Thu 22 May 2008
Per reader request, I'm opening up a thread to discuss the relationship between PacketFront and UTOPIA.
Some background: Last year, PacketFront purchased DynamicCity, the project management group for UTOPIA. DC also did consulting on projects in Arizona and Palo Alto, CA. PacketFront is a Swedish company that draws on a considerable amount of industry experience from that country's construction of an open-access fiber optic network. As part of the purchase, the Lindon office has been maintained in its current location.
My understanding of PacketFront's relationship to UTOPIA is that they assumed the contract for project management from DynamicCity and have continued in that role with Chris Hogan, VP of Marketing, being the most public figure. A search on LinkedIn shows at least 12 PacketFront employees in the Intermountain West, some of whom I recognize as former employees of DynamicCity.
Questions? Comments? Rude noises? I'd also invite any employees of PacketFront to chime in to provide any additional details or clarification.
May 22nd, 2008 at 10:32 pm
This is great. Thanks Jesse. I appreciate your willingness to listen to your readers curiosity and suggestions. That says a lot about the value you place on your readers. So, back to my question. How integral to the success of Utopia is Packet Front?
May 23rd, 2008 at 7:34 am
I think it might actually be the other way around. The projects in Seattle and Palo Alto have their eyes on UTOPIA. PacketFront has been working on both of them for some time (DynamicCity started the one in Palo Alto) and they’ve been waiting to see what happens here before making any financial commitments. I think UTOPIA is starting to reach a point where they’re taking on more things for themselves and gradually PacketFront’s involvement will decrease.
May 23rd, 2008 at 9:14 am
While Dynamic City was a respondent to the Palo Alto RFP their proposal was considered essentially non-responsive to key provisions of the RFP and was rejected. This was prior to the acquisition of DC by PacketFront. The successful respondent to the city’s RFP was a consortium of 180 Connect, PacketFront and the Royal Bank of Canada (I’m not sure all parties are still involved).
PacketFront was one of eleven successful respondents, out of 28, to the city of Seattle’s RFP for their Broadband Initiative. Dynamic City - once again this is before the acquisition - was an unsuccessful respondent.
May 27th, 2008 at 12:20 pm
Chris Hogan no longer works for PacketFront. I hear he’s currently working on contract directly for UTOPIA.
As a hardware manufacturer is having PacketFront advise/manage UTOPIA different than having Dynamic City (unattached to any specific equipment) do it?
May 27th, 2008 at 1:40 pm
PacketFront is certainly different from several angles. Because of their size and experience, they know better what works and what doesn’t work. There’s also a better internal support network for technical staff to pick each other’s brains. On the flip side, there’s certainly an incentive for them to attempt to hawk their own platform, though I’m sure they realize that UTOPIA isn’t going to change horses mid-stream, especially not with their cash flow issues.
May 27th, 2008 at 2:19 pm
While they may (or may not) have more depth in the tech end than DC (Dynamic City) the current on site tech support for UTOPIA seems significantly less than DC had?
I understand the 7X24 NOC may be a thing of the past, as are a number of experienced techs. (Dave, Ken & others?)
DC was focused on UTOPIA (it was their first, only and most important project), PacketFront may have other (more important?) irons in the fire (i.e. new customers that may buy PF hardware)? DC’s total future success was based upon making UTOPIA successful…not so with PacketFront?
I think you will see UTOPIA take on more and more of what Dynamic City did in the past. (i.e. Chris moving from PacketFront to UTOPIA?)
August 2nd, 2008 at 1:36 pm
I am part of the FTTH citizen group in Palo Alto that has recently been successful in getting our City Council 8-0 vote to direct the City to negotiate a long term contract with the 180 Consortium (AXIA, Packetfront and 180 Connect)for providing an open network and management therefor to serve all city segments. Mostly we have modeled our concept on Utopia.
We appreciate that the major economic incentive for the Consortium will be the commercial and industrial businesses. Obviously those segments have the need for higher reliability and quality than the resident segment.
There are some residents that feel that the City contract with the Consortium must contain provisions that provides a Mediation Process where the City can seek to protect the residential segment from deterioration in the residential service as time goes forward. Other residents feel this concern should be addressed by the specifications in the Agreements with the specific cutomers to give the Consortium the flexibility to compete in the market place.
Did Packetfront shown a tendancy to ignore/skimp on the services provided the residential segment vs. the commercial segment?
August 2nd, 2008 at 4:09 pm
Gerald:
While I can’t provide information on your specific question, I can tell you that I was involved in creating the contract between iProvo and it’s service providers.
I think you battle is bigger than just balancing residential and commercial services.
I often argued that “market forces” would be sufficient to address a problem. i.e. A Service Provider would never provide poor service as “market forces” would fix that.
I was wrong! Sometimes the market is very slow to react and much damage can be done.
While I believe that the city should take a very hands off approach and allow the service provider to operate as freely as possible, they MUST have some power to intervene and if needed encourage/force a course correction. Representing the customer and the network.
A very difficult balancing act. You want the city to have a power you never want them to use. It’s sort of like the nuclear option.
I would also tie contract renewal to performance if possible.
I believe we have seen situations when actions that benefit a service provider may actually harm the Network. (As in when service providers sell satellite video services to customers they connect to UTOPIA, when IPTV services are offered on the network. The service provider gets a nice sales commission from Dish/Direct but the network is not able to sell video service to generate revenue for them.)
