There is much to be down about in 2020. Yet, America’s heart broke when the story of two elementary school girls spending hours to complete their homework outside of a Taco Bell made national news.
Why were those girls in, of all places, a fast-food restaurant to study?
The children did not have internet access at home. Taco Bell was the only place nearby that had a free, stable Wi-Fi connection.
Who knew the difference between accessing education during a global pandemic would be found in a fast-food parking lot?
America must build better for our nation’s children. Our country can build better for its young.
We’ve all heard Marc Andreessen’s clarion call to the tech industry, where on April 18th, 2020, he laments over “our widespread inability to *build*.” (One assumes that Andreessen’s use of the word ‘our’ here refers to Western nations in general, with America in particular.) His poignant piece demands more competence and innovation from American society, and he asks, “…what do you think we should build?”
3M, an American multinational conglomerate based in St. Paul, Minnesota, dramatically increased the production of their N95 respirator masks in response to COVID-19. Bloomberg reported on March 25th, 2020 (three weeks before Andreessen’s post), that 3M “has in two months doubled global production to about 100 million, and it’s planning to invest in new equipment to push annual mask production to 2 billion within 12 months.” 3M itself states the company “has supplied 800 million respirators around the world, with half provided to the U.S. in the first six months of 2020.” (It’s also worth mentioning that on April 2nd, 2020, the Trump administration invoked the Defense Production Act of 1950 to compel 3M to increase the production of their N95 respirators for the U.S. to acquire via the Federal Emergency Management Agency.)
For a country with a “widespread inability to build,” 3M works to get the job done. Still, if “it’s time to build” now, one reasonably asks, “Was America not building before?”
3M’s herculean efforts provide our answer. America today endlessly builds tomorrow.
For some, to build or not to build is the implied, underlying question. For others, the explicit, central consideration is what should be built.
Yet, I ask, “America should build for whom?”
Inequality exists and persists across the American socioeconomic spectrum. While most of our attention is fixated on income and wealth inequality, another type of inequality goes unnoticed: high-speed internet access. America’s ‘digital divide’ has long persisted, but the coronavirus pandemic has revealed and exacerbated this latent, glaring division. America’s largest cable and telecommunications firms have neglected rural communities’ need for high-speed internet for far too long. While these giant telecoms ignore over 160M Americans without fixed broadband access, Jase Wilson and Mike Faloon pay attention to their fellow citizens without the means of communication. The two entrepreneurs see a middle America with the talent but lack the capital and software to build for themselves. Wilson and Faloon started Ready.net to support smaller internet service providers (ISPs) meeting rural America’s digital needs. The San Francisco-based company recently participated in the Y Combinator. Ready.net raised venture capital funding from the accelerator, Thiel Capital, Arbor Ventures, and notable angels such as Ralph Gootee, Calvin French-Owen and others.
Gootee, a cofounder of PlanGrid (acquired for $875M by Autodesk) and angel investor in Ready.net, says, “As remote work becomes the new normal, access to high-speed internet has never been more crucial. Ready.net lets local ISPs, the backbone of America’s rural internet, focus on delivering high-quality access through incumbent-grade subscriber experience software.”
America’s digital divide is driven by two factors: physics and economics. Physics comes into play via the type of wiring used to send and receive information. The two types of wiring used in information transmission are copper and fiber. Copper is a highly conductive, malleable commodity metal that transfers information via electrical pulses. While available in bulk, it is still an expensive material to purchase. Regardless, copper’s advantageous properties made it the bedrock of the telecommunications industry, starting with Alexander Graham Bell’s Bell Telephone Company in 1877 (which was the precursor to American Telephone & Telegraph, commonly referred to as AT&T today). Nearly a century later, the renowned Bell Laboratories’ (which AT&T held an ownership stake at the time) innovations in fiber optic material manufacturing created a viable substitute to copper for telecommunications wiring.
Today, fiber is the best alternative to copper for wiring infrastructure. Fiber, which is spun from tightly woven strands of pure glass, can transmit information through infrared light. The main advantages of using fiber for internet connections are its robust signal fidelity over long distances, low noise interference, and high-grade protective material durability. Fiber’s advantages feed into its main strength of increased data bandwidth in both directions (upload and download) instead of downloading only via copper. However, fiber’s greatest disadvantage is its exorbitant upfront installation costs. Thus, ISPs who offer fiber optic internet plans are found in wealthier, urban zip codes versus DSL (copper) plans by poorer, rural service providers.
