Exclusive Series: Big Money Moves Forward with Open Access

Editor’s note: This is the fourth and final article in a four-part series on open access networks in the lead-up to Digital Infrastructure Investment on Thursday, September 19: ‘All-in’ on Open Access.

WASHINGTON, September 18, 2024 – A new wave of private capital and joint ventures is beginning to transform the way open access networks are financed and developed.

What was once largely a public-sector initiative is now attracting billions in private investment from firms like the Canadian Northleaf Capital Partners and BlackRock, the world’s largest asset manager, betting heavily on shared network models. Open access networks allow multiple Internet Service Providers to utilize the same broadband infrastructure, which can foster competition and reduce costs.

SiFi Networks, Tillman FiberCo, and Gigapower – a joint venture of AT&T and BlackRock – are among the key players leading this shift. For example, SiFi secured $2 billion for its FiberCity initiative, while Tillman raised $500 million to expand its fiber deployments. 

Still, even as private investment floods into open access, some ISPs, like Ziply Fiber and Boldyn Networks, are embracing hybrid models, blending public-private partnerships to accelerate deployment in underserved areas.

SiFi Networks: A $2 Billion Private Investment Bet

With $2 billion in private funding, SiFi has been expanding its FiberCity initiative and has committed to building networks in 30 U.S. cities, with plans to pass more than 40,000 homes per month.

Broadband Breakfast Series on Open Access Networks:

Part 1: Overseas Strength in Open Access
Part 2: Municipal Broadband and Open Access
Part 3: AT&T, T-Mobile Bet Big on Open Access
Part 4: Big Money Moves Forward with Open Access

SiFi has already launched projects in cities like Oceanside and Placentia, California, with other ongoing expansions in Illinois, New York, Connecticut, and Michigan. These open-access networks, offering speeds up to 10 gibabits per second (Gbps), are attracting partnerships with ISPs like T-Mobile Fiber and GigabitNow.

SiFi’s strategy, reliant on private investment and partnerships, is especially appealing in urban areas, where the dense population makes fiber investment more attractive. This private funding model has allowed SiFi to deploy fiber networks across the U.S., making it an increasingly substantial presence in the open-access market.

Ziply Fiber: A hybrid model of private and public financing

Ziply Fiber’s foray into open access networks has relied on a hybrid financing model that combines significant private investment with public partnerships. In 2022, Ziply raised $450 million in private funding to accelerate its fiber buildout across the Pacific Northwest. 

For example, Ziply has expanded its reach through partnerships with Public Utility Districts in Washington State. Its acquisition of iFiber Communications, an open-access ISP, allowed it to reach around 100,000 passings in areas served by PUDs. In rural Skagit County, Ziply partnered with the Port of Skagit to build an open access network, leasing the infrastructure to other ISPs.

Ziply was initially created in 2020 by WaveDivision Capital, an investment firm, acquiring Frontier Communication’s assets in the Pacific Northwest for $1.4 billion.

Since then – particularly as it has moved more into open access – the company has attempted to strategically blend its capital, supplemented by finding through public-private partnerships. Its collaboration with public entities​ has enabled the company to expand quickly while tapping into existing public infrastructure to reduce costs.

Google Fiber: A history of experiments, including open access

Since its launch as an experiment in 2010, Google Fiber has generally opted to build its own vertically integrated fiber networks, controlling both the infrastructure and service delivery. But the company, also known as GFiber, has also explored open access models in select markets, occasionally leveraging private capital from its parent company, Alphabet, to finance these ventures.

One of GFiber’s notable experiments with open access occurred in West Des Moines, Iowa, where Google partnered with the city to create an open access fiber network. 

Under this model, the city installed conduit in the public right of way, and broadband providers, including GFiber, paid a license fee to lay fiber in the city’s infrastructure. GFiber was the first tenant in this network, contributing to the construction costs through monthly lease payments.

Similarly, GFiber has embraced an open access model in Huntsville, Alabama, where it partnered with the local public utility. In the city, Huntsville Utilities owns the fiber infrastructure, which Google Fiber leases, allowing other ISPs to compete using the same network. This strategy helps defray the high costs of fiber deployment, while also supporting competition in the broadband market​

Recently, GFiber expanded its open access approach by collaborating with two Vermont Communications Union Districts to build a public network. In this model, the CUDs will own the network, and GFiber will lease capacity to become the first ISP, with other providers able to join the network and offer competing services.

