Spinning fiber optic glass into gold for Longmont startups

Roshan1286, Flickr

Fourteen years has got to be the Guinness World Record for eating your own dogfood.

The pride of Longmont, a 17-mile city-owned fiber optic loop, largely sits dark. City departments use it. Some strands are also leased to a few public entities, like the local Boulder County government outpost, Platte River Power Authority, Longmont United Hospital and the St. Vrain Valley School District.

After all these years, it remains tantalizingly unavailable to residents and local businesses after being mired in ugly politics and aggressive anti-competition campaigns funded by the cable industry since it was installed in 1997.

Longmont voters will decide Tuesday whether the city can override a 2005 state law backed by national Internet behemoths Comcast and Qwest (now CenturyLink) to prohibit municipalities from leasing city-owned fiber to private Internet Service Providers (ISPs) or operating their own broadband service, like water/sewer or electrical utilities.

But lost in the local media’s coverage of the ballot squabble and the cable industry’s flush $300,000-and-counting opposition campaign is a much larger question:

What could a super fast commercial Internet connection and savings of tens of thousands of dollars in installation costs mean for Longmont’s burgeoning startup community and its long established data storage sector?

Show me the money

Alex Sammoury is in a good position to know.

Sammoury is the executive director of the Longmont Entrepreneurial Network (LEN), a nonprofit incubator that counts 22 green tech, data storage, aerospace, B2B, and biomedical startups in its portfolio. He’s also a first term at-large Longmont City Council member and he’s frustrated.

“This is not going to cost the city anything to do,” Sammoury grumbles. “There’s no extra cost. Or extra investment form the city’s perspective. Everything is already in place.”

LEN provides its on-site startups with satellite Internet so the benefits of tapping the city fiber are negligible. But Sammoury believes it would provide a significant competitive advantage for the local office parks where it can cost an arm and a leg to pipe in T1 service from the two dominant ISPs—Comcast and CenturyLink.

“Their real fear is that somebody would come in and be able to make a business out of [tapping the fiber loop] and force them to reduce their prices,” says Sammoury spilling the beans on the worst kept secret in town. “Right now they essentially have a duopoly. If one raises the prices then the other is justified in raising their prices.”

Data backup company and LEN graduate Rebit, Inc. would definitely like to see some new options in Longmont. The company recently upgraded two 1.5 Mb T1 lines to a fat 7 Mb Metro-Ethernet connection. And they still need more bandwidth.

Dennis Batchelor, Rebit’s co-founder and marketing director, voices a common beef among local entrepreneurs: Limited choices and high costs because of Comcast and CenturyLink’s stranglehold on commercial broadband and VoIP.

“If we had access to significantly higher bandwidth at reasonable rates, we could consider additions to the services we offer our own customers,” says Batchelor. The potential to access the city’s fiber loop is tempting for Rebit which closed a $1 million Series C round early last year for total venture financing of $6.7 million. This is a company Longmont should be fighting hard to keep.

“While we have no intentions of moving our offices in the foreseeable future, the cost of doing business will be a factor if/when we do move,” Batchelor concedes.

A doozy of an incentive

Cities are in fierce competition to lure businesses.

But the telecom lobby outgunned them. And its trophy? A state law that prevents the city from even providing wireless hotspots at community-wide events let alone lighting up the remaining 90 strands of fiber to offer residents and companies blazing fast download speeds and potentially lower costs through more ISP competition.

Seeing 63 percent of the loop dark and unused galls Longmont Power and Communications Director Tom Roiniotis, “The law is so broadly restrictive that its got a lot of unintended consequences.”

For one, he believes it likely bumped the city from Google’s short-list to provide experimental ultra-high speed Internet service at 100x times faster than typical connections.

“Don’t be evil” is apparently not a mantra shared by the cable industry.

For Longmont, it’s more than an issue of protecting corporate turf or making short-term political sweetheart deals. Fundamentally, municipalities look at capital investments differently than corporations.

Roiniotis breaks it down:

“We may not make a lot of money on infrastructure but simply investing in it there’s going to be a lot ancillary benefit by attracting businesses, getting people in primary jobs and increasing tax revenues.”

Back of the napkin forecast

It also looks mighty beguiling to potential ISP competitors. And Longmont-based broadband provider RidgeviewTel would like a bigger piece of the action.

President and CEO Vincent Jordan reckons the Big Two providers are raking in close to $54 million annually for residential and commercial broadband in Longmont over traditional phone and cable lines. Then tack on build-out expenses of up to $15,000 for running a T3 line to a firm’s front door. On the flipside, Jordan estimates those costs would hover around $2500 to tap into the city’s fiber loop because of its proximity to the main business corridors.

“There are still a good number of small businesses in Longmont that cannot get the bandwidth they need in order to do their business even though the city fiber runs right past their facility,” says a frustrated Jordan.

“They have no option. When they go to CenturyLink or Comcast and say ‘what can do you for us?’ — they usually get the answer from Comcast ‘nothing.’ CenturyLink will say ‘yeah, no problem, we can build that out for you but it’ll cost you $35,000.’”

Jordan has been beating the drum for the ballot measure with a small contingent of local business leaders. Meanwhile, a well-funded opposition campaign led by the cable industry has largely ignored the business advantages and pounded residents with scare tactics.

If Question 2-A fails to pass (see sidebar for the backstory), the city once again ties an arm behind its back trying to compete with tonier exurbs like Fort Collins and Louisville in luring startups and expanding companies. Longmont has its charms but for a cash-conscious entrepreneur that fiber is solid gold.