The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. The Broadband Bunch is sponsored by ETI Software.
Pete Pizzutillo:
This episode of the Broadband Bunch is sponsored by ETI Software and VETRO FiberMap.
Hello and welcome to another episode of the Broadband Bunch. My name is Pete Pizzutillo, and we are here live at Fiber Connect 2023 in Orlando. I have the pleasure of speaking with Jacob Simon and Jonathan Restivo from Cityside Fiber. Gentlemen, thanks for joining me.
Jacob Simon:
Thanks, Pete.
Jonathan Restivo:
Thank you for having us.
Pete Pizzutillo:
How’s the event going? We’re on day two, or at least maybe day three for some people.
Jacob Simon:
Doing good.
Pete Pizzutillo:
First time here?
Jonathan Restivo:
This is our third time as a company, but the first time here in Orlando for the show and the environment. In the past few years, you can really see the industry growing and the interest in fiber, and the show keeps getting better and better. So it’s been fantastic.
Jacob Simon:
Yep. This is my first time here, but it has been really good. There are a lot of vendors here. More than I expected.
Pete Pizzutillo:
And I think that one of the interesting things is one-stop shopping. You can see anything from digging trenches to software to consulting. In a lot of other places, you don’t get that exposure, so you’re right. And I think the last few years post-COVID, it’s just continuing to gather. And there’s just a ton of great energy right now. I think everybody had been waiting for some of that funding to come. Now I think people are knee-deep and trying to solve how to get this stuff done.
Jonathan Restivo:
Right. It’s what comes next. The hard part is putting it in the ground, right?
Pete Pizzutillo:
Yeah. You tell me. We’re about to find out. So Jonathan, as a founder of Cityside Fiber, maybe you can just give a little bit of background on the genesis of how the company got started.
Jonathan Restivo:
Yeah, absolutely. Coming out of COVID or early into that experience, my co-founder and I, Rod Hanson, who was at Crown Castle at the time and had just left, started kind of sharing some ideas about where the industry was going, telecom overall, but in particular with fiber and the importance that it plays in connectivity across multiple different use cases.
In our case, we were heavily focused on small cells at the time and were kind of hitting a snag because of the lack of fiber and the high cost of a single-use small cell. So as we started doing some business planning, we thought about how we could get fiber into more places. We started working on a business model for more of a wholesale development or wholesale setup for fiber to the prem, which would allow us to bring fiber deeper into the communities and allow for multiple use cases that could come over the top once that fiber was established.
So, yeah, we were looking at more of a wholesale model, but as we worked through some of the business structure there and where the opportunity was and we had looked at different geographical locations kind of across the west, where we settled was right in our backyard of Orange County, California, was a real dearth of fiber and particularly at fiber-to-the-home. And we thought it was a great market for us. We’ve built in that market before. We have good relationships at the city level and saw a great opportunity there.
As we worked through our funding with SDC Capital, we started to shift the business model from wholesale to direct-to-consumer and be able to not only serve as the developer and operator, but also as the ISP. And that’s something that we’ve taken some time to get to that place, and now we’re super excited to be able to launch. We’ve started building in our first couple of markets and will soon announce a few more in Orange County.
We’re really excited about being able to bring fiber throughout the community and serve the purpose of fiber-to-the-home and increase the residential services that are available to our neighbors but also start to enable some of those additional use cases in the carrier space and the enterprise space and bring about that next level of technology that was begging for fiber. And now, hopefully, we can provide it.
Pete Pizzutillo:
So when did that journey start for you?
Jonathan Restivo:
Our first meeting to start business planning was in November 2020. We formed the company in March of ’21. We were formally funded in February, this past February, through SDC Capital, and we’ve been off and running ever since.
Pete Pizzutillo:
Jacob, what’s your role in Cityside?
Jacob Simon:
So I was asked to come in and design a fiber network that could have overlaid services on top of it. And I did that, and now it’s all the technology, so software development operation for the network engineering team, engineering the fiber, and doing the actual technology engineering as well.
Fiber Connect 2023, Cityside Fiber, Connectivity, Local Fiber Providers, Orange County, Fiber Infrastructure, ISP, Sustainability, BEAD Money, Community Building
So you are a newcomer dealing with some incumbents there. I mean, what are some of the things that you anticipated as challenges, and what’s one of the biggest surprises that you ran into?
Jonathan Restivo:
From a competitive perspective?
Pete Pizzutillo:
Yeah.
Jonathan Restivo:
So what’s interesting about that is that like you said, there’s no fiber within the residential space, or it’s very limited. There are pockets where there’s some aerial, and so the existing incumbents could build cheaply via existing poles. And then there are some greenfield opportunities, a couple of pockets. But for us, our main competitor is the cable co. Depending on where you’re located in Orange County, that’s either Cox or Spectrum. Again, they don’t have fiber, so their primary or top product is the Giga blast, which can get a theoretical gig down and pretty poor speeds up. And that’s where the fiber comes into play. So for us, we’ve designed to build out a more regional comprehensive network that spans from Central Orange County down to the southern end of Orange County and connects back up.
