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Home » Josh Shapiro: “Los Angeles Community Broadband Project” @ Talks at Google (Transcript)

Josh Shapiro: “Los Angeles Community Broadband Project” @ Talks at Google (Transcript)

TRANSCRIPT: 

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.

We’re looking at Culver City. It’s not just low income, but this problem, it really affects everyone. There are entire neighborhoods that they will offer cable service or higher service up to a street. And then you’ll have a neighborhood of maybe 30,000 people that are stuck on DSL. So one of our missions is to grow the accessibility and service area by providing high-speed broadband to areas that are still on DSL and then also make it more affordable.

Moving along, so our mission in a nutshell is to offer better quality service. So that’s more consistent speeds, especially during peak times, mainly through lower over-subscription rates. We’re looking at something like a 10 to 1, as opposed to 101– fair pricing, more affordable. We can’t last in, say, a price war against a major ISP. But our goal is to charge a fair market rate– which right now, looks like something about $10 less than what you typically get out there– and to improve accessibility to broadband, so to serve those communities that are currently under-served and provide higher speeds to the areas that don’t currently have it.

Net neutral, no filters, no throttling, none of that– and then we want cellular browsing data. That’s something that, while being more accessible and more affordable, those are separate components. We think the net neutrality and knots touching your data sort of goes hand-in-hand with our moral commitments to the community. So taking a look at the hardware, the tech out there is probably the coolest part of this that allows us to make this possible. We’re working with a new kind of prosumer technology– it’s only been out in the market for a few years– that’s developed into a new style of architecture.

It’s got a couple names. But the big one is MicroPop architecture. That’s where we’re– instead of providing wide-area coverage to a large area using a sector tower, we’re back hauling or we’re using a point-to-point link from a tower down to a hub, I guess this access point station, usually on someone’s roof, or a telephone pole, something along those lines. And that provides area coverage to the house around it. So real quickly, this is a MicroPop– Rob will be talking about these in a minute– MicroPop and a client-side antenna.

This is what the client side would typically look like, something like a small bowl style antenna. There are various shapes and sizes, but –

AUDIENCE: The one on the right.

JOSH SHAPIRO: The one on the right– yes, sorry. One of our goals is to also build a system that’s non-intrusive, since that’s one of the concerns for municipalities is they’re thinking back to the dish days of having giant satellite dishes on people’s roofs. And there are some walls around that.

So making it small and non-intrusive is another aspect of that. Walking through a network, so our current goal and focus right now is on Culver City. For a test pilot, it’s got a topographical advantage with a giant hill next to a dense– I would say, like a suburban area– with a tall tower. We’re talking with the city about utilizing that tower for our test pilot and beyond. So walking through sort of the MicroPop model here, we have our tower backhauling down to an access point on the ground, which, itself, can have several clients.

That access points deliver service around it and can also bridge to nearby access points. So part of the goal of this system is to limit the number of tower locations you need to build in redundancy and sort of lower cost. The more tower space you need, the higher the lease price is. So most of our network design is designed around affordability and reliability– so making it as affordable and accessible as possible without sacrificing much in the reliability area. That translates to something more like this, as far as an actual network design.

It might be hard to see on here, but just to walk through it. So this is a view of Culver City. On the south of this image is the Culver City downtown area where Washington and Culver kind of collide. And on the right side is around Sony Studios. So we have this overlook tower, which we’ve learned will be supplied with fiber itself.

So we don’t have to do any kind of relaying. From here, we can backhaul down to access points in the neighborhoods, which each have about– those MicroPops are about 1,000-foot radius or so. They’re line of sight. So we’ve sort of gone through and roughly mapped out that each one could hit around 50 structures or so wherever they’re located. So they’ll be a little overlap, in order to hit all of those homes.

And then in green are links from one access point that has backhaul from the tower to another access point. So you can start to build out your network access point to access point. It has this granularity to it that you might not had if you were installing wireline. And the return investment on these things, if you have enough clients on them, could be something like six to nine months. So they pay themselves off really quickly.