Interestingly enough, Andreessen himself has mused about the digital divide, albeit on a global scale. As part of a16z Summit 2019, the billionaire venture capitalist (VC) engaged in a wide-ranging conversation titled, Why You Should Be Optimistic About the Future, with Kevin Kelly, the Founding Executive Editor of WIRED Magazine. Near the beginning of their forty-five-minute discussion (around the two-minute mark), the two luminaries briefly discuss the digital divide.
Marc Andreessen: There is an actual generational thing that’s happening, and you [Kelly] alluded to the generational component. It took 25 years to get everybody online. They’re saying we’re not quite there yet, but we’re getting very close (emphasis added).
It’s like the most amazing thing. It’s working incredibly well. We are very close to every, at least every adult on the planet, being Internet-connected, but it took 25 years to get there. That, for me, is okay…
Kevin Kelly: …right, right. During my time at WIRED, people were kind of concerned about the digital divide. I said, ‘The digital divide is going to cure itself’ (emphasis added).
One wonders what they (especially the self-assured Kelly) would say to the fact that in 2019, only 53% of humanity had access to the Internet, according to the International Telecommunications Union. It’s telling that Andreessen did not contest Kelly’s nonchalant, flippant claim that the digital divide will “cure itself.” (In other parts of the interview, such as at the twenty-four-minute mark, Andreessen is observed to directly object to the framing and premises of Kelly’s questions.) At first glance, it appears Andreessen implicitly believes that similar to the human body’s immune system fighting off a bacterial or viral infection, the endogenous mechanisms of the market will remediate the digital divide.
However, there’s more to the story than meets the eye.
Roughly four years earlier, on March 20th, 2015, USA Today reported that “Venture capitalist Marc Andreessen and his wife, philanthropist and educator Laura Arrillaga-Andreessen, have teamed up with Hewlett-Packard to donate nearly $170,000 worth of computers, printers and other equipment. The donation is part of a growing effort in some quarters of Silicon Valley to address the digital divide that persists throughout the rest of the country, especially in poor or underserved neighborhoods” (emphasis added).
The Andreessens should be commended for their efforts to help bridge the country’s internet access gap. Yet, it will take more than philanthropy to link America’s digital divide. Entrepreneurship could provide a vital connection to the global economy for rural America.
Ready CEO Wilson says, “Mike and I are both from small towns. We were tired of folks like our friends and family not getting high-quality internet access and falling behind. And the local ISPs getting squished by the copper cartel are using public money to stifle competition. Our customers are the local ISPs. Historically, they’ve always dealt with external headwinds from the copper cartel, the too-big-to-fail oligopoly of incumbent national networks who do all kinds of nasty things to suppress competition from local ISPs. Our goal is to help them focus on their controllables. We thought we could help them solve their two biggest rate limiters – access to capital and modern software that works for them, rather than the other way around.”
The economics of internet access tend to fall heavily in favor of giant, monopolistic cable and telecommunication firms. There are over 7,000 internet providers, yet the top five ISPs (from greatest to least: Comcast, Charter, AT&T, Cox, and Verizon) have over 70% of the internet services market. Comcast and Charter alone have roughly 56% of the total market. For many Americans, the existing broadband monopoly means that they only have one of the largest ISPs to subscribe to for internet access. The Institute for Self Reliance (ILSR) reports that “Comcast and Charter maintain a monopoly over 68 million people.” To clarify – 30 million people’s only choice to access broadband is through Comcast, and the other roughly 38 million have the privilege of having Charter as their sole option.
Wilson adds, “My hometown of Maryville, Missouri, is fortunate to be served by one of the first Rural Electric Coops in the nation to become an ISP by pulling fiber. It has remarkably fast internet, which is an enormous advantage for their economy compared to other towns of similar size (~10k). On the other hand, Mike’s hometown in Maine sits directly along with a piece of open-access fiber network, but there isn’t enough money to connect any business or home to the network. His non-profit worked with the area towns to form a broadband utility to connect the community to the network, but the national DSL provider, Consolidated, reports speeds above the FCC’s definition of broadband. That leaves the local utility ineligible for federal and state grants access to information and global opportunity. The growing number of things people and companies can do when they have strong internet seemed to be a defining issue confronting many rural places, even before COVID brought about the remote services era. We are now living in the remote services era.”