And so it’s a redundant ring, and it’s built in a modular way so we can continue to add cities and expand our reach into different neighborhoods along that path. And because it’s contiguous and designed in a way to add additional use cases over the top, I think we’ll be able to create some interesting opportunities in the enterprise and carrier space.
Jacob Simon:
And for me, I was actually just surprised at the amount of non-fiber that’s in the area. Everybody assumes Orange County is ready with fiber. It was not until we got there.
Jonathan Restivo:
Yeah, there’s this perception that it’s Orange County, $4 million homes. It must have good internet quality. And shockingly it doesn’t, which is our challenge. It’s really expensive to build there. Our cost per pass is higher than you’ll see in most other areas, but I think you also see a strong appetite for competitors within our space and within our communities. A lot of them have one choice, and it’s the cable co. AT&T isn’t really competing in a lot of that territory. They don’t have the products for the internet.
And so just having a choice and having a local company I think has been a big thing. I think people understand that we’re new, but because we’re local and because we’re being a competitor and giving them a choice, even if they don’t choose us, I think they’re just happy to have us there. It increases their property values, and it creates a competitive environment. So now the cable co has to compete on service and price. So even if they don’t choose us, it’s creating a better environment for them.
And so what we’ve seen is a pretty, like I said, pretty strong appetite for this type of alternative. And I hope a little bit more of a willingness to grow with us. People understand that we’re new, but because we’re local and because we’re providing that alternative service, I think people are pretty excited about it and pretty willing to kind of roll with the punches as we get going. We’ve had a couple of delays. It’s a challenge being a startup, being a new brand in that space. But so far so good. I think we’ve had a pretty good reception.
Pete Pizzutillo:
I’m just starting to hear some talking about sustainability or designing for affordability. So as operators, you’re trying to reduce your OpEx. But as a consumer, I love competitors. But if it’s something I can’t afford, then it’s not an option. So what are some of the things that you guys thought about in terms of your business and operational model, as well as your architectural model to help with that in mind?
Jacob Simon:
As far as architecture goes, when I was putting things together, it was to use as little fiber as possible but still leave room for growth inside the residential network. We know we have to have service out there. We know we have to be able to provide that service to each one of the customers that are in the area. But doing that at a low cost to us and still leaving a lot of fiber available for those over-the-top services was important.
Jonathan Restivo:
And from a service perspective, we’ve tiered our offerings at one-, two- and five-gig just as our base, up and down obviously. And we aren’t offering a lower product because the way that we’re saying is it’s putting a governor on a Ferrari. There’s no reason to go below a gig. It’s a different product; it’s a better product. Why dumb ourselves down to the existing infrastructure that’s out there?
So in addition to having those higher-tiered packages that are competitively priced, we’ve been working with Calix. Calix is our hardware and software provider and offers to manage Wi-Fi services and connected services that can kind of come over the top from security cameras and things like that. And so really trying to create a more connected home both within the home and outside. That’s the service aspect from a physical perspective, but there’s also the service from a customer experience perspective.
And so what we’re heavily focused on is as a local provider, making ourselves accountable, being available to the community, getting out into the community wherever we can to say hello and show our faces, and find ways that we can just enhance the quality of the customer experience across the board. So not only are you getting a better product, fiber’s a better product, it’s more reliable, it’s faster, et cetera. That kind of speaks for itself, and it’s competitively priced.
But at the same time, you’re also hopefully getting a better experience if you call in or if you have to answer an email. And we’re reaching out and offering certain things to the community. We’re just trying to enhance that experience that so many folks have had a hard time or challenges with the existing incumbents. We just want to change that experience and make it a better experience across the board.
Pete Pizzutillo:
So you’re coming off fresh design, build pain, lessons learned, things, for people listening that are going down this path? What would you do differently? How should people be thinking a little bit outside the box to win that build phase?
Jacob Simon:
Yeah, I would say what I’ve learned is you can’t hold yourself to one design ideal. You can’t say we’re only going to do underground, or we’re only going to do aerial where we can. You have to be able to build for the community because even the community will make requests as to how you build an area.
Jonathan Restivo:
Yeah, I think one of the challenges that we’ve had as this industry has developed is kind of on the SaaS side. And so speaking to VETRO as one of our SaaS providers has been super high quality and does a lot of things well. And we have some other vendors that have their niche, and they do it well. The challenge is that it combines many components, and I think some of the existing providers have done a great job of integrating with construction management or provisioning at the CP level and things like that. But it’s very piecemeal, and that’s been one of the challenges. And I think picking good partners and getting those systems in place from the start has been critical for us. And it’s still a challenge because of how piecemeal it is.
Everyone kind of has their specialties that they do well. And they can combine it with others, but it creates a lot of integration challenges. It creates a lot of systems, and before you know it, you’ve got 30 SaaS vendors that you’re trying to integrate. That’s been one of our challenges is to try to limit that. So from an operational perspective, that’s certainly a critical component to, right off the bat, make sure that you’re getting right with the right partners.