And you can just kind of toss them wherever you need to expand your area. Let’s see, the benefits to society– there’s the tech side of things, and there’s also the community aspect. The biggest one is creating competition. Right now, any kind of competition would start to alleviate some of the issues we see in the price, the service quality. And now, even though it could be difficult on our side coming into a market and even if we can compete at a cost perspective for some time, it does force the competition down to either compete or to play with PR hit.

So we’re hoping we can help other people out on that. Educating the consumer is a big deal. Things like cord cutting can help people save hundreds per month, instead of just $10. We’ve been reaching out to our community through nextdoor.com and a few others. And we have a ton of neighbors in the Culver City area that are paying over $100 for bundled packages that they don’t really use, or seniors that don’t understand Netflix and streaming, and YouTube TV, and those kind of things. Educating them on those– that they exist– and helping them migrate over could help them save a ton per month. There’s a open-source development aspect of this. A lot of software on our back end uses open source. So would we would be helping those open source communities by developing modules and the aspects that we need.

Ultimately, our goal is to package this in an open wiki so other communities and other citizens can build this for themselves in their own community or maybe even build something else somewhere else in Los Angeles. Since LA is a beast to tackle, we definitely need the help. And we think the best way to do that is to put it all out there, make it very turnkey, and then support other people in building themselves. We’re looking into low-income and student support programs, where there’s some things that are experimental that are in the works. We still have to do some stuff on it, but looking at ideas like bandwidth sharing, or bandwidth donations built into the service, optional donating an extra small amount per month to buy plans for low income, and then working with the cities to, I guess, officialize low income, and find out who those people are, and qualify, and all that.

And then lastly, something that’s sort of new but we’re working on it is a neighborhood health program and building in sort of a social element to all of this. Nextdoor.com does it in an interesting way. And that’s a model we might want to explore. But they create neighborhood leads for every pocket of each neighborhood, I guess. It’s usually a few streets, or a block, or some kind of section like that. But they have people sort of assign themselves a leader for their neighborhood. And then that person can help nearby neighbors. And that might be an interesting model for servicing. There’s some things we’ve got to work out there, like how much they can do, insurance, and that kind of stuff.

But initially, our idea is, someone like that, we could lightly train. They could come in. We could lightly train them to do, say, educating the consumer aspects where they’re hooking people up with Netflix and helping them walk through it. And then, on our behalf, they could help people that we assign in trade for, say, like, a credit toward the internet. So involving more of the community to, at least, do the light stuff that helps us in the long run support our network could really help things move.

So we’ve got a test pilot that’s– I’ll talk about timelines in a second. But we’re working on designing a test pilot right now for Culver City, something on the order of 30 to 50 clients to start with. It might grow from there. And right now, we’re looking into building in criterias for success. So what would be a successful pilot? Well, it needs to be reliable, sustainable, scalable– so testing multiple access point scaling and that kind of stuff.

The proof of design, looking at how this new sort of wireless prosumer-grade technologies operate– we’re sort of exploring how much we have to spend for what quality of equipment. And the sky’s the limit. But the real affordability comes down in the entry-level equipment, where you get a lot of bang for your buck. But somewhere like Los Angeles, from an RF perspective, is very challenging, so looking into, what modules work best? What equipment works best? And then ultimately, customer feedback– we would need to hear from our customers in the test pilot to sort of tweak that model. We want to play with things like over-subscription, other ideas.

Like say you’re paying for a 25 megabit plan, but it’s not peak hours. It might be possible to just open that throttle up for those users. And maybe there’s no reason to force them down into 25 megabit all the time if there’s extra headroom on the network. Looking at more of a business side of things, we’re planning out just different phases of expansion starting with a local level, with the goal being about 500 customers in Culver City. There are some basic outlines for revenue and expenses.

But the real challenge is just getting started. Like any startup, there are expenses that we have to cover, especially employee costs, for all aspects of the business, and outreach, marketing sales, tech. And by our phase 2, we can push through that, and we have our sort of minimal needs met for employees. And then as you scale up, the biggest cost of this would be employee costs for service, and maintenance, installation, and the equipment itself, which is about something like a quarter of the employee costs. So again, our big focus is reducing those employee costs by bringing in experienced community members to help support us.

