April 28, 2018
Rochester – The words “Greenlight” and “Golisano” in the same sentence ignited a speculative fervor in Rochester this month that few other ideas can conjure.
Indeed, a billionaire businessman and philanthropist moving to buy one of the area’s buzziest broadband companies is a huge shift for the local telecommunications landscape, which has traditionally been dominated by a few, one-stop-shop tech giants.
“Greenlight has tremendous opportunity and tremendous potential, but unfortunately it takes capital and time,” said Tom Golisano in a phone interview. “They’ve done a very good job over their first five or six years, but we think we’re now in a position to start escalating the growth.”
After founding the local business services giant Paychex in 1971, Golisano has gone on to pursue philanthropy and invest in numerous business ventures. He bought the Buffalo Sabres hockey team in 2003 (and sold it in 2011) with the goal of keeping the team in western New York, and ran for governor several times without success.
He spoke this past week after Grand Oaks GLN LLC of Pittsford, a company he owns, and Greenlight Networks filed a joint petition with New York’s Public Service Commission seeking expedited regulatory approval of Grand Oaks’ acquisition of Greenlight for an undisclosed sum.
Grand Oaks will acquire controlling equity interest in Greenlight, and stated that the acquisition is “in the public interest,” according to the filing. The deal should be completed as quickly as possible to allow for rapid access to capital, which is integral to long-term success in the “competitive telecommunications industry,” the petition stated.
While this news implies a shakeup in the local telecommunications market, the average person’s question is: What will my house’s broadband access look like five years from now, thanks to Greenlight’s new windfall? Answer: Analysts say you’ll likely have faster options, more of them and maybe even some more money in your wallet if things go according to plan.
Greenlight was founded in 2011, and currently provides fiber internet connection that can reach gigabit speeds to a host of local suburbs (mostly on the east side) and parts of the city of Rochester, including a tiny pocket neighborhood on the west side near Aquinas Institute.
Gigabit service equals 1,000 megabits-per-second speed, which blows away all other megabits-per-second offerings for area residents. The label denotes how much data can be transmitted in a given amount of time.
While most residents won’t reach the gigabit threshold, the amount of devices and bandwith needed in a typical household is growing, and the country is increasingly connected.
As of year-end 2016, 92 percent of all Americans have access to fixed terrestrial broadband at speeds of 25 Mbps, up from 89 percent in 2014 and 81 percent in 2012, according to the Federal Communications Commission’s 2018 Broadband Deployment Report, released in February of this year.
The FCC set 25 Mbps as the minimum speed for broadband service, but over 24 million Americans still lack fixed terrestrial broadband at that speed at the end of 2016, the report said.
New York’s downstate urban areas have excellent broadband coverage, while rural areas tend to lag behind. As of last year, 74 percent of the state had access to broadband at speeds of 100 Mbps or faster.
Greenlight plans its buildout partly on neighborhood-by-neighborhood interest, incrementally piecing together a fiber network based on who wants its service. With Golisano’s potential infusion of capital, the speed of installation in eager neighborhoods around the area would kick into overdrive.
Fiber optic networks consist of strands of lightweight, optical glass fibers that use light to carry data to homes and businesses. Fiber is typically seen as a reliable internet source because it is hardy in inclement weather, and because the fibers themselves do not conduct electricity, making them immune to interference from outside electrical forces or radio frequencies.
If the Public Service Commission is favorable toward Golisano’s request for an expedited acquisition of Greenlight, it’ll likely be formally approved at a May 17 meeting, said Greenlight President and CEO Mark Murphy.
“Having Tom on board means a lot more than just access to capital,” said Murphy. “As a resource, he’s already been invaluable, because … he understands what it takes to really grow a business and scale a business as quickly as we would like to and as he would like to.”
While both Murphy and Golisano are tight-lipped about the timing and details of an expansion plan, the area’s west-side suburbs essentially haven’t been touched by the service. Residents there have lamented its absence, with many saying on social media that they’ve continually petitioned the company to build in their neighborhoods.
“They’ve had a tremendous number of people sign up that would like the service, but because of the infrastructure costs, it just hasn’t been available to them, so we’re going to close some of those gaps,” said Golisano.
Once enough resident interest appears in a specific area, Greenlight looks at its geographical components, like interstates or railroad tracks, or a neighborhood that’s got all underground cabling, said Murphy. A “Greenlight district,” or a specific area of service, is drawn up and an order goal set, which dictates how many residents need to get on board for the service to be a go.
Gov. Andrew Cuomo spoke Jan. 31, 2018, in Plattsburgh about New York’s next steps to expand broadband across the state. Joseph Spector, Albany Bureau
Easements often need to be acquired from homeowners to add cable to backyard utility poles, and the company has to apply to use existing utility infrastructure, which is expensive and can take at least three months. The company also has to work with local municipalities when the public right of way is involved.
Golisano’s capital reinforcements will allow Greenlight to install cable and other accessories in several locations simultaneously, speeding up the entire process — “We’re going to hire some more people that are involved in our construction process … and be able to do more projects at once,” said Murphy. Most installation is done by local third-party contractors.
The company will lease fiber from other companies to get from town to town, letting them establish hub locations miles away, he said.
If you live in Brockport, for example, said Murphy, “it’s not like … you’re going to have to wait 20 years to get it, because that’s the furthest point,” said Murphy. “Conceivably if we had a lot more demand in places, we can leapfrog a lot of that stuff and meet the customer demand.”
