100+ Demand Aggregation projects – what have we learned?

Map of Town with Fiber Network Solutions

Map of Town with Fiber Network Solutions

Late 2013 we released the first version of our demand aggregation platform COS Service Zones. Our primary focus was to help those building out fiber in the US get enough customers signed up so that they could move forward with their projects with lower risk of failure. Since then our platform has been used in over 100 projects in the US alone. What have we learned so far? Well, a lot, and some of it we will share with you in this article.

COS System’s founders started building software for the fiber network operators in Sweden 20 years ago. At this time the saying “build it and they will come” was still the most common strategy (if you can call that a strategy?) behind fiber buildouts. The thinking was that a new technology, literally lightyears better than what was in place before (in Sweden primarily ADSL and traditional dial-up modems), would make customers switch over without hesitation. It soon proved though that it wasn’t that easy. Studies have shown that over time the fiber take-rates tend to reach over 70 percent, but this often took 10 years or more. Since large parts of Sweden, like the US, is rural, a more cautious method of building fiber was starting to be used. When approaching a new area you tried to get engaged with the residents through meetings, information and even door-to-door campaigns. You defined their neighborhood boundaries and explained that they needed to come together and show that enough of them were willing to sign up before the fiber build-out could start. It was generally done with pen and paper and with the help of grassroots in the neighborhoods who volunteered in rallying their neighbors. Often these grassroots were those running a home business and those with kids who made the phone line busy every night and the phone bill break the family budget. This method was very effective in avoiding the worst potholes where low take-rates would make the network builder loose money for years, but it was a demanding administrative task.  

In 2012, when COS Systems first started to look at what the fiber industry looked like in the US, we decided to build a platform to make this method digital and to the largest extent automated. We already had a BSS/OSS (Business and Operations Support System), but it was too early to sell that platform, because the networks had to be built first! The good thing was that we could use a lot of the experience we had from building that platform and a large portion of the core code.

We built the product around a couple of major concepts. First we needed a way to manage people’s expectations and the level of commitment asked for. The result was the two first phases a neighborhood zone could be in; Survey and Signup (Zones are now often referred to as “fiberhoods” – more on that later). In the Survey phase people are asked to take a non