JOSH SHAPIRO: So we are the Los Angeles Community Broadband Project. I’m Josh Shapiro, the founder and acting executive director. We’re building a community-driven wireless ISP in Los Angeles. That’s an Internet Service Provider that is built by the community for the community. And we’ve started by assembling a team of community members, professionals in each of their areas. And our goal is to create an ISP that has and maintains a symbiotic relationship between the customer or a member and the business, which is very different than the model we’re all currently familiar with. So moving along, we believe that the root of the problem right here in Los Angeles and elsewhere is a lack of competition.
The incumbent ISPs, they operate off of anti-competitive model, where their goal is to segregate a portion of the market and sort of territorialize it to maintain control. That has obvious problems for the consumer, being that– all of the symptoms of an anti-competitive market. It’s expensive. The customer service is poor. The service quality itself is lower.
And now we’re running into problems where we’re starting to see what we believe are the beginnings of the monetization of the internet like cable television. The big step in that direction is, of course, the FCC decision to repeal Title II and net neutrality. That is just a precursor on a potential multi-step path to building internet services into a tiered system, where there’s a fast-track lane and a slow-track lane. And if you’re not paying or if the services aren’t paying, then your access to that content at the consumer level could be limited, possibly restricted. At the very least, it’s an inconvenience.
At the most, you could be talking about the difficulties to access specific information, which has its implications. So most of you, though, at a consumer level right now, are sort of feeling the strain and the inconvenience level. And just sort of break down one of the symptoms of a territorialized market, I guess, is the service quality itself and the cost of it. So we just took one customer’s service plan on an incumbent ISP– it’s a 100 megabit plan– and started to just run some numbers off of that. It’s $65 a month for on a non-promo rate. I think it drops to about $50 on a promo.
But then, of course, there’s no incentive to keep people on promotional rates. You might have the opportunity to bounce from promo to promo. But in a lot of areas that are not duopolies, but are monopolies, you might just be told, no, you don’t have any other option. And they know you don’t have any other option.
We started to test average speeds over a period of time. And at least in this case, the 100 megabit plan, only half the time, was greater than 50 megabit per second. So you’re looking at an average of about 706 megabit per second download and 79 megabit per second upload.
So while you’re sometimes hitting the numbers, a good deal of the time, you’re not. And that mainly comes down to over-subscription ratio. There are other factors. But oversubscribing your customer base is one of the easiest ways to, I guess, pull in more revenue to sort of stretch your network further and further. So for example, say you have 1 megabit per second on your network to divvy out to your customers.
So a typical ISP, you might be looking at multiplying that something like 100 to 1. So you’re selling 100 megabit worth of service off of your 1 megabit. The idea there is that not all of your customers will be using that service or maxing out that service at one time. So you can kind of play around with over subscription. That’s a necessary component of the business model.
But when you start to oversubscribe more, and more, and more, then you start to get into this pattern where, if you were testing, it’s an unhealthy network, where, during peak times or when multiple users are overlapping and using their service, the total capacity is being divided down, and down, and down until you’re dipping into the 25s, the 10s, the 5s. You’re getting a small fraction of your service. Now it might only be for a short period of time. But some are like Los Angeles, where you could be sharing with hundreds or thousands of people off of nearby hubs. You could be talking about experiencing these dips every single day during peak hours, which is typically, like, 4:00 to 7:00, 4:00 to 8:00, people are coming home and using their internet.
And so if that’s your main internet browsing time or internet experience, on a whole, you will be paying for your, say, 100 plan, but then usually only getting a fraction of that. So another issue that we see is there’s a growing digital divide between low-income and high-income users. The problem there is that newer technologies are being invested in areas that are higher income, where, as far as a business standpoint, there’s an earlier return on investment, because there are more users in that area that we’ll use that new technology. So in a sense, maybe the lower-income users won’t utilize as much fiber, simply because they can’t afford it. But then the problem is, is that there’s no option there.
So actually looking at the breakdowns here– I know this font is a little small, so I’ll walk you through it. There was a report released last year by the Berkeley Housing Institute that showed that 34% of Los Angeles households, approximately 730,000 homes in Los Angeles on AT&T’s network, did not have access to high-speed broadband as defined by the FCC as 25 megabit per second or greater. So you’ve got 730,000 people just on AT&T’s network alone in Los Angeles that don’t have broadband. That’s incredible. Somewhere like Los Angeles with 12-something million people, you’ve got neighborhoods, and some of them are– we’re looking at District 10.