Jacob Simon:
Make sure you have software people on staff.
Pete Pizzutillo:
Yeah. Right. What I was saying is we often talk about not being in the IT business and focusing on the ISP business and trying to find the platform. Because what’s interesting is I think historically this industry is good at the manufacturing side of things. You spend a lot of time making those decisions. And then if you’re trying to get to OpEx and efficiencies, it’s a digital world.
So you need those platforms that are behaving well together, so you have this single view. And as a software guy, we are moving in that direction. But you’re right, I think having a platform end to end where you guys can just jump on board and get going is kind of elusive at this point in time. There are some options out there, but yeah, I appreciate that you don’t want to be so much a software guy as you do want to be an ISP.
Jonathan Restivo:
Right, exactly. And the hard part about that is that so much of that is critical to that customer experience that we talked about. Making sure that from the buy flow to the call-in and how our CSRs handle intake reporting and escalation, all of that has to do with the customer experience. And if you’ve got multiple different vendors, trying to put that together is a challenge.
Jacob Simon:
Being able to manage that plan for three years out as well becomes a little bit difficult.
Pete Pizzutillo:
Right. Right.
Jacob Simon:
I mean, taking a look at how your software’s going to build up, if it can scale up properly, was a big question that we had.
Pete Pizzutillo:
Right. Yeah, yeah, for sure. So you mentioned private money. Are you guys going after any of the BEAD money, any public money?
Jonathan Restivo:
We’re still looking into it. Again, being based in Orange County, it’s not something that you would think that BEAD money would apply for. But given the low-quality service and lack of options, we’re seeing some initial, as we do some analysis, we’re seeing some pockets that actually might qualify within our build plan. So we need to do a full evaluation of that. And California is moving pretty quickly because they had their projects underway. They’ve already allocated, I think, $2 billion of funding. And then now with the additional 1.4, they’re aggressive. A lot of it has gone to the middle mile. A lot of it has gone to some of the more rural areas, but there are some last-mile projects out there that we’re taking a look at and seeing if we might qualify for.
Pete Pizzutillo:
Being close to that world, there’s a lot of conversation about how much of this BEAD money will be instituted. Is private money going to outpace the public money? Will we close the gap? What’s your thought if you look 24 months down the road where we are as a nation outside of your purview?
Jonathan Restivo:
I do worry a little bit about — I don’t want to say misappropriation. It is probably not the right word — money going towards the wrong hands. I mean, some of the larger incumbents have had their opportunity to invest, and they just have chosen not to for whatever reason. A lot of it is monopoly tactics and things like that. So I do worry about that.
I think it’s a good thing that we’re investing in this. I think there is not a one-stop-all solution. A rural farm is going to need a different type of infrastructure than some of our suburban markets and some of our urban markets. Fiber everywhere may not be the right solution, or at least not in the near term. And so I think we just need to be smart about it. I worry about it getting into the wrong hands, or I do worry about projects not being well-designed for some of those things. But I think it’s actually off to a decent start. So we’ll see how things go from here.
Jacob Simon:
And I would say just the good part we’ve got about this entire infrastructure act is that we’re getting more people out there. We’re getting more people interested in the technology. We’re building, or trying to build, the infrastructure that we do need for technology to get bigger in the country.
Pete Pizzutillo:
Yeah, I mean somebody said wisely because this has kind of been iterations throughout this industry that the assets don’t go away. The companies that own those assets may go away. And that’s part of the question that I had for you guys about affordability and sustainability. Is this gold rush to folks’ demise if they don’t think about the sustainability of some of that stuff? They might be building a network that other people are going to be operating downstream. So I think you’re right. What I worry about on this side is really the consumer expectation because there’s much talk about how much money. It sounds like a lot of money, but if you ask anybody in the business, it’s-
Jonathan Restivo:
It goes quickly.
Pete Pizzutillo:
Yeah. So, should be interesting, but maybe we’ll have you back in 24 months and see where you guys are. I want to thank you guys for joining us and sharing your story. I mean, your story is exactly what we like to feature. People see a need, a local need. And I don’t know why you guys do it, but thank God you do it. So best of luck to you guys.
Jonathan Restivo:
I question that sometimes.
Pete Pizzutillo:
How can our listeners learn more about you guys?
Jonathan Restivo:
Yeah, so we’re at citysidefiber.com, and we’re excited to be building out in Orange County and creating a more connected community there.
Jacob Simon:
Yeah, and I’d say we’re looking forward, if you’re in the area, to coming out and seeing us at one of our events.
Pete Pizzutillo:
All right, great. Thanks for joining us again, guys. Enjoy the rest of the show.
Jonathan Restivo:
Thanks, you too.
Jacob Simon:
Thank you.
Pete Pizzutillo:
That’ll wrap up another episode of the Broadband Bunch here at Fiber Connect 2023. Thank you for listening and talk to you soon.
