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New York has traditionally suffered from limited competition, patchy deployment and high prices. Can the new plan be a model for cities across the country to follow?

Photo: Corbis News via Getty Images
Power

Can New York City fix what ails American broadband?

New York has a massive new plan to fix broadband in the city. Will it be a new model for collaboration and competition in the broken U.S. broadband market or another failed attempt?

New York City is routinely lauded as a technology and innovation hub. Yet like so many American towns and cities, decent broadband often remains just out of reach. FCC data indicates that 1.5 million people — 18% of city residents — still have no internet connectivity, usually thanks to limited competition, patchy deployment and high prices.

To fix the problem, New York unveiled a massive new Internet Master Plan in January that experts say is the largest and most aggressive local broadband improvement project in U.S. history. If successful, the city's proposal could become a template for other towns and cities looking to improve broadband access and provide a leg up to regional economies.

"The private market has failed to deliver the internet in a way that works for all New Yorkers," New York City Deputy CTO Joshua Breitbart, who is leading the plan, told Protocol. "The problem of the digital divide in New York City is so large that no one project or partnership can solve it."

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The city's proposal will first identify areas most in need of better coverage, then simplify access to city infrastructure to help internet service providers deliver it. ISPs will cooperatively help deploy fiber via underground conduits along all major thoroughfares, using shared fiber, coaxial or wireless technology to serve apartments and businesses.

Some 800 city rooftops and more than 20,000 city utility poles will be made available for deployments for the first time. The full cost of the project — funded by a combination of public and private funds — is estimated in the plan to be $2.1 billion. In turn, the city claims better, more equitable broadband could help spur up to 165,000 new jobs, a $49 billion increase in New Yorkers' personal income, and $142 billion in incremental Gross City Product by 2045.

Stealth Communications CEO Shrihari Pandit has been selling business broadband in New York City for more than 35 years. He told Protocol that access to infrastructure like conduits, rights of way, building points of entry and ductwork was a major problem for most of that time, and called the city's proposal "a welcome, enlightened approach" to solving the logjam.

"Independent ISPs looking to compete in residential broadband face major hurdles in gaining access to buildings, and financing the large capital costs required to rewire them," Pandit said.

Pandit noted that Empire City Subway — the division of Verizon tasked with managing the city's labyrinthian underground conduits — is required to provide competitors access to this conduit as part of a 129-year-old city agreement, but only in Manhattan and limited parts of The Bronx.

"Brooklyn, Queens and Staten Island do not have the same conduit access, and consequently, fiber availability is much more limited," Pandit said.

Things are far worse on the residential broadband side, where Pandit said lax federal regulatory oversight and antitrust enforcement — not to mention controversial exclusive deals struck between landlords and incumbents like Verizon — have worked to tightly restrict infrastructure access and constrain broadband competition.

"We have a market failure for home broadband, little to no competition — and unsurprisingly, higher prices, poor service and extreme consumer frustration," Pandit said.

As a result, Verizon and Spectrum enjoy a duopoly over residential broadband across much of the city, leading to higher prices, patchy availability and poor customer service.

New York sued Verizon in 2017, claiming the company failed to live up to a 2008 agreement to deploy fiber uniformly across all five boroughs. In 2018, Verizon's biggest cable broadband competitor, Spectrum, was nearly kicked out of the state by New York regulators who say the company repeatedly failed to live up to broadband deployment promises and merger conditions.

"Given the incredible diversity of the people and neighborhoods of New York City, it's clear we need more than just one or two service providers to meet everyone's needs," Breitbart told Protocol when asked about the city's contentious relationship with its two dominant providers.

A new model for competition

New York's proposal to fix the problem is unique in part because it employs an "open access" model, which lets multiple ISPs come in and compete over the same network infrastructure. FCC studies have suggested that in countries like Sweden, such models result in more intense competition along with cheaper and faster broadband service.

"Open-access infrastructure can be shared by multiple operators to lower costs, increase competition, minimize physical disruption to the city, and incentivize private-sector investments to reach and serve customers," Breitbart said.

