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Inside the bold plan to bring gigabit fiber to Detroit

Colin Neagle | June 30, 2015
When discussing the ongoing revitalization efforts in Detroit, it's hard to miss the name Dan Gilbert. The founder of Quicken Loans, owner of the Cleveland Cavaliers, and a Detroit native himself, Gilbert's investment firms have funded dozens of tech startups in the city and turned its defunct old buildings into shiny new workspaces that look like Silicon Valley transplants.

When discussing the ongoing revitalization efforts in Detroit, it's hard to miss the name Dan Gilbert. The founder of Quicken Loans, owner of the Cleveland Cavaliers, and a Detroit native himself, Gilbert's investment firms have funded dozens of tech startups in the city and turned its defunct old buildings into shiny new workspaces that look like Silicon Valley transplants.

Until last year, what Detroit lacked in this daunting task to become a tech hub was access to affordable, high-speed broadband, the kind that Google Fiber was famously bringing to other cities around the country. So, rather than pray for Google to arrive or incumbent Internet Service Providers (ISPs) to spontaneously change their pricing and services, Gilbert invested in two Quicken Loans employees who were crazy enough to suggest building a fiber network themselves.

The result is Rocket Fiber, which was formed last year and is stepping into the broadband market with its own Google Fiber-inspired offering: 1 Gigabit-per-second (Gbps) broadband service for $70 per month. To date, the company has laid almost seven miles of fiber in Detroit's downtown area and has received "submissions of interest" from more than 80 businesses and 3,000 consumers, with plans to reach 12 miles and 32 buildings by the end of the year.

What's most notable about Rocket Fiber, however, is how the company has been able to mitigate the risk of entering a market known for capital-intensive investments, time-consuming deployments, and billion-dollar incumbents with a reputation for stamping out any whiff of competition.

Last July, Ars Technica published an article providing an in-depth look at several fiber startups that struggled in this market. The article described the obstacles that stand in the way:

"A new fiber provider needs a slew of government permits and construction crews to bring fiber to homes and businesses. It needs to buy Internet capacity from transit providers to connect customers to the rest of the Internet. It probably needs investors who are willing to wait years for a profit because the up-front capital costs are huge. If the new entrant can't take a sizable chunk of customers away from the area's incumbent Internet provider, it may never recover the initial costs. And if the newcomer is a real threat to the incumbent, it might need an army of lawyers to fend off frivolous lawsuits designed to put it out of business."

Randy Foster, co-founder and CTO of Rocket Fiber, says his company is taking a unique approach that might give it a fighting chance in the broadband market. One unique advantage is its ties to Rock Ventures, Gilbert's investment firm which funded Rocket Fiber and also owns more than 75 properties totaling more than 12 million square feet of commercial real estate in downtown Detroit. Foster says these properties and the companies within them are free to pursue internet services from any provider, and that Rocket Fiber has never assumed exclusivity with any of them. Foster does admit, however, that Rocket Fiber's relationship with Rock Ventures gives it an advantage that can help it reach new customers more easily than other companies.

 

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