And then our progress so far– so we’ve assembled a team of professionals right here. We’ve designed an RF and technology model that we’re continuing to address as new tech comes out on the market. It’s almost month-the-month right now. Some of the tech we’re waiting for could be huge. And it’s landing any day.

But there’s some on the horizon. So it’s extremely fast-paced, these wireless solutions, the way they’re growing. We’re meeting with LA-area municipalities. So right now, we’re in talks with Culver City to deploy their first. We’ve reached out to West Hollywood and met with their technology team. They’re interested, even though they’re a very small municipality. They’re looking at deploying mini fiber in the next six months. So it could be ripe.

And then we’ve talked to LA itself and reached out to city officials– right now, District 10, I believe District 3. And we’re starting to explore what this might look like in Los Angeles. Now LA is a much bigger beast to tackle politically than in Culver City or West Hollywood, so we’d probably be getting our foot in the door in smaller municipalities and then expanding into LA when we can. There are permits and other hurdles to cross that might take more time for LA than for the smaller municipalities. So it’s just one step at a time.

And then lastly, we’re looking for investors. So there are a couple of different ways you could do this. Other community ISPs, they’ve started small and seeded using investment from even neighbors– so collecting a couple thousand here, a couple of thousand there on a low-interest loan or a zero-interest loan, and then growing organically, and paying it off. We’re actually in contact with a small community WISP, Wireless ISP, out in Golden, Colorado called Au Wireless. And they started with, I believe, it was around $8,000. So it can start very small and grow from there. We’re looking at a little more than that, because we’re tackling a bigger beast.

But at least from an investor standpoint, it’s very approachable for communities. It could be just a series of houses. It could be an HOA could get together and do something like this. Really, the biggest challenge there is how you’re getting your service for your ISP. And in our case, the answer is through Culver City’s Culver Connect Community Wi-Fi that’s being finished in the next couple months here. They’re able to transport us down to 1 Wilshire to access very affordable level 2. To our timeline, we’ve got a tech demo coming up in the next month that we hope to show to some people, especially the municipalities that are interested, to sort of fast track some of the permitting and that kind of stuff. For the tech demo, we hope to set up a handful of these in a park. And they will emulate the access point on the client side. And we want to start to look at speeds.

How many clients can we get on these? What kind of air interference we may be looking at? Can it punch through foliage well if it’s in an access point? So that’s coming up. We’ve got our test pilot for our first deployments sometime in September. That might depend on Culver City and what their timeline is for their fiber. But currently, that looks like it’s on track.

And then moving forward beyond that would be early next year hitting our first phase 1, sort of the first official deployment where we’re expanding into the neighborhood, and we have a more long-term models for scalability, and then scaling beyond that. Hopefully, sometime next year, we’d be able to get permitting from LA. The Bureau of Engineering deals with all that and zoning. So that’s one hurdle. But those are the big ones.

And then it’d be expanding from there. Let’s see. And that’s it. So we’ll wrap that. I’m going to bring up all my guys. And we’re going to start kind of a Q&A to kind of get some back and forth going on. So hop on up. Who’s got a question? You got a– yeah!

QUESTION AND ANSWER SESSION

AUDIENCE: So I have a question, which is, shut up and take my money. Well, I guess it’s not technically a question. So let me ask you two other things quickly. One is, in all seriousness, how quickly do you think you can get to Pasadena?

JOSH SHAPIRO: Oh, man. Actually, I’ve got an interesting answer in the Pasadena, specifically. So Pasadena, there’s a big cogent data center out in Pasadena. And there’s some great hill access antennas. Pasadena was actually one of our first areas that we were looking at because of that data center being really easy access to level 2. So I would say that it would be more of a, how difficult would Pasadena be for our west-side-based team to service? But if we could get past that hurdle, maybe the answer would be, if we started to build our own network in Culver, but someone was interested in starting something like that in Pasadena, we could sort of seed them with all of our turnkey and be very hands-on with them to get that started, especially since we’ve done some preliminary research over there.