The lack of competition to contest these giant cable corporations’ monopolies destroys any incentive to improve their services, especially in rural areas. The only time service improves where there is competition to be found between the cable and telecom companies in urban areas. Even if SpaceX’s future Starlink satellite network were to contest the cable and telecom monopolies, the aerospace firm would be drawn to competing in the more profitable, developed urban markets first, with rural areas last, if they are even attended to at all. SpaceX hopes to provide a “low-cost alternative in more urbanized areas.” Once again, rural America is overlooked.
Michael Seibel, the Managing Director of Y Combinator, says, “Tens of millions of people in rural America count on a local ISP to get access to the world of opportunities only available on the Internet. Ready is making the software that will allow these ISPs to grow and thrive.”
Our nation’s largest ISPs can provide better services. And they do.
For the affluent.
For smaller ISPs in rural areas where these giant telecoms fail to service, they cannot offer local subscribers faster internet and additional services because of high capital costs to install the necessary telephony and networking infrastructure. These local ISPs seek financing from local and regional banks, but these financial institutions are reluctant to lend because of their inability to understand the broadband services industry properly.
Ready COO Faloon explains, “Historically, local ISPs have only had access to traditional bank loans, government assistance (grants/loans), and retained earnings to upgrade or expand their networks. The vast majority of traditional lending sources will not underwrite the take rate risk of new networks, leaving the ISP piecing together government assistance – when available – and retained earnings to expand networks into underserved markets. This has been a serious hurdle in closing the digital divide.”
Then who will provide high-speed internet service for rural America? One monopoly’s overlooked customer base is another upstart’s profit. Microsoft estimates that over 160 million Americans are without access to broadband internet. Given the average monthly broadband subscription is roughly $60 per month, the estimated total market size is $115.2 billion. In the worst-case scenario, assume that the Federal Communication Commission’s (FCC) estimate of 24.7 million Americans without broadband access is accurate. (Microsoft disputes their approximation.) If all other assumptions are kept constant, then the estimated market size becomes $17.8 billion per year. These estimates are realistic given Comast’s 2018 broadband revenue was $4.3 billion. It’s important to note the nature of the discrepancy between Microsoft’s and the FCC’s respective rural broadband access estimates is based on U.S. federal laws and regulations, specifically the regulatory agency’s Form 477.
Faloon adds, “Our entire means of production has shifted to an internet backbone where there is an assumption that the internet is ubiquitous and omnipresent, which is a bad assumption. Rural places with strong internet have a unique advantage now; rural places without strong connectivity are dying. It’s about more than just home use; businesses depend on it, too. In a town in Missouri, an optometrist closed their business because they could not get strong enough internet access to meet guidelines for connection quality. Even manufacturing now needs IoT in the factory as a baseline assumption.”
To understand Form 477, one must first understand the FCC. With a stroke of President Franklin Delano Roosevelt’s pen, the Communications Act of 1934 gave birth to the FCC. The 1934 Act charged them with the main task of regulating interstate telephone communications. The FCC performs its duties per Title 47, Chapter 5, Section 151 of the United States Code, which states the institution regulates “…interstate and foreign commerce in communication by wire and radio.” Over sixty years passed before telecommunications regulations were updated to account for the advent of the Internet, culminating in President Bill Clinton’s Telecommunications Act of 1996. Sections 706a and 706b of the 1996 Act stipulated that the FCC must “…encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest…” and “…The Commission shall, within 30 months after the date of enactment of this Act, and regularly after that, initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans…,” respectively. Section 706b is the impetus for Form 477’s creation by the FCC. Yet, why is this form so consequential?