Ratcheting up competition
Greenlight isn’t the only company trying to catch the customer’s eye. For Rochester’s dominant telelcommunications company, time seemed to be of the essence this week to make sure residents were aware of its latest options.
Time Warner Cable, now Spectrum under parent company Charter Communications, has been a mainstay in the area for decades, providing homes and businesses with phone lines, cable television and internet services, now with a hybrid combination of fiber and coaxial cable, which transmits data via a copper core.
Frontier Communications has also historically been a key telecom player in the area, offering bundle packages but only advertising high-speed internet options of up to 24 Mbps on its website.
Charter pledged to prioritize increased internet speed and coverage when it bought Time Warner in 2016, but it didn’t meet the allotted deadlines, according to New York’s Public Service Commission, which fined Charter in March over the issue. Charter disputed the PSC’s findings.
The company this week announced that it would make available gigabit speed Spectrum internet service to 23 million people across the state this year, which at about 1,000 mbps is ten times faster than the 100 mbps basic internet package. The company will also deploy DOCSIS 3.1 technology with the gigabit offering, which will allow Spectum’s increased speed to run on the existing fiber and coaxial cable network.
The news was aptly timed in the Rochester area, given the unveiling of Golisano’s intentions with Greenlight just days earlier, which indicated the likely possibility of widespread Greenlight gigabit service over the next few years.
Charter’s other local efforts to boost service include going all-digital in the area earlier this year — as more communities go digital, there’s more opportunity to increase speed in the future — and bumped basic internet package speeds to 100 Mbps from 60 Mbps in December.
“When it’s private sector and (broadband companies) are competing against each other, that’s all good … there’s not really a downside here,” said Scott Wallsten, president and senior fellow at the Technology Policy Institute, a think tank based in Washington, D.C., and an economist researching telecommunications and broadband.
“You’d expect to see lower prices and faster speeds. What that means is that even people who do not switch to Greenlight benefit because their prices might come down,” he said.
Greenlight will surely look at the customer base available and what it is looking for. Ultimately, it’ll still come down to who wants the service, and that can vary across socioeconomic and age barriers, said Murphy.
Tech-savvy early adopters of the service wanted increased bandwith, he said. Now, the service can provide utility and efficiency to anyone from young families running multiple devices simultaneously to wealthy folks looking for the fastest internet money can buy. It’s also used in both student and senior housing, he said.
Greenlight’s customer base rose out of word-of-mouth recommendations — there are few complaints about the service so far. But when it goes big, it’ll have to convince those residents who are reticent to cut the cord or make any sort of change to their communication service, said Phillip Dampier of Brighton, founder of consumer advocacy website Stopthecap.com.
With a broadband-only service like Greenlight, customers have to sign up for packages like Youtube TV or Sling TV to get cable channels over the internet. Charter, with bundle deals including phone, cable and now faster internet, will likely market itself as the more compelling and convenient value, he said.
“They’re going to have to market to the resisters,” he said. “Companies make a big mistake when they assume they’ll take 50 percent of the market.”
Affordable internet in city
As technology becomes a more and more integral component of our businesses and classrooms and more people are working from home offices, reliable internet is a top priority. The area — and even some outside businesses considering bringing a hub here to Rochester — will be eyeing Greenlight’s expansion in the coming months and years, hoping for choices that will help them connect to the web faster or in new ways.
“For small business, like telemedicine … these are very important building blocks to transition us into a digital economy,” said StoptheCap.com’s Dampier.
But this news won’t necessarily spell a renaissance for the community, said Wallsten.
“It’s always the case when you go back in time that there’s something that everybody thinks is a magic bullet that’s going to save the city or region … and it’s always wrong,” he said. “It’s certainly better than the internet getting worse. But the question is, ‘What’s the incremental improvement?’”
Another question hanging in the air: How and when will Greenlight provide internet services to low-income city neighborhoods?
“We’ll lay that out when we do some more significant announcements later on,” said Murphy, adding that Golisano has consistently had a philanthropic approach in many of his enterprises.
The company has and will work with agencies to find ways to get into affordable housing complexes or community centers where the service can be effective, he said.
The company hasn’t pursued service to outlying rural communities, as it “has its hands full” in the greater Rochester area and other companies have been aggressive in targeting rural areas with service options, he said.
5G: The future for fiber?
As an array of local offerings for high-speed internet become more promising by the day, some have already speculated about what could be a lucrative use for fiber infrastructure in years to come.
“Fiber to the home networks are going to the backbone for the next generation wireless technology,” said Dampier. 5G is the next wireless network, expected to be available as early as 2020 — as 4G aided video streaming to your smartphone or other device, 5G will be able to deliver an even higher level of speed, capacity and mobile accessibility.
But a network of that scale needs fiber — lots of it — and “small cells,” which are small radio access points placed close together to allow for more mobile coverage in high-density areas where larger cell towers are difficult to place. That infrastructure will take years to build out, but Golisano’s move to push Greenlight’s expansion in Rochester could be the first step in that direction, said Dampier.
National providers have gone up and down on the issue of fiber expansion, with AT&T still rapidly expanding its network and others like Google Fiber and Verizon FiOS tentatively moving forward after grappling with the formidable costs of fiber installation and the need to aggressively compete in the wireless world.
But wireless technology does eventually connect to wired technology, and with the world’s data needs headed into the stratosphere, fiber infrastructure can’t be ignored.
“The first one that gets their fiber deep into the neighborhood stands to make a lot of money,” said Dampier. “So who’s going to put the fiber in first?”