AUDIENCE: Cool. Thank you. My other question– I had a little more of a technical question. I noticed that your backhaul, I guess it is, is by millimeter wave. So I know this is not a huge problem in LA. But do you have measures of, like, how badly that degrades in rain?

JOSH SHAPIRO: So talking about the millimeter wave and the wavelengths, so we’re looking at, for backhaul, just to start with– because it’s super affordable– we’d be either doing 24 gigahertz or 5 gigahertz unlicensed. Unlicensed isn’t great for backhaul. But 24 is pretty affordable. It’s like $3,000 a link, something around there. And the rain degradation is negligible. Even for the 60 gig, it’s not bad if you’re not going far. And it rains so rarely in Los Angeles. And most of the radios have a 5 gigahertz fail back. So if it starts raining, they can switch over, no big deal.

AUDIENCE: What does all these links do to the ping? You talked a lot about the speed. What about the pings?

JOSH SHAPIRO: Oh, great question. Do any of you want to talk about– all right, I’ll take this one real quick I do have the figures in my head. So you’re asking what rain does to the latency?

AUDIENCE: Yeah, or how is latency?

JOSH SHAPIRO: Or how does the latency look like? Oh, great. Well, in a nutshell, radio moves faster through the air than light through optics. So we’re looking at something like– depends on how many hops or how many access points. But you could be looking at sub-1 millisecond numbers, upwards to somewhere around 8. Right now, most of the stuff we’re looking at is 1 to 2. So it’s been very good. I think most of our coax speed tests are like in the 20s. So I think we can beat that.

AUDIENCE: I guess this is a pretty obvious question. But given how most areas in LA are or in Americas are monopolies and duopolies. Why hasn’t this been done before?

JOSH SHAPIRO: Great question– looking at you guys, hoping that will– all right.

MARLEY JAFFE: I mean, just to start off, this concept of a wireless ISP has been done before. So we’re not revolutionary in that world. I think where we’re revolutionary is that we’re trying to do it here in LA. So that’s just sort of the baseline is that other communities and other areas, both rural and not-so-rural– maybe not necessarily as densely-based as we are here in LA– but do have solutions like this. We are trying to stand out in being net neutral, and community-focused, and driven, and things like that. But the technology behind this concept is nothing new. Although, there are new developments that are helping us succeed faster, and better, more efficiently in LA.

JOSH SHAPIRO: To add to that, I would say that– on, at least, the tech front– handling Los Angeles kind of density was previously an issue. So I think that technology to address high-density areas, metro, urban has more recently become more affordable.

CRAIG DUFFY: And related to that is also the help to lower-income community members that we’re going to be trying to do. That’s another factor that hasn’t really been done by others. So that’s one of the other things that’s trying to set us above everybody else.

AUDIENCE: Why did you decide to go to nonprofit? Wouldn’t it be easier to raise money if you were for-profit?

JOSH SHAPIRO: We’re actually not a nonprofit. I’ll have Gabriel touch on that. We’ll let him explain that.

GABRIEL OLSON: So the plan is actually to look at incorporating as a benefit corporation so that we can have, basically, a dual bottom line, both be profitable, but also have a social mission to provide social benefit, and legally ensconce that in the kind of bylaws of our company so that we are able to take advantage of investment, and sort of scale up in the future, and add lots of infrastructure, and expensive investments all of that sort, but also maintain a responsibility to the community.

ROMAN TATARNIKOV: Also, just to add to it, actually it’s legally required for benefit corporations to show that they’re doing their social mission and so on. So even if we’re going to be a corporation, we still have this social effect. And we’re actually legally responsible for it.

JOSH SHAPIRO: OK, great. Anyone else?

AUDIENCE: How geography-bound are you, meaning most of LA is surrounded by hills to some distance. But how far away from the hill can you be before you start having to build really tall towers?

JOSH SHAPIRO: I missed the very beginning of the question.

AUDIENCE: Basically, how far from a hill do you have to be before you have to start building really tall towers?