Wilson explains, “The form is ‘gamed’ by nationals to prevent competition and to appear to have more coverage than they really have. Indirectly, Form 477 helps determine who gets what funding and what areas are deemed “served” for a variety of programs offered by FCC, and used in other federal funding programs. The larger issue is information asymmetry. Another problem is you have to submit a Freedom of Information Act (FOIA) request for the 477s individually to get any real analysis done. They are not published directly because doing so would make it easier to plot competition. The real data isn’t available to the general public without significant undertaking. Thus, there is a layer of understanding local ISPs don’t have that the nationals do. A national ISP has the resources to gather all of the 477s through FOIA. A local one does not.”
The FCC relies on Form 477 “to determine which providers are servicing which areas” and is “the government’s main source of data used for identifying underserved areas of opportunity.” ISPs are required to fill and submit Form 477 to the FCC regularly. Form 477 is critical to determining whether all Americans across the country have access to “advanced telecommunications capability” or broadband internet. If the data collected from the form indicates that this is not the case, then per Section 706b, the FCC “must take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and promoting competition in the telecommunications market” (emphasis added). However, as detailed earlier, monopolies do exist; therefore, the FCC has failed to promote competition in the U.S. telecommunications market. The reason for the FCC’s failure is due to Form 477’s intrinsic flaws.
“The self-reporting and one served house per served census tract aspects allow all kinds of manipulation by nationals who want to prevent competition. The way the form deals with where broadband service is available puts rose-colored glasses over a grim problem. It makes it appear like our nation is far more connected than it really is. A national ISP can have one house connected in a census block group, which by definition is hundreds to thousands of homes. That census block group is deemed served,” says Wilson.
Form 477 is flawed for several reasons, but two critical errors must be highlighted. (It’s important to note that the FCC currently defines broadband internet as 25 Mbps download speed/3 Mbps upload speed.) First, service providers can self-report their coverage, and there is no additional verification by an impartial third-party. Second, ISPs can count a region as being “served” if, in reality, they only serve one household within a region’s census block. The second error has serious consequences for the telecommunications market. Larger ISPs can easily inflate their coverage at risk of no penalty. The FCC can take Form 477’s data at face value and subsequently determine the overall market to be competitive. Thus, the FCC will not act by “promoting competition” as stipulated in the 1996 Act. One of the ways the FCC could promote competition is through Section 714b of the 1996 Act, which establishes the FCC’s Telecommunications Development Fund. The fund’s purposes are outlined in Section 714a, stating the goals to be, “promote access to capital for small businesses to enhance competition in the telecommunications industry…” and “…to support universal service and promote delivery of telecommunications services to underserved rural and urban areas.” Form 477s flaws impede the FCC’s core purpose to ensure all Americans have access to high-speed internet.
Faloon states, “Ready gives local ISPs tools they need to focus on growth. If you look closely at local ISPs, they’re more than just the source of the internet for tens of millions of homes. The best among them are recommenders of sorts and distributors of innovative products & services. That’s what we help local ISPs become.”
Milton Friedman, a staunch critic of the FCC, once said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” One must apply Friedman’s logic to the FCC and judge the public regulatory body by its results. The FCC could take a greater active role by stepping in where local and regional banks will not, and directly provide capital to small ISPs serving rural areas in America. Yet, for the funds they do set aside for broadband providers, they go straight to the national ISPs who “claim” that they serve the populations that, in reality, they do not. These national ISPs have zero incentive to change given their captive markets. The funds they receive from the U.S. government via the FCC are essentially a guaranteed revenue stream, instead of being put to use as capital investment by a local ISP. Form 477’s poor design and implementation work hand in hand to protect, rather than attack, the cable and telecom U.S. broadband monopoly.
Wilson claims, “Local ISPs face regulatory hurdles designed to protect national incumbents, competitors with unlimited marketing resources, Incumbents offer predatory offers designed to lure subscribers away, churn is driven by better temporary price and availability of other services like TV vs. typical “pure-play” ISPs. Once big enough, they can generate their own services to bundle and price in loss leaders to support this type of takeover offer, furthering the gap. Ready makes it easy for local ISPs to fight fire with fire, to grow their territory using the same techniques, with different services and territory planning.”
