A Gigabit Fiber Startup Will Compete With Comcast in Detroit

Detroit is in better shape today than it was during the height of the recession, when it was unclear whether American car manufacturers would ever recover. But a startup internet service provider thinks that, in order to secure the long-term economic future of the city, it's going to need to attract a new set of tech businesses with ultra high speed internet.

At the moment, Detroit's residents and many of its businesses are served by Comcast, whose fastest internet speeds in the city max out at 105 Mb/s. Rocket Fiber, which is set to start serving businesses and residents this fall, is planning on offering gigabit internet speeds similar to those of Google Fiber for $70 per month (for home service), which is $45 cheaper than what Comcast charges for its fastest residential service. Business-class service pricing varies.

The hope is that fiber internet service will attract new companies as it has in places like Kansas City, which is served by Google Fiber, and Chattanooga, Tennessee, which has built out its own fiber internet service.

"We saw Google was doing it in Kansas, and then we visited Kansas City and saw the entrepreneurs moving there, the new technology startups happening there," Edi Demaj, one of Rocket Fiber's cofounders, told me. "We want to put the city on the map from a technology standpoint, we want to see Detroit come back."

"If we do something similar to what they are doing in Kansas, we thought it'd be huge for Detroit," he added. "A lot of companies moved to Kansas that would have never moved to Kansas. We want to make sure Detroit is one of a handful of cities to have gigabit service to the residence."

The startup is backed by Rock Ventures, an umbrella company owned by Dan Gilbert that has heavily invested in (and owns) many companies in and around Detroit (Gilbert also owns the Cleveland Cavaliers and is chairman of Quicken Loans). So far, the company has laid a 5.5 mile fiber "backbone" around the city's downtown area, and it will begin lighting up residences and businesses later this year.

As with other cities that have built new fiber networks, the city's poorest areas will not be served immediately. The thinking in other cities has been that there is simply not the demand or population density (read: people who can afford the service) necessary to offer the fastest internet speeds and remain profitable if the service is built out to every corner of a city from the get-go. It's a point that raised contention in Kansas City and it's a problem that has been seen again and again all over the country, in areas both urban and rural.

Rocket Fiber says it plans to expand to the city's midtown area in 2016 and the rest of the city and suburbs by 2017.

Overall, it's taken roughly two years to get to this point, where the company is about ready to actually start providing internet service. About 2,000 people have formally expressed interest so far.

"We're laying our own physical infrastructure, which is a capital-intensive operation," Christina Mathes, the company's vice president of client experience, told me. "The plan is to cover as much of the city as we can and then look into the suburbs."

As I reported Tuesday, Rocket Fiber is one of a handful of internet startups around the country that see an opening created by consumers' dissatisfaction with massive telecom companies like Comcast, AT&T, and Time Warner Cable. The company, like others in this space, emphasizes customers' ability to call a phone number and speak to a real human, and its founders are saying the right things about wanting to help the community they're serving. The company says that if things go well in Detroit it will expand to other cities in other states toward the end of the decade.

"The broadband situation here is bad, and we're all extremely passionate about Detroit—we've been here for years now" Demaj said. "We think that money follows money. We need to build the things we know make a great city if we actually want to have a great city."