JOSH SHAPIRO: Great question. So the technologies we’re using can go across Los Angeles Valley. There’s no range limitation there. The real issue is line of sight. So being high off the ground, and being able to point down on people’s roofs, instead of hitting across a ton of foliage, or structures, that kind of stuff, it will really be a case-to-case basis. Some areas are easier than others. We don’t necessarily need to utilize a bunch of towers. There are people on the edge of hillsides, like for example, West Hollywood.

There might be a house that will be able to host an access point. And we can just point it right down from there and use it as a relay, as well. We would want to look into towers in cases– or at least, buildings using antenna locations in cases where we can’t serve that area without them. But it should be rare.

CRAIG DUFFY: Related to that is there are some areas where you’ve got a valley that has 10, 20, 30 houses in it that don’t really have anything faster than DSL. And so we have the advantage of, we don’t have to lay wire down for those people. All we do is get up. We send a transmit to one of the houses on top of that hill or on the edge of a valley. And then if that can hit everybody else, then we’ve got that whole neighborhood covered.

MATTHEW VITALE: Me and the tech team, we touched on this a little bit more. We did a torture test from Culver to West Hollywood, I believe, where it was about 58—

JOSH SHAPIRO: 57 miles. This was on entry-level equipment. But it was doable. I think that, touching back on Craig’s response, one of the big advantages of this platform, as opposed to a traditional sector tower layout, is that we can use private rooftops. So in somewhere like Los Angeles, you’re not building any more towers anywhere. Actually that was, I think, a quote from one of the council member staff. So we have to find another way. And one of the ways to do that is to use people’s rooftops.

So I guess with fewer doors opening, enough to provide the zoning, and that kind of stuff that would allow us to attach some of the smaller equipment on people’s homes, we can use them as our towers. And instead of having to cast down upon a huge area, we can kind of do a zigzag approach, where we’re literally expanding pockets at a time, 40 houses at a time, 50 houses at the time, zigzagging our way line of sight through these neighborhoods. Now down the road, you might a tree grow in the way of some line or someone might build a structure in front of that. It’s OK. You can just reroute.

The WISPs we’ve been talking to that deal with suburban environments, they’ve become accustomed to needing to kind of organically grow around things. And when obstacles pop up, you sort of just make your way around them in other ways. It sort of works out.

ROMAN TATARNIKOV: And to add to it, about the actual tower set, and the antenna service, and the customers, that’s pretty much their last mile. But if we’re talking about connecting different neighborhoods far away from each other, it can very easily be done.

Because I have personally have been on top of 1 Wilshire. And I saw how there was a wireless backhauling for 1 Wilshire to 100 Wilshire, which is in Santa Monica. So we’re talking from downtown LA to Santa Monica. So for those direct links, it’s something very possible.

JOSH SHAPIRO: Great. One more question?

AUDIENCE: I have one more question. I hope that’s all right. What are your plans for large apartment buildings? And when I say apartment buildings, I’m more thinking about lower-income areas, so not the nice areas here along the beach where they actually updated their call boxes so they work with cell phones. I’m talking about the ones that would never do that, and maybe you are going to let you put little antennas, or it’s not feasible to put the little antennas outside every unit.

JOSH SHAPIRO: Right. So we’re actually building a technology model that works around all of the sort of data equipment or hellish boxes we might come across in some of these older complex. And you’d be surprised, it doesn’t need to be a low-income structure for it not to be touched for 50 years or whatever. So one of our tech models– actually, maybe Marley can speak to this theory. We’re looking at battery backup systems and using exterior ethernets and that kind of stuff to equip. Do you want to talk a little bit about kind of our UPS?

MARLEY JAFFE: Yeah, I can. But we also want to touch on why we can put these antennas on people’s roofs.

JOSH SHAPIRO: Oh, yeah, go for it.

MARLEY JAFFE: Well, I’ll let you touch on that part. So our sort of model for medium-sized apartment buildings– bigger than one to two, duplex, fourplex units, but smaller than 50 apartment buildings– is, essentially, reverse power over ethernet. So each apartment that has the service has a router, just like everyone has in their apartment.