As the ISLR mentions in their 2018 report, “…investment by the large ISPs is correlated to competition rather than the regulatory environment.” Fortunately, others have noticed Form 477’s shortcomings and aim to rectify them with additional legislation. In a September 2018 report from the Government Accountability Office, the GAO acknowledged “that FCC’s broadband data overstate fixed broadband availability by counting an entire census block as served by providers that serve some, but not necessarily all, of that block,” which coincides with Microsoft’s conclusion discussed earlier. On March 23th, 2020, President Donald Trump signed the Broadband Data Act of 2020 into law. The new law orders the FCC to reform both the structure and implementation of Form 477 per Section 802. Hopefully, with this reform, the FCC can properly regulate national ISPs and supply capital to local providers to promote competition in captive markets across the country.
Before returning the attention to the broadband service market’s current state, it’s important to consider that Milton Friedman was the preeminent champion of the Chicago School of economic thought, which promoted free-market enterprise and economic liberalism. During January 1980, Friedman heavily railed against FCC regulations on his PBS-televised 10-part series, Free to Choose. He asserted, “The fact that we have a great many different channels of persuasion is a very healthy thing, as long as there’s no monopoly…one of the worst things that we have is a control of FCC of radio and television” (emphasis added). He would prefer a hands-off FCC in the telecommunications industry.
Washington granted Friedman’s wish nearly twenty years later. The Mercatus Center gleefully describes William Kennard’s “ascendancy” in becoming the FCC Chairman in November 1997. On September 17th, 1999, Kennard proclaimed, “…I envision a broadband oasis, where anybody who wants to compete in this broadband marketplace and make the investment to deploy should be able to do so in an unregulated environment or a significantly deregulated environment…I believe the best way to achieve these values is to resist the urge to regulate right now…we should resist the urge to regulate because I think that it is likely that the market will sort this out. You need regulation when market-based incentives are not aligned with the needs of consumers. That is really why we have our jobs. But I believe that there are market incentives that will drive openness in the broadband world” (emphasis added).
To achieve his goals, Kennard removed the floodgates of deregulation to allow competition to flow throughout the market. In a policy document titled “A New FCC For The 21st Century,” Kennard’s vision for the FCC was to “transition from an industry regulator to a market facilitator.” To accomplish this transition, the FCC Chairman stated four top priorities, one of them being to “promote competition in all communications markets.” A key policy initiative under this priority aims to promote “…through market-based approaches, the competitive deployment of advanced technologies in all areas of the country, particularly in rural areas.” Kennard’s hope is once “competition becomes a reality, deregulation must occur.”
What happens if competition isn’t realized? Kennard didn’t seem to consider that outcome.
Surely, Friedman would also extend his logic to judging the private sector by “their results” rather than “their intentions” (emphasis added). Fast-forward to over twenty years later, and Kennard’s (and Friedman’s by extension) free-market enterprise intentions resulted in the two largest national ISPs owning over fifty percent of the broadband services market today. Deregulation did not prevent monopolies from forming; it accelerated their development, as larger ISPs realized it was in their rational interest to diminish and eliminate competition to protect their profits. What concrete actions did the “copper cabal” take to reduce competition in a deregulated environment?
Susan P. Crawford, the John A. Reilly Clinical Professor of Law at Harvard Law School, details the actions taken by cable incumbents during Kennard’s tenure as the FCC General Counsel (1993-1997) and Chairman (1997-2001). She states, “The major cable providers in this country do not compete with one another. The operators clustered all cable into regional monopolies during the summer of 1997—Leo Hindery, then-President of Tele-Communications, Inc., and the architect of the effort, calls that summer the “Summer of Love”—pursuing swaps and partnerships that put every market in the United States except four in the hands of a single operator.”
The two Salinas schoolgirls are unable to have affordable, reliable broadband internet access at home because of the existing national ISP monopoly. Today, the large cable and telecom ISPs essentially leave these two girls (and millions of other impoverished Americans) disconnected from a promising, Internet-enabled tomorrow.
Thus, Andreessen’s essay is timely in sounding the alarm. His writing does more than just examine America’s shortcomings in dealing with the novel coronavirus. The VC’s relevant piece inadvertently reminds America of her existing digital divide, which is best represented by the two Salinas schoolgirls’ trials and tribulations. Wilson and Faloon recognize that the digital divide won’t “cure itself.” Therefore, it is all the more important that a company like Ready.net exists as a remedy.
