The Open Access Model: How it Brings Connectivity to Underserved Communities

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In a previous article we talked about how “open-access” fiber networks are one future-proof way to bring connectivity rural Canada.

Put simply, these networks divide ownership into several layers: the physical infrastructure, the maintenance and operation of the network, and the service delivery may all be owned or managed by different entities. In some cases, the infrastructure is owned by a government entity, such as a municipality.

How Does the OAN Model Work?

Until the late 20th century, television and telephone networks were separate — limited by the prevailing technology at the time. Towards the end of the century, however, innovations allowed providers to build a single, high-performance network to carry telephone, internet, and cable signals. 

The challenge, of course, is that in many countries those networks have been built by private, for-profit companies, and those companies invest capital where it makes financial sense for them. In many cases, that has left lower-income or rural areas underserved. These large telecoms may also act as service providers, which limits choices for consumers.

The OAN model has either two or three layers, which separate the owner of the network from the service provider. This has several advantages: for municipalities, for example, the costs to build a network are much lower than for private companies. Local governments are also more willing to invest capital in these areas, as their success isn’t measured by shareholder returns. Many local governments across North America are embracing the opportunity to build their own networks. 

Separated from the owner, private companies — such as Valo — can provide services to manage and maintain the network. This is the second layer of the OAN model. It frees the infrastructure owner from the responsibilities of management, allowing them to channel expertise elsewhere. 

The third “layer” of the model is made up of retail service providers — the companies who provide bundles directly to the consumer. Opening the network to more than one provider can reduce the cost to customers, further improving access. 

How is it future proof?

No one can predict the future, or what technological innovations we’ll develop in the coming years, but what we can do is build networks that are durable, reliable, and far outpace any capacity we can currently imagine. 

Fiber-optic cable, which is made of glass, outperforms traditional copper cable in the following ways:

  • Capacity and speed: Data moves across fiber-optic cable as pulses of light. The cables themselves are clusters of fine glass filament and are capable of sending terabytes of data at about 70% of the speed of light. This gives networks a lot more ‘breathing room’ as we begin to live more of our lives online, ensuring the data we need is delivered at optimal speeds.
  • Durability: fiber-optic cable is more resistant to corrosion, which greatly reduces the cost burden of maintenance or replacement. 
  • Reliability: fiber is less susceptible to interference than copper cable, including from third parties and nearby electrical devices, and it’s more reliable during harsh conditions. 

All these benefits – longevity, cost-effectiveness, and capacity — translate to benefits for every layer of the OAN. For those who build the infrastructure and handle maintenance, the up-front investment pays off in lower costs for upkeep down the road. For the service providers, solid infrastructure allows them to offer their customers reliable connections at top speeds — and the promise of the ability to keep up with future innovations.

OAN is Catching On

The pandemic brought into focus not only how essential internet access is, but how essential it is for that connectivity to have the speed and capacity to serve customers’ needs. Rural communities in Canada are underserved by slow networks and spotty coverage — farmers require just as much bandwidth as any urban business, and residents everywhere require reliable connections to fully participate in modern society. 

Many communities across North America are experimenting with open-access networks to bring the internet to rural or hard-to-reach communities. In Alberta, three municipalities have pooled their resources and created a non-profit entity, Rural CONNECT, to fund a network for their communities, with Valo providing maintenance services. Open-access networks have been popular in Europe for decades, and investor interest in the model in the United States is ramping up as the government allocates increased funding for infrastructure in underserved areas. 

OAN is emerging as a viable model for rural areas, especially in countries like Canada, where vast stretches of land remain unconnected. At Valo, we’re excited about the possibilities and ready to bring our years of experience in high-speed infrastructure to waiting rural communities — in Alberta and beyond.

Open-access Networks Are Vital To Canadian Innovation

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The Canadian Radio and Television Commission (CRTC) universal service objective for broadband access across Canada is for 90% of communities to have access to 50 megabits per second (Mbps) download and 10 Mbps upload speeds by the end of 2021 and 100% by 2030 or sooner. Yet a “digital divide” persists across the country. The government estimates that at the end of 2022, 91% of urban households had access to broadband that met the standard, while only 62% of rural households did. The number is even lower for indigenous communities; in 2021, less than 45% had access to what’s known as “50/10 speeds.”

Those numbers underscore the divide between urban and rural communities, but even within cities there’s a socioeconomic divide: not every urban community has service that meets the standard, and even the definition of “access” is problematic — a provider might claim its network meets those speeds, but the reality is likely much different. 

This is a big deal. As more and more of our lives move online, access to seamless, robust network becomes more and more vital. Enter open-access networks (OAN), a business model for bringing “future-proof” infrastructure and services to communities. These open-access fiber networks allow people to participate fully in the world, whether they’re using services like health care and education, running a business, connecting with others, or streaming their favorite show. 

What is an Open Access Network?

Open-access networks are networks built via a layered architecture model, where ownership of the physical infrastructure of the network and the delivery services are separate. Separating the delivery of services from the ownership of the network creates an open market, ideally providing a landscape that allows more competition. For example, service providers can join the network without having to build or maintain the network, vastly reducing their capital costs and making room for smaller providers. 