Perhaps a management company or service providers creed should start like a doctors. “Do No Harm” (to the network/network owner/subscribers) and anything that does harm to the network triggers the right of the city to become involved?
Just my 2 cents…I’m sure other might see it differently.
August 2nd, 2008 at 5:45 pm
Gerald: I’d say that PacketFront’s relationship with Palo Alto will be significantly different from the relationship with UTOPIA. UTOPIA had originally hired DynamicCity as the project management company and they were later acquired by PacketFront. Since PacketFront is more in the business of selling integrated FTTP solutions, UTOPIA made the decision to insource the functions previously provided by DynamicCity (including the NOC).
As part of the open service provider model, you should aggressively seek as many service providers as possible. UTOPIA and iProvo made a big mistake by counting on one really big triple-play provider to kick things off initially. In both cases, those providers (AT&T and HomeNet, respectively) fell through and left the projects hanging. You also need to look well beyond the triple-play to services such as transparent LAN, off-site backup, colocation and home security. Since PacketFront has had such limited involvement in UTOPIA and none in iProvo, I can’t honestly tell you what to expect at this time.
August 2nd, 2008 at 9:22 pm
Jesse: Thanks for your comments. There is a significant structural difference between the prospective Consortium contract with PA and Utopia’s contracts with the service providers. Axia is offering to make a significant up front investment and they will “essentially own” the network for Term of 25 years. During that time they will also be the operator and will sell wholesale to the Service Providers. For us,during the Term, AXIA takes the place of Utopia in your structure.
In your system, a joint governmental agency, Utopia, is making the top level policy decisions. In our system, Axia, a private corporation will be making all the top level decisions constrained only by the Consortium agreement.
This is why some of us fear how the residents,the lower profit segment, would be treated in the long run by AXIA.
I asked your members the initial question(as representatives of the residents of the affected Utopia communities) because I expect that the differential profits between commercial and residential segments would move Utopia in its policy making capacity pretty much the same as AXIA, but probably to a lesser degree.
On another issue, I note from most of the thread comments that Utopia’s current financial issues seem to relate to the residential take lower rate in established communities. Has this been true in both commercial and residential segments?
You are correct that Packetfront is in a different capacity; primarily an equipment supplier in the contemplated PA contract.
August 3rd, 2008 at 10:23 am
Any smart network operator will figure out that while business accounts are worth a lot more than homes, you need the residential volume to make rent. There’s a few angles that will drive residential adoption. First: network ownership. Of all the things Provo did wrong, one thing they did right was pushing the “community ownership” aspect and making many residents feel as if they had a personal stake in the success of the network. That breeds loyalty and is critical to long-term success.
Second, make sure you’re offering services that are, minimally, on-par with existing providers. Capt. Video has often pointed out that UTOPIA and iProvo providers haven’t done the best job of offering compelling VOD and local programming options. There’s also been no move beyond triple-play to offer more services to jack up the ARPU. At the end of the day, you can compete on price or you can compete on services. Go for the model that makes the most money. Verizon has been able to generate an ARPU of over $200 for residences by offering compelling video products and tiers with really high speeds.
Third, you have to market your existence. UTOPIA has a very low public awareness and the existing providers don’t really have the money to launch extensive marketing campaigns. If you sign up a lot of providers and offer transport fees that keep everyone in the black, the signups will come.
Remember that Axia has a strong motivation to make money and they’re probably smart enough to know most of what I’ve said already.
UTOPIA has had a strong take rate in both commerical and government markets as evidenced by their very high ARPU. With ~7500 subscribers, they are covering operating expenses of $600K monthly or an ARPU of $80. Residences are barely worth $40, so we can surmise that both cities and businesses are signing up for high-profit connections while residences have been on the sidelines.
Something that helped drive iProvo’s adoption rates is the constant resident churn due to the high student population. Because new residents were forced into choosing a provider, there was less of a chance of sticking to an incumbent. UTOPIA’s footprint has a higher percentage of single-family homes and thus customer inertia kicks in.
August 3rd, 2008 at 10:30 am
Well said Jesse!
August 19th, 2008 at 7:51 am
I’m a little late to this but I’ll add my belated two cents worth in response to Gerald’s question. As Jesse already stated PacketFront wasn’t in a position to differentiate in any way between business/gov’t and residential customers on UTOPIA, but judging from the projects they have been more influential in there is no basis for concern in this arena (specifically for the Palo Alto project though it seems to me 180 Connect would have as much influence on this issue as PacketFront). But it’s important to realize that business/gov’t customers serve as an important revenue anchor for such projects and are commonly built out and lighted up first to drive the project forward, not that there are too many real world examples to cite for this model, in the States anyway. PacketFront is currently working on a project in Danville, Virginia where this basic framework is being employed.
On another note, in the rarified niche of muni open access the Palo Alto project is really starting to catch people’s attention in much the same way UTOPIA did years ago. However, it is the public/private partnership model including the 25 year private ownership followed by permanent public ownership of the network and no bond issue that is of most interest. UTOPIA and iProvo have caused great industry concern (warranted or not) for the public financing aspect of muni FTTH as well as the wholesale only model.