Wilson says, “Our mission here is to help our customers, the local ISPs, get ready for the new world in which access to the Internet is table stakes. It’s all about what else they can do for their subscribers. We want to give our customers superhuman abilities so they can connect more people to better services.”
Before discussing their startup in further detail, one must finish assessing the market’s state. It’s surprising how a poorly crafted regulatory form can strengthen the monopolization of an industry! Nevertheless, the market opportunity presented by providing broadband internet to overlooked rural areas is immense on its own, and that doesn’t account for the added billions in revenue from bundling services or even financing smaller ISP’s capital expenditures. Fortunately, while telecoms and cable companies relentlessly compete for urban-area customers, Wilson and Faloon build software for ISPs servicing rural America. However, to fully appreciate what the two cofounders are building, it’s important to understand America’s cultural terrain that encourages our need to build.
While one could question the logos of Andreessen’s argument, the pathos of his call-to-arms stirs latent yet genuine feelings within every American. America conceives itself as a do-it-yourself (DIY) country. The ability to get things done yourself is infused in America’s cultural DNA. But some perceive the expression of this self-reliant gene as waning over the years. When faced with a collective problem, instead of appealing to our neighbors to unite in fashioning a solution, we appeal to administrators to resolve our issues.
Tanner Greer of Scholar’s Stage succinctly captures the cultural shift. He states, stating, “In the 21st century, the main question in American social life is not “how do we make that happen?” but “how do we get management to take our side?” This is a learned response, and a culture which has internalized it will not be a culture that “builds.” Greer’s pertinent observation dovetails nicely into Andreessen’s sentiments that smartly evoke our national pride. The latter harkens back to a past era where America was confident in its ability to build: “Our nation and our civilization were built on production, on building. Our forefathers and foremothers built roads and trains, farms and factories, then the computer, the microchip, the smartphone, and uncounted thousands of other things that we now take for granted, that are all around us, that define our lives and provide for our well-being.”
Compare that past ethos of self-sufficiency to the present zeitgeist. Today’s rural Americans are fed up being put-on-hold by a national ISP’s local customer service representative to complain about poor internet service. Appeals to authority don’t work. There was no authority for the two Salinas schoolgirls to demand better internet service at home for virtual schooling. They made a classroom out of a Taco Bell asphalt parking lot for themselves.
As they say, if you want things to get done, you better do it yourself.
Nathan Stooke, CEO of Wisper ISP and a customer of Ready.net, knows a thing or two about DIY. He says, “Most people don’t know that Wisper ISP is a 20-year overnight success. In the beginning, my team and I were manually purchasing and assembling the necessary hardware to create the radios needed to transmit a wireless internet connection. It was a lot of bootstrapping, do-it-yourself kind of work. But our customers were incredibly thankful when we would come out to install these radios at their homes or businesses. Before we had a presence in the areas we serve, some residents would relocate to other places that had an ISP who could provide high-speed internet.”
Wilson and Faloon are rejuvenating middle America’s DIY-culture to improve digital services with Ready.net. Ready provides small, local ISPs with an end-to-end “subscriber engagement platform.” The startup’s platform enables these firms to centralize their back-office processes, maintain a customer-facing mobile app, and convert field reps into sales agents. The startup’s software empowers small, local ISPs to upsell and cross-sell additional services such as telehealth or voice over internet protocol (VoIP) to the latter’s subscribers. These additional services are worth billions in additional revenue across the thousands of rural internet providers serving tens of millions of Americans overlooked by cable and telecoms firms. A critical observation here is that the quality of telephony and networking infrastructure used by local and national ISPs has improved over the decades. Yet, the cost to produce such hardware has not decreased nearly as fast as software in general. Hardware upgrade costs appear to be the primary critical rate-limiter for ISPs. Yet, software innovation could help these firms bypass such capital constraints that national ISPs overcome.
Whisper CEO Stooke adds, “Ready.net has greatly streamlined our back-office operations. Given the nature of our DIY industry, in addition to assembling the hardware ourselves, a local ISP would usually have to create their own software from scratch. When these businesses are sold, the software is generally left behind. With Ready, they brought us close to the leading-edge of BSS software needed to automate our back-office processes. Instead of having to communicate between multiple systems located in a different department, Ready allows us to have customer information all in one location at our fingertips.”