“Capital has always been a barrier to universal connectivity,” says Mike Stelck. Major providers don’t see rural community networks as generating the returns they require, so many areas are left with inadequate coverage — a situation that hampers business development, economic growth, and resident satisfaction.

“We live in a world where a farm needs more bandwidth than a city block,” says Mike Stelck. It’s become so vital, in fact, that many farmers have had to invest in server rooms to keep their businesses operational. Others struggle to cobble together connectivity by working via cell phone, amassing huge bills, or waiting until they can go into town to connect properly. 

The economic implications of underserving rural communities is significant. The vast swathes of seemingly unpopulated countryside generate 30% of our gross domestic product through agriculture, mining, forestry, and other industries. According to Statistics Canada, in 2020 small rural businesses earned $138.4 billion (representing almost 18% of revenue generated by small businesses country-wide), and medium-sized rural businesses generated $69.6 billion in revenue (14.6% of the revenue generated by all medium-sized businesses). As with urban endeavours, the internet is vital to their operations.

Making the Connection

Canada has experimented with version of OANs before, including Open Alberta, a project that linked the province’s education, health care, and government departments via high-speed internet across the province. That network was eventually taken over by a private entity, and eventually the rural tributaries of the system became victims of that allocation of capital that hampers so many others. 

Rural Connect, a new corporation created by the municipality of Delburne and Red Deer and Paintearth Counties, aims to bring high-speed internet to the region via the open-access model by 2024. The three entities have invested $xx million in the project, which will see Valo build the infrastructure and Tether act as the service provider. Rural Connect will address the lack of investment from private providers, and as an open network will provide opportunities for other service providers to join. In addition to building the network, Valo will provide maintenance and management services to Rural Connect, allowing them to maximize cost efficiency. 

The network has the potential to stimulate economic growth for the region, and drive innovation. Sweden, which established open-access networks in the 1990s to provide high-speed connectivity across the country (and started a program to put a computer in every home), has long been known as a hotbed of innovation. Companies like Skype, Spotify, and others — who have produced the tools we’ve all come to rely on so heavily — were all developed there. The Rural Connect project aims to deliver the same possibilities to rural residents, via one future-proof, high-speed connection.

How Open-access Networks Empower Communities

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In the 1990s, Sweden conducted an experiment that some say transformed its entire economy. The government launched a program that aimed to put a computer in every home, and then built a high-speed network that delivered connectivity to every part of the country. They did it using an open-access model, which separates ownership of the physical network from the delivery of services. 

Today, Sweden is considered a leader in tech. It has become home to innovations like Skype and Spotify, gaming developer Mojang AB (creator of Minecraft), fintech firm Klarna, and lithium-ion battery developer Northvolt. In fact, the country has more “tech unicorns” — tech startups valued at a billion dollars or more — per capita than any world region outside Silicon Valley. In Stockholm, there are more than 3,000 start-ups and scale-ups, and 101,000 tech employees.

Many of its business leaders credit the early and widespread access to advanced technology for the nation’s track record as innovators. And studies over the years in various countries have demonstrated that internet access and, now, broadband speed, help drive innovation in communities. 

Overcoming the Digital Divide

In Canada, it’s become more and more obvious that universal access to high-speed connectivity is necessary for communities to thrive. Where we stand now is far from universal, however, as only <stats from first blog>.

Open-access fiber networks are a viable way to bring last-mile high-speed connectivity to communities across the country — even the hard-to-reach ones. Their layered business model helps open up the market for a host of service providers and allows counties and municipalities to “own” their network, removing them from the whims of major telecom corporations, who maynot continue investment in a network if the returns aren’t attractive enough. 

For these communities, high-speed connectivity can open up a world of opportunities. Technology has become the backbone of almost every industry — It’s essential to the way we live, work, and play. A lack of connection hampers economic growth, limits the services people can access, and can even affect health and wellbeing, as families struggle to remain connected.Canada’s current patchwork of substandard rural networks has been called into the spotlight thanks to the Covid-19 pandemic, when businesses and essential services turned to online channels. The digital inequity across the country became more pronounced than ever, highlighting disparities between (and at times, within) urban, rural, and Indigenous communities. 

Connecting Communities

While our current approach to broadband connectivity doesn’t serve Canadians equally, there are increased calls for open-access network implementation. And several municipalities and local governments are taking matters into their own hands, choosing to build networks using an open-access model. Rural CONNECT, in Alberta, will bring Red Deer County, Paintearth County, and the municipality of Delburne together to build a network to serve their region with a future-proof fiber network. 

As the vendor responsible for building the network infrastructure and fulfilling the maintenance contract, Valo is part of this open-access project. Since our inception we’ve been advocating for universal access for rural communities, aiming to deliver well above the 50/10 goal the government of Canada has set out as a minimum. Like the xxx in charge of the Rural Connect project, we understand that internet access will help these communities build strong economies, attract new residents, and keep current residents connected to the rest of the world in increasingly vital ways.