delivering service over the network. This way the community can influence the price to the subscriber. First, the direct competition between the providers (generally on an Appstore like online marketplace where all providers and services are listed) will drive the prices down. Secondly, the city can choose to lower the wholesale price which due to competition will affect the retail price and thereby increase utilization.
My conclusion is that the decision made by many communities in Sweden to build their own fiber infrastructure has proven to be right. They have made sure their communities have been relevant throughout the digitalization that has taken place over the last decades. But the full value is now to be realized as cities in control of a high-speed broadband infrastructure have the necessary tools to embrace and be leaders in the smart city revolution.