Going back to the 1970s, a Bell Labs researcher named John Cioffi figured out that one could use existing copper telephone wires to transfer data without additional network infrastructure. In the same decade, on the software side of the equation, Vint Cerf and Bob Kahn, often referred to as “the fathers of the Internet,” developed the Transmission Control Protocol/Internet Protocol (TCP/IP) protocol suite, the most popular network protocol in the world. It is the foundation of nearly all IP-based services today. Building on Cerf’s and Kahn’s discovery, in the early 2000s, Martin Casado invented Software-Defined Networking (SDN) at Stanford University. SDN can be interpreted as an improvement over TCP/IP, as it “creates the ability for operators to define much more complex traffic forwarding behavior.” This helps ISPs guarantee Service Level Agreements or contractual obligations broadband providers must meet concerning network performance.
Back to the present day economy, national ISPs can upsell and cross-sell effectively through their economies of scale. Their refined sales playbooks and extensive telecommunications infrastructure allow them to serve additional customers and provide a greater variety of supplementary services with decreasing marginal cost. There are two critical observations to be made from the stated facts. One, similar to Cioffi’s hardware and Cerf’s and Kahn’s software discoveries and subsequent innovation, respectively, Wilson and Faloon understood software, specifically SDN, can be used in place of new hardware to add additional services. Two, software can replicate the economy of scale advantages enjoyed by national ISPs, ostensibly putting local ISPs on an even-footing to compete.
Wilson states, “The name ‘Ready’ is meant as a state of preparedness. It’s also a play on the telecom industry phrase ‘Make Ready,’ which is the required work to prep utility infrastructure for broadband usage.”
Ready’s cofounders combined these two novel insights to create software that helps ISPs upsell and cross-sell additional services more effectively to their subscriber base while only using their current networking and telephony infrastructure. As a result, Ready.net differentiates itself from Sonar Software and Powercode, two other well-known ISP software providers. The former leverages software, specifically implementing SDN, to help ISPs layer additional services on top of what they already provide through their current hardware. At the same time, the latter two only focus on improving ISP back-office processes.
One particular example of Ready leveraging SDN is in interfacing with a customer’s provisioning system. A provisioning system allows an ISP to connect and maintain services for their current subscribers. Ready’s customer-facing application allows an ISP’s subscribers to customize and adjust their subscriber plan whenever they want, and their backend SDN-implementation interacts with the ISP’s provisioning system to adjust the networking output to provide the defined-level of service that the subscriber wants. With Ready, local ISPs can provide more than flexibility in their subscription plans. Ready gives an ISP’s subscribers agency and ownership over their subscription. Such user control keeps a local ISPs customers loyal and empowered, unlike the captive markets national ISPs operate in with impunity. ISPs using Ready.net can increase their gross margins per subscriber while growing their top-line revenue. The net income can then be used to invest in infrastructure upgrades, such as swapping out copper wiring for fiber optics or be kept in reserves to make their business more attractive for outside investment on a risk-adjusted basis.
Faloon asserts, “Local ISPs are the best path for our nation to solve the broadband divide. They can take on the copper cartel no problem. They routinely crush them where they’re given a fair chance. They have two rate limiters: capital and software. That’s why we made Ready.”
For small ISPs who are ready to seek financing, they can do so through Ready BOSS. (BOSS stands for Back Office Secret Sauce. The name refers to telecom acronyms BSS and OSS, which stand for business support systems and operating support systems, respectively.) BOSS offers three core services: Ready Growth for data-driven growth marketing strategies; Ready Finance for capital investment for infrastructure upgrades and balance-sheet liquidity; and Ready Operate for automation tools to eliminate and streamline manual back-office processes. Ready can provide more affordable capital to the ISPs it serves because the startup’s software powers their back-office processes. From the data the startup collects on a particular ISP, it can feed that into unique, proprietary risk models to offer loans at more affordable interest rates, unlike traditional financial institutions. BOSS’s feature trinity catalyzes ISPs to scale in a capital-efficient manner by providing more value through their software-enabled economy of scale. The emergent network effect of Ready’s customers offering more and better services to rapidly acquire more ISP subscribers, growing the startup’s revenues exponentially in turn. Ready.net’s potential success will not be possible without the talented team behind it.
