Open Access Networks Poised to Turn up the Heat in the U.S. Broadband Market

The open access fiber network business model consists of a network operator who builds, manages and owns the fiber network and multiple ISPs who sell wholesale access to the network and resell it to residential and business customers. The ISPs are responsible for all the customer acquisition and support costs/activities, while the network operator is responsible for network operations. This type of shared network model is very popular in Europe largely because regulators have mandated it to level the competitive playing field. By mandating a shared network approach, regulators lowered the entry barriers, enabling a wider range of ISPs to enter the market. In the U.S., the open access network model has yet to catch on, but that appears to be changing. US regulators do not require the likes of Comcast, Verizon or AT&T to open up their broadband networks to third party ISPs. In addition to the lack of regulatory mandates, U.S. operators have had little reason to launch an open access business to overbuild an existing DSL (digital subscriber line over telephone lines) market with a new DSL network. Now that fiber technology has arrived in scale, it is now starting to make sense for companies to leverage the technology and build open access networks where the incumbent network is DSL, and to a lesser extent, hybrid fiber-coaxial cable.