Bridging the rural telco middle mile divide

With the U.S. telecom industry's eyes on the broadband portion of the Obama Administration's American Recovery Act (ARRA)-one that will dedicate a total of $7.2 billion in funding to last mile service providers--there's an equally compelling movement to help smaller rural providers bridge the divide between their CO and major Internet backbones.

As this so-called ‘middle mile' opportunity has emerged, a number of competitive wholesale service providers and even states have submitted applications to extend their long-haul networks to independent ILECs that reside along the path of their long-haul networks.

Taking a leverage and extend mentality, wholesalers believe they essentially can extend their long-haul networks to serve other last mile broadband providers with a mix of wholesale IP/Ethernet, optical, voice and even traditional TDM-based circuits (DS3s).

Of course, the problem that large incumbent wholesalers and even competitive wholesalers such as Level 3 and 360networks have had in servicing the Tier 2, 3 and 4 markets has been the cost to build into these areas. Similarly, state-run networks that serve educational and internal needs have also struggled to find carriers that will actually work to provide that connectivity.

However, service providers and states believe that if they are successful in getting broadband stimulus funding they can build out a real middle mile network infrastructure with multiple uses.
Chris Mueller, Vice Chairman and Chief Financial Officer for 360Networks-one of the wholesale operators applying for the first round of broadband stimulus funding-thinks the idea of being a purveyor of this service really is just a continuation of what it has done for other carriers. One such carrier that 360networks is providing middle mile service for is WiMAX provider Digital Bridge.

"We work with next-generation and existing carriers, but their inhibition to going into to some of these markets is the cost of the backhaul from these underserved markets to the big backbones, and that can destroy their economic incentive," Mueller said. "They may have a great market where they can tap competitive services at competitive rates, but if they have to pay $15,000 to $20,000 a month for a DS3 to haul it back to the nearest backbone, their models break apart. We felt that by providing a competitive, call it middle mile, we could alleviate some of that."

Still, Mueller is concerned that there are other providers in the application process simply disguising themselves as middle mile providers. "What we have seen in some of the applications that are just coming out, there are a number of people that are using the broadband stimulus program and the middle mile concept as kind of a guise to build middle mile networks," he said. "There are an existing number of networks where private dollars have been spent to build these long-haul networks. These people have devised, under the middle mile guise, 100-mile rings, which I hope will be viewed more as long-haul network projects."