“On the front-end, Ready has done a lot of the heavy-lifting on the user interface and experience aspects to allow a self-service system for our customers. Ready gives us different ways to serve our customers when they need help, which leads to a better experience for both parties. Most importantly, Ready integrates with our provisioning system to update key hardware and databases whenever a new customer signs up for our services or an existing customer wants to change their subscription plan. The level of flexibility that Ready provides is a game-changer,” states Stooke.
Before returning to address the daring humans behind Ready.net, it’s necessary to revisit Andreessen’s essay one final time. Towards the end of his writing, the VC implies that the public and private sectors operate in competition with one another. While one can agree that this is true in certain sectors of the economy, there are other examples where industry and government have a symbiotic relationship. The very Internet itself wouldn’t exist without public sector investment and development. Cerf (while first at Stanford) and Khan were researchers at the Defense Advanced Research Projects Agency, commonly referred to by its acronym, DARPA. DARPA, the U.S. research and development agency of the United States Department of Defense, which is funded by taxpayer money, spearheaded the Advanced Research Projects Agency Network, or better known as ARPANET, in 1966. ARPANET was the predecessor to the Internet, which we take for granted today.
Andreessen knows ARPANET quite well. In a March 2014 WIRED magazine profile, he stated the following:
“There is a sense that Mosaic and the web browser came out of nowhere, but with Mosaic we built on the work of others. In particular, we exploited the intersection of two deep technology stakes that matured in the early 90s: the ARPAnet turned NSFnet turned internet, and the microprocessor turned personal computer turned GUI-based PC.
And then we made a leap of faith. Most people in the world had neither internet access nor a P.C., but we made the simplifying assumption that everyone would have both, which helped give people the reason to get both, and the assumption came true.
The element critical to the web’s success is that everyone in the world can bring to it their own ideas, and build any kind of website. This open-ended programmability was unlike any other networked information system in history” (emphasis added).
The “work of others” that Andreessen “built on” was Cerf’s and Kahn’s at DARPA, similar to how Wilson and Faloon are building on Casado’s SDN innovation to create Ready.net. Unfortunately, it’s not a given that “everyone in the world can bring to [the web] their own ideas” because not everyone has a reliable Internet connection. However, if the Ready cofounders are successful, they will help prove Andreessen’s thesis about the web.
In the same way that he “made a leap of faith” to develop Mosaic, he could make another leap of faith by believing in Wilson and Faloon. The two believe it’s time to build high-speed broadband connections for rural Americans, which allows the latter to unlock the nation’s unlimited economic potential.
French-Owen, a cofounder of Segment (which was recently acquired by Twilio for $3.2 billion) and angel investor in Ready.net, adds, “I invested in Jase, Mike, and the Ready.net team because I support their mission. Access to fast, reliable internet is one of the biggest enablers of human creativity and potential. It makes such a difference in the lives of hundreds of millions of people. I’m fortunate to have mostly lived in cities, where there are many great options for fast internet access. But in many parts of the country, the reality looks quite different. Internet access is slow, expensive, and controlled by just a few providers. Ready.net is helping change that dynamic.”
Wilson and Faloon are the cofounders of Ready.net. Wilson, Ready’s CEO, is an MIT-trained serial entrepreneur. He previously founded several companies, including Neighborly, which was focused on helping public entities public-private partnerships acquire and create new funding sources. Faloon, Ready’s COO, is a finance expert with over fifteen years of experience in the industry. He previously was COO of Standish Mellon Asset Management Company, a $150 billion investment fund, and a Chief Strategy Officer at Neighborly, where he met Wilson. The two cofounders have done a great job building out their team, as they have eight stellar engineers on their team.
Ready’s cofounders state, “Our backgrounds combine decades of enterprise experience, fintech experience, and broadband infrastructure experience together with degrees from MIT, Harvey Mudd, Colgate, USC & U.C. Boulder. “
If giant cable and telecom corporations don’t provide the means of communication to America at large, then everyday Americans will have to do it themselves.
Today, Wilson and Faloon help America’s local ISPs build inexpensive, high-speed internet for those two Salinas schoolgirls.
Tomorrow, all American students will be Ready for virtual schooling in the comfort of their homes.