But that’s actually providing power back up to the equipment that’s on someone’s roof or on the apartment complex’s roof. And as long as one person is providing that power, the entire system stays up. So if multiple apartments lose power for whatever reason, as long as one person still has it, then all of the equipment on the roof stays powered. And then everyone inside the apartment should keep internet, as well. For buildings that are going to be the access point– so serving other buildings in the area– those will also have battery backups.

And all of this equipment will be able to be monitored by us to ensure that, when a power outage goes out, we’re aware. If it starts getting close to the time that the battery will be depleted, we’ll have backup solutions in place, or we’ll be repairing backup solutions so that large areas of the community don’t lose internet, and just maybe that one building or something like that.

JOSH SHAPIRO: And touching on the what if landlords don’t allow it, as long as long as we’re permitted at the city level, it’s allowed. There’s actually a specific language written by the FCC that doesn’t allow landlords to prevent you from attaching an antenna to your roof for internet access. So the real challenge would just be getting past the city. If that’s clear, then we won’t have to deal with the landlords.

CRAIG DUFFY: One thing related to that is the access points use very low amounts of electricity. It’s like a light bulb or two.

JOSH SHAPIRO: Yeah, it’s something along the order of 50 watts– could be give or take 20 watts. But you’re looking at $50 a year, $60 a year. So the goal with the access point model, the MicroPop model, from that standpoint, is we’re mainly targeting private households, because the exchange is a little simpler. But the traditional model is that you offer free service to anyone that’s hosting it– so free top-tier service. So instead of them paying $80 a month, or $60 a month, or whatever it is, they’re getting free service. And it’s really just at the cost of powering the access point itself.

ROMAN TATARNIKOV: And just to make sure, we will mention that if the building loses power. Even if the building loses power, we still have the batteries So don’t freak out.

AUDIENCE: So forgive my ignorance on this point. But why can’t you– or can you? But is there some legal restriction or something that keeps you from putting your equipment on existing cell towers?

JOSH SHAPIRO: There’s nothing that prevents us from putting our equipment on existing cell towers, it’s just the cost of doing so.

AUDIENCE: Really?

JOSH SHAPIRO: It’s usually cost-prohibitive, especially for something like us. That would be a major expense across the network. And we’d have to raise prices to compensate for that.

AUDIENCE: If somebody owns the cell towers and charges you money if you want to put your equipment on the cell towers.

JOSH SHAPIRO: Right. And it’s usually—

AUDIENCE: That’s how that works?

JOSH SHAPIRO: Exactly, yeah. They charge you money for– usually, it’s, like, square footage or a certain amount of space. There’s no standards out there. They could literally look in your eye, and think you’re full of money, and double the price in front of you. That’s sort of what we’ve been told by people that are working in the WISP market here in Los Angeles.

AUDIENCE: OK, cool. That make sense. You also mentioned something about there’s a restriction that says, landlords can’t stop you from installing an antenna on your roof for internet access. I live in an historic neighborhood in Pasadena. Do you know if the rules are the same for those, as well?

JOSH SHAPIRO: That’s a great question. I do not know.

AUDIENCE: OK I was just curious.

GABRIEL OLSON: Are there people with DIRECTV on their roof in your neighborhood?

AUDIENCE: Yes, there are, the people, like, next to us. But I think they’re just out of the historic neighborhoods. So I’m not entirely sure. But I think that they do. And so I think that I would be OK. But I don’t actually know this. I just thought maybe you would.

JOSH SHAPIRO: Yeah, we’ll look into that. That’s actually the first question of that kind.

AUDIENCE: Have you guys seen any push back from ISPs? Or is there any intimidation? And at the same rate, is there anything that the ISPs are doing, in terms of innovation, that you see as a threat to your business?

JOSH SHAPIRO: That’s a great question. Well, I’ll touch on the first point. We haven’t seen anything yet, but we’re very small. That might change as we grow and start to pluck off a sliver of market share somewhere on some chart. But currently, nothing in that area.

MARLEY JAFFE: I’ve seen my internet get slower, personally.

MATTHEW VITALE: Yeah, same here. I’ve been getting throttled a lot lately.

JOSH SHAPIRO: Yup.