Such policies have never been embraced on a scale like this in the U.S. Some smaller cities, like Ammon, Idaho, (population 15,540) built an open-access broadband network that lets numerous ISPs come in and compete over city-owned infrastructure. As a result, residents and businesses in Ammon can switch among several ISPs in a matter of seconds, at prices far lower than the national average. The award-winning network is now the envy of far larger municipalities.

New York City's proposal is part of a broader nationwide trend. Towns and cities, frustrated by high prices and substandard customer service, have explored building their own broadband networks, either alone or as part of a partnership with the private sector. Estimates suggest that some 750 communities have explored some variation of home-grown broadband.

While cities like Chattanooga, Tennessee, have built their own popular city broadband networks on the back of the local power utility, New York's program is a more collaborative affair. The city plans to cooperate with industry in a way that's realistic for the city's gargantuan scale, building off of the limited progress already made by the city's existing providers.

Gigi Sohn, a former FCC official and telecom policy expert, told Protocol the city's broadband plan was the most comprehensive and well-considered proposal she's seen. Sohn said that while such open-access models have proven popular and successful in other countries, industry lobbying has prevented the idea from taking deeper root in the states.

Incumbent ISPs have also lobbied for the passage of laws in more than 19 states, restricting towns and cities from building their own networks, even in instances where nobody else will. Such restrictions can harm municipalities looking for creative solutions as they attempt to redevelop themselves into innovative technology hubs.

Many such community broadband efforts begin with noble intent, only to be derailed by industry lobbying and costly lawsuits. Still, Sohn said, the city's proposal, if successful, could be used as a template by other cities looking to improve their broadband fortunes.

"Even if not every single thing in this plan is transferable, at a minimum it gives cities and the federal government an inkling of what a master plan for other cities or the U.S. might look like," Sohn said.

A difficult road ahead

While Sohn was impressed with New York's plan, she warned that paper proposals are one thing, but successfully completing them under fierce, unrelenting opposition from incumbent telecom giants displeased by increased competition is something else entirely.

"It's not enough just to write a report like this," Sohn said. "You have to find strong friends in the legislature who will stick with it until the end, get the governor and state [attorney general] behind you and make sure you have representatives both from industry and groups that will benefit from this plan working behind you."

Dane Jasper, CEO of independent California ISP Sonic, called New York's plan largely "aspirational," noting the city needs to clarify precisely where it will get funding and how it will incentivize private ISPs to participate. He pointed to vague fiber deployment proposals from cities like Los Angeles that gained ample headlines yet never fully materialized.

When asked whether New York's open-access model could be adopted elsewhere, Jasper said it depended on both city infrastructure — not all cities have vast swaths of underground conduit available — and the quality of local leadership.

"Today we experience really mixed results, with some cities being good partners, some being totally indifferent and some seemingly set up to monetize the permitting and fee process in a way that simply impedes deployment," Jasper said.

Based on his own experiences battling telecom giants on the West Coast, Jasper suggested that dominant ISPs likely wouldn't take kindly to having their regional dominance threatened by competition.

"Incumbents will use every angle to stop disruption: the ballot box, the courts, and finally upgrades to their own network and price undercutting," he said.

When asked whether Verizon would join or fight the city's project, a spokesperson would only state that the company was still reviewing the plan. Spectrum did not respond to repeated requests for comment.

Breitbart acknowledged the city's announcement was just the first step in what the city hopes will be a long, cooperative process between private industry, government, and the public at large, culminating in better service and an end to the duopoly logjam that has plagued the city for decades.

"The Internet Master Plan is not a shiny, silver bullet," Breitbart said. "It is a practical, data-driven framework to focus new initiatives and measure impact at neighborhood scale. This is a plan everyone should get behind to connect all New Yorkers."

Correction: An earlier version of this story incorrectly stated Stealth Communications had worked in New York for 35 years, instead of 25 years. This story was updated Feb. 12, 2020.

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