The city of Los Angeles is looking to build a citywide broadband network, and posted a request for information (RFI) on how best to accomplish the task. And by the July 18 deadline, the city had received 34 responses, which came from city departments, neighborhood councils and private companies like IBM, Alcatel-Lucent, Ericsson, Time Warner Cable, and Macquarie Capital USA, an Australian-owned company now closing in on a deal to buy the unfinished network started by the Utah Telecommunication Open Infrastructure Agency (UTOPIA).
All but one response are private to everyone but the city.
That one public response was from a Dutch startup called Angie Communications, which submitted an 18-page response (PDF) outlining how it would build not just a fiber network in Los Angeles, but also build and operate a nationwide 4G network that provides speeds of 10 Mbps and 50 Mbps to 95 percent of the nation’s population, as well as a Wi-Fi network with speeds of 100 Mbps that reaches 90 percent of the population. The estimated cost of the proposed nationwide network is $70 billion; so far, the company has raised $67.6 million from investors. Going even further, the company says it will also build fiber and wireless networks in the Netherlands, the UK, Germany and France.
Angie CEO Neal Lachman said he's not yet willing to talk about the details of his company’s plans, and the city similarly declined to comment on any of the responses received. But industry analysts appear unimpressed by Angie’s big proposal.
“I thought it was the end of July, not the 1st of April,” Gartner Analyst Ian Keene said. “They are going to build nationwide networks in the USA, UK and other countries – both FTTH and cellular – with no cellular license and a small budget? I can see zero credibility here. They would need to explain a lot.”
Los Angeles’ estimated budget is $3 to $5 billion, and Angie’s proposal for the city falls at $2.5 billion in funding needed to reach a break-even point, according to the company. But the situation isn't just about finances -- Keene’s criticism is supported by a string of failures by companies with a similar lack of experience.
Looking north to the city of Seattle, its plans for a city-wide fiber network fell apart after entering partnership with Gigabit Squared, a company with no track record of building large fiber networks. And over the past several years, a company called LightSquared failed to break into the wireless market despite being backed by a billionaire – the company claimed bankruptcy earlier this year.
For Teresa Mastrangelo, principal analyst at BroadbandTrends, the company’s plans are “ambitious at best,” she said. “Specific to the city of LA RFI, where they are claiming they can build out the entire network in 5 years seems highly unrealistic. The engineering and permitting alone will take 12 to 18 months, if not longer. This company has no real history, so there is nothing to base success on. I think this falls into the category of, ‘If it is too good to be true, then it probably is.’”