ROMAN TATARNIKOV: Yeah, let’s wait till this video gets uploaded. And then we’re done.

JOSH SHAPIRO: Yeah, then we’re done for. Touching on the– oh, I’m sorry I already forgot.

AUDIENCE: Innovation from ISPs.

JOSH SHAPIRO: Right, innovation. Right now, I guess the scope of technologies look like they’re moving more and more toward wireless. So there may be a point– say, it’s 10 years from now– where most people, I guess, last mile is all wireless. Now I think there’s already something like– what is it? Like 50% of people access the internet on mobile already– or is that some figure like that– and growing. So the real tackle probably won’t be major ISPs, or at least the coax technologies aren’t really concerned. It’s probably more LTE tech that’s– we’ve got fifth gen deployments coming out now. And so competing with mobile might be an issue down the road.

But again, in that regard, you’re talking data caps. They might not be net neutral. Even if you aren’t capped, you’re hitting some kind of 1%, or threshold, or something like that if you’re a heavy user and being throttled down. So it might be some time, maybe years and years from now, where the technologies in mobile or roaming are cost-competitive with ours, which is a fixed wireless. But again, I think at the end of the day, our selling point will be that where we’re different from everyone else. Because we’re built by the community. And we’re for the community.

CRAIG DUFFY: I also welcome the competition. I mean, if someone else is going to try and beat our prices and do it better, I think that’s all going to help everybody, right?

JOSH SHAPIRO: Right.

CRAIG DUFFY: So that’s ultimately our goal is everybody gets faster and cheaper internet. Because it should be utility that we all get almost as a right. So thinking bigger picture there, it’s important to all of us for that.

MARLEY JAFFE: Yeah, it’s not necessarily the best business model. But that’s one of our goals is to sort of have some of the larger ISPs wake up and realize that they’ve been taking advantage, and oversubscribing to an unhealthy amount, and things like that. And if we can drive that change here in Los Angeles and in greater areas, that’s one of our mission accomplished.

AUDIENCE: Thank you for the talk. So yeah, so on that, I don’t know if you threw these numbers out there. But you said that current ISPs are oversubscribed by something like 100 to 1. And you are thinking of doing it more like 10 to 1. But still, more or less, it seems like the same prices. So I’ve never thought about this. Let me be very stupid. But help me think about this. Does that mean the ISP is overcharging us by 10x? Or do you have an inefficiency of 10x? Or how to think about this?

JOSH SHAPIRO: That’s a great question.

CRAIG DUFFY: On the nose.

JOSH SHAPIRO: There are some efficiencies, I think, in our set-up over coax. The biggest one is probably the speed of deployment, the super low capital expenditure required, those kind of things. So it costs us less for the equipment. And we can deliver for less. It’s not as robust, per se, as wireline or especially fiber.

Fiber, it’s a huge initial cost. And maybe you have a ROI of, like, 10 or 20 years in a neighborhood. But it’s always going to be there. And you can continue to upgrade it in other ways. The real issue with fiber and wireline tech is that, in somewhere like Los Angeles, I think the telecom commissioner was quoted as saying that they’d hang him if he dug up that many roads.

It creates traffic issues, that kind of stuff. And there’s a cost associated with that. So a little bit of tech advantage– and then, on the other side, we’re not seeing what their books look like. But a quick guess might just be that they’re making a lot of money.

AUDIENCE: I’m not that good at throwing.

AUDIENCE: Hi, thank you guys so much. Yeah, so this is also a bit of an ignorant question. But I know I’ve had friends that have gotten letters from their ISPs about torrenting, RIAA, MPAA stuff. And I was wondering, to what degree you all are responsible for the types of traffic that your customers use? Even like child pornography, are you responsible for any of that? Are there any legal concerns that you have? Do you have to build up a lawyer team to be able to respond to these kinds of things? Because I could imagine the MPAA and RIAA would be pretty formidable opponents if they sued you.

JOSH SHAPIRO: Right. I can answer to probably the degree of how other wireless ISPs across the country do it. But does anyone else have specific answers to any of that?

