Already common in Europe, open access networks are just beginning to gain traction in the U.S. While players like SiFi Networks and UTOPIA Fiber have adopted a wholesale-like model, newcomer Underline Infrastructure is taking a bit more of a hands-on approach.
Generally speaking, “when people say open access in this country, they typically mean ISPs can come in and lease fiber and choose to build a given neighborhood that hasn’t been overbuilt yet. We mean something very different,” Underline CEO Robert Thompson told Fierce. “We are not a wholesale leaser of fiber. We are the fiber network literally to the doorbell.”
Thompson explained Underline isn’t just providing physical fiber-to-the-home infrastructure, but also a unified billing system and cybersecurity layer. The latter will allow the communities it serves to deploy smart city applications over an on-demand Layer 2 connection that will never touch the Layer 3 public internet, he said.
“On the one hand, we directly face consumers and businesses, schools and so forth and we provide them network access connectivity and technology for a monthly connection fee. On the other hand, we look like a network infrastructure-as-a-service provider to the ISPs or content community,” Thompson said.
“We don’t provide IP,” he continued. “We’re going to move your traffic from your house ultrafast over fiber and we’re going to hand off you and your traffic to the internet service provider of your choosing. That ISP is then your IP, the routing of your traffic. They’re connecting you to that glorious world wide web.”
In terms of how it will make money, Thompson said Underline will charge users directly on a monthly basis for connectivity, with their chosen ISP getting a portion of that cost. So, for instance, in the case where a subscriber takes a $65 per month symmetric gigabit plan, the ISP will get a $15 cut. He added Underline also plans to charge licensing and per subscriber fees for use of its technology stack.
The company is now preparing to put its plan into action, initiating construction in its first market: Colorado Springs. There, it will offer residential speeds up to 10 Gbps and enterprise service up to 100 Gbps, with qualifying households eligible to receive a discounted rate on Underline’s bottom tier symmetrical 500 Mbps plan.
Thompson said the project will be completed in several stages, with a Phase I build set to connect 24,000 homes and 4,000 businesses with 225 route miles of fiber plant. Initial customers will include the the National Cybersecurity Center, the new Space Information Sharing and Analysis Center and Altia Software. He added Phase II will cover roughly the same amount of ground and Underline also has a build agreement with an unnamed city “immediately surrounding” Colorado Springs. Taken together, construction in both phases and the second city will amount to “an exercise of approximately $125 million in total capital.”
Work is being privately funded by investors including FinTech Collective, Revolution’s Rise of the Rest Seed Fund, Seavest Capital and Fantail Ventures, allowing Underline to aggressively pursue growth.
“We are after this with a vengeance, and we are very thankfully supported by very strong capital,” Thompson said, noting a “drumbeat of steady announcements of drills in the dirt in new communities” is on the way.
In terms of where it’s headed next, Thompson said it is targeting communities with populations between 20,000 and 750,000. He pointed to these communities as ones which have “historically been basically ignored by the incumbents and which by and large will not qualify” for federal support for broadband deployments.
Beyond that, he said Underline’s market assessments include factors like demand point density per fiber route mile, a population productivity ratio, a competition index and a social equity analysis. The latter is a key priority for Underline and “part of our social purpose,” Thompson explained.
“We want to understand and we actually want to target communities that have a significant portion of their demand points that have no internet at all or very poor internet at home because of socio economic status,” he said. “This country’s got to have internet that’s fast, affordable and fair.”