Tillman FiberCo: Leveraging private equity for $500 million

Tillman FiberCo has recently emerged as an important player in the open access fiber market. Founded in 2021, the company has secured $500 million in private equity funding through a partnership with Northleaf Capital Partners, which is fueling its ambitious fiber-to-the-premise network expansion across several states, including Arizona, Florida, Texas, and Colorado.

Tillman FiberCo is partnering with T-Mobile as the anchor tenant on several open access fiber builds in Florida, targeting densely populated suburban and urban edge areas. This partnership is critical to Tillman’s financing strategy, as T-Mobile’s role as the primary user of the network provides the long-term revenue stability that attracted investors like Northleaf Capital.

The fiber network expansion is expected to serve key areas of Florida, including the cities of St. Petersburg, Fort Myers, Naples, Pensacola, Miami, Palm Beach, Ft. Lauderdale and Kissimmee.

This partnership showcases how private equity is driving large-scale open-access deployments.

Ubiquity, Boldyn Networks, PRIME FIBER: Smaller open access players

Not all open-access players are operating at the same scale as SiFi or Tillman. Smaller companies like Ubiquity, Boldyn Networks, and PRIME FIBER are also making significant contributions to the market.

Ubiquity, founded in 2019, has expanded its fiber footprint across states like California, Arizona, Texas, and Nebraska, offering both dark and lit fiber options for ISPs. Ubiquity prides itself on its private funding model, supported by investors like Generate Capital, and has secured “green” loans to support environmentally focused fiber builds​

Boldyn Networks has also expanded its U.S. presence, particularly through public-private partnerships, with an emphasis on serving military bases and urban centers. 

A relatively new player backed by InLight Capital, PRIME FiBER focuses on providing wholesale fiber services to ISPs and enterprises across the U.S. 

Ubiquity, Boldyn Networks, and PRIME FIBER all have wholesale agreements with AT&T, allowing AT&T to operate as a fiber and wireless provider on the open access infrastructure.

AT&T and BlackRock joint venture: Blending corporate and investment capital

While AT&T typically prefers to own and control its infrastructure (see Part 3 in this series), AT&T and BlackRock recently teamed up to launch Gigapower, a joint venture aimed at building open access fiber networks to pass 1.5 million homes and businesses. 

With BlackRock’s significant financial backing, Gigapower plans to serve locations across Arizona, Florida, and Nevada. This partnership allows AT&T to expand its fiber footprint without bearing the full infrastructure cost, offering a scalable and cost-effective approach to open-access deployment.

Traditional municipal financing for UTOPIA Fiber

Despite the rise of private capital, municipalities continue to play a critical role in financing open access networks. For example, UTOPIA Fiber (see Part 2 in this series), a municipal consortium, has expanded its footprint to reach 22 cities by reinvesting revenue from subscriber fees. 

However, these financing models tend to face longer timeframes for deployment compared to private ventures, as they often rely on municipal bonds, including revenue bond, or on federal grants​.

Take-aways for open access networks

Open-access networks are being financed through a diverse array of models, with private investment playing an increasingly significant role. However, public-private partnerships remain vital, particularly in regions where large-scale private investment alone is not viable. 

As federal funding programs like BEAD focus on rural areas, urban and suburban markets are seeing more private investment and joint ventures. The future of open-access financing likely lies in a combination of these approaches.

Don’t miss the Digital Infrastructure Investment Summit on Thursday, September 19, 2024:

Open access networks are gaining greater traction nationwide. In additional to major players entering the market, existing open access entities are thriving, as more cities and regions are committing to open access. Under this model, multiple ISPs can offer services over the same broadband infrastructure. The promise is greater innovation and competition, and easy entrance into the market for some.

Broadband Breakfast Series on Open Access Networks:

Part 1: Overseas Strength in Open Access
Part 2: Municipal Broadband and Open Access
Part 3: AT&T, T-Mobile Bet Big on Open Access
Part 4: Big Money Moves Forward with Open Access