ROMAN TATARNIKOV: Yeah, other ISPs, they pretty much just ignore all those complaints. Mostly, they just forward them onto the user. Because realistically, it’s a job of ISPs to provide a pipe. And it’s the end user who’s responsible for its own traffic. Plus, ISPs, one of the things we mentioned is the way we’re different is we also respect user privacy. So we’re not selling data. But we’re also not trying [inaudible] any content. So if a certain user starts torrenting or something, then, yes, obviously, it can be traced by IP address. So we’re pretty much going to pass it to users. There’s nothing really changed in this regard.

JOSH SHAPIRO: Use a VPN is the end question for torrenting. Use a VPN and throw out those letters.

ROMAN TATARNIKOV: Actually, there was another thing we were thinking about is, since we’re a community, to educate more in privacy, that maybe we can partner with some VPN providers, and just partner up, and provide a VPN service with a discount. So pretty much, we forward users to them. And you get the discount.

JOSH SHAPIRO: And it goes without saying that we will be compliant with all FCC laws as required.

ROMAN TATARNIKOV: Yeah. And about the lawyers, we’re a business. So we’ll end up having some kind of lawyers. Plus, we will definitely have auditors, because we’re benefit corp.

JOSH SHAPIRO: Right. I would also want to touch on, as far as torrenting specifically, in doing this as a community level, there’s a little bit more of an aspect of using your fair share in the effort to make it more affordable for everyone. So I think part of that could be building in a tier system on our side for people that are heavy users. And we’re not talking data caps or anything like that. But people that use more, the 99 percentile of users, it does make it more expensive on the ISP side. So there might be some kind of fairness program or something like that.

Or could be as simple as saying, hey, we know you’re torrenting. Can you do it less during peak hours? Or we’ll have to quality of service adjust you or something like some.

ROMAN TATARNIKOV: Also, it’s important to remember that torrenting does not equal actual privacy violation or anything like that. Torrenting is just a method of sharing the media. So you can download Debian or CentOS free torrents.

JOSH SHAPIRO: Great Anyone else?

AUDIENCE: Speaking of competitors, it looks like there’s a lot of satellite internet companies that might be coming online in the next– you would know better than me– but some number of years.

JOSH SHAPIRO: Soon, yeah.

AUDIENCE: Yeah. How do you see them as either partners or competitors?

JOSH SHAPIRO: I think, right now, satellite’s currently more niche. It stands to be less and less so I think some big sat just launched– or will launch—

GABRIEL OLSON: Elon’s got one this week.

JOSH SHAPIRO: Oh, yeah, if we want — and their capabilities are increasing quite a bit. It will be soon where satellite will be able to compete, as least speed-wise, maybe not latency-wise with wireline. So I think that’s the technology that will be on the horizon that we’ll just have to look for. But again, at the very end of the day, competition is healthier for the consumer. And that’s the heart of our project is to benefit the end user. So I think we’ll just kind of roll with the punches on that one.

CRAIG DUFFY: Yeah, satellite is slower. But definitely, we want more competition out there to help move things along.

JOSH SHAPIRO: It won’t be slow for long, I guess is the point. Do you have another question?

AUDIENCE: No, I was just kind of fantasizing in my head, like imagining one level of your hierarchy being delivered by satellite, so then, perhaps, you could replace the fiber that’s feeding your central tower.

JOSH SHAPIRO: That’d be interesting. I would guess that the business model on the satellite couldn’t handle backhaul for level 2. It might be totally cost-prohibitive. But as far as competition, it will definitely be there.

MARLEY JAFFE: Yeah, we’re very fortunate to be in LA, geographically, as well as with Culver City’s municipal fiber that they’re putting in being relatively easy for us to get to 1 Wilshire, which is a very large internet hub for the world. And so, most likely, there won’t be a competing technology that will give us better, faster, more reliable, cheaper backhaul internet. But one day, who knows? If Elon Musk gets his vision or any of the other companies out there, then maybe.

JOSH SHAPIRO: Yeah. All righty, well, we’re running up on our 1:00 PM mark. So we will wrap it there. All right, thank you so much for joining us.

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