We’ve figured out how to install fiber optics at ten times cheaper than traditional telecom companies and we’ve already installed them into 100 homes. We founded Treasure State Internet two years ago. It started off as a wireless ISP, with small cell wireless access points to limit the range. The idea is that within a limited range, maybe a mile, you can push faster speeds. Most companies are trying to push 13 miles, which vastly reduces their speeds. But that wasn’t enough for us, we also decided to get into fiber optics for even higher speeds. Traditionally, fiber optics are hugely expensive, hard to deal with, hard to manage, and are a large capital outlay that you don’t get a return on for 5 to 10 years. That’s why you see all the telephone companies complaining about the difficulty of installing fiber optics and upgrading their networks.

When you actually do the apples-to-apples electronic hardware cost of what is going in to a traditional installation versus ours, the comparison is $900 to $130.

We have a different installation method, and also different equipment that we’re installing. Most networks were built in the ’80s and ’90s, and they’re still using that same construction method. Once you start stripping away all of the unnecessary components they’re building, costs decline significantly. The problem with telecom companies is they have a whole legacy architecture they carry with them. For instance, they’re still putting analog phone lines on these things. The reality is we just want to get good internet connection. You can do all that other stuff a different way. Our goal is to pair the fiber to a property.

There are two ways in the United States that infrastructure’s put down. You either dig a big trench with a backhoe, probably eight inches wide minimum, at whatever depth you need to go down to. Cable and phone companies use directional drilling which is great for long-haul projects. If you’re trying to go miles and miles, point-to-point connections, you would drill because the disturbance is minimal. But we’re trying to stop at every single house and the size of a conduit that we’re putting down, is like a sprinkler line. It’s seven millimeters in diameter—you don’t need to dig an eight-inch wide trench for that. We only need a three-inch wide cut to deal with and don’t have to go nearly as deep. This isn’t conductive; it’s not electricity. It’s not gas. It’s not a big deal. The difference in cutting takes a lot less time and effort than it would have otherwise.

One of the biggest savings is on labor costs. You no longer have to dig a huge trench that can take several workers at once. With ours, you dig with maybe one or two people, throw the trench down, backfill it. You’re done.

Yes, but only in America. Scandinavia and South Korea already have automated tools for these installations but they’re extremely expensive. $500k expensive. Eventually those tools will make sense for us long-term but they’re not on our radar immediately.

We’re already 10x cheaper than the regular telecom companies but we think we can halve the cost again. The next goal is to make an even smaller saw that doesn’t exist at the moment. Instead of doing a three-inch wide trench, we can do a three-quarter-inch wide trench, then you don’t even have to use asphalt to fill it up. You can use crack sealer, which will make it even cheaper going forward. We’re going to make our own wheel saw that’s smaller and if we combine that with conduit shipped from China and fiber shipped from China, we’ll be able to install fiber at least five times faster with way less impact, with way cheaper material. We’re planning to go from $1,000 a customer to the vicinity of $300.

You want to buy some duct and you want to buy some fiber, you call up a big distributor that represents all the different manufacturers. They want huge minimum oders. The materials are marked up ridiculously high. We found out if we directly shipped our materials from China, the conduits that cost $0.30 a foot from big brands, becomes $0.07 a foot. Our material cost is cut by four or five times. And it’s the same plastic that everybody uses, simply not branded and marked up. It’s like the difference between Tylenol and generic grocery store Tylenol.

We ran our lines through an eight block radius and have received twenty customers, including large business customers. We also have another thirty customers in the pipeline who want to get set up with our internet. The hundred unit track of fiber is already installed, meaning we basically just have to get it to run from their street to their home. The onboarding is incredibly fast and easy. One house will pay for and profit us for the entire block.

There’s a $299 install fee plus $65 per month for internet. When we first capture a customer, we’re getting roughly $364. And our cost in materials to get them is less than $10 in conduit, less than $20 in fiber and electronics for both sides is roughly $110.

At its most basic, we lay a main line that goes down the streets and then once a house signs up, build from that main line to the house. Then we build other main lines that can continue to branch and connect with older lines. It’s like a honeycomb-style system: redundant and cost-effective. Let’s say you’re running a bundle of fiber from point A to point B, by the time you reach point B, if you’re stopping off at every house, you’re going to run out of strands. What we do is keep back four strands so that at the end of point A to point B, we create a little hub a couple miles away. So when want we to build again, we draw from the strands piled at the hub.

We don’t, and so all of our costs are based on the assumption that we will have 10% of the households we pass actually sign up. Those assumptions are based on recuperating our costs. If we spend $100,000, within a year we will make $100,000 back if 10% to 15% of those houses sign up.

We have a five mile map of Helena right now. We recently had 600-800 signups that want our internet. A majority of them came in through an online forum we held and are outside of our current radius. Next step would be to set the wires in their neighborhood and get them hooked up to our service.

All fiber is not created equal in how you use it and what you connect on the other side of it. Our fiber is better because we are pushing the actual feed down the glass. A lot of times you’ll hear CenturyLink go, “Oh, we’ve got fiber to that business building,” and they’ll offer maybe forty-five megabits up and down. When we say we’re offering fiber, we’re saying we’re offer a gigabit to your home or business, and for only a $100 more for our cost in hardware, we could upgrade it to ten gigabits. And we’re building an asset that’s not going to go away for the several years. There’s nothing better. There’s nothing faster.

We can apply for federal grants relating to bandwidth projects and build wherever we want. If we were just an internet company, there would be a bunch of other costs and fees and filings required for us to put things in the street. Because we’re an internet provider, we have the same ability as a telephone company, but none of the regulations.

We’ve had about thirty people that have emailed us saying, “I have $50,000 and want to do this in my town. Tell me what the hell I need to do.” The long term goal is to franchise, but short-term, we still have a lot of innovation that we need to pin down. Our plan is to custom-design additional tools to make everything faster, creating an actual process and procedure that can be handed off with minimal training. When people email us saying, “Hey, I want to start a network,” I can load an entire container up with product that I’ve produced and sell it to them.

To get fiber optics, telecom companies would need to lay a completely new network. They would need to tear up their existing infrastructure and put down fiber if there is any fiber at all. They’d need to do exactly what we’re doing. For a variety of reasons, these telecom companies aren’t equipped to handle that kind of undertaking right now. If they decide to start spending the money, they’re still going to continue to do it the way they’ve always done it. That means outsourcing their entire construction project, and the contractors around here who do that work are good at what they do, but it costs a lot. We’re effectively becoming a construction company that happens to sell internet—we install our own fiber and save on those costs.

Matt: I have been fascinated with the internet since I was a kid. I was probably about twelve when I realized that you could just make web pages. The reason we’re doing this now is because as a user, I wanted to have fiber optics internet. Eric: I’ve always been interested in computers. I probably built my first one around age 12. When Matt and I started talking, it’s like, “I know networks. You know networks. We’re both smart. Come on.” We both wanted to improve internet and it was just a matter of joining forces and making it happen.

First risk is unlikely, but if anyone came in and threw down $100 million, they could potentially outspend us. It’s key to move fast. Another concern is finding qualified employees—especially in a place like Helena, Montana. As we take more money from the bonds, another worry is just making sure that we manage and maintain cash flow, which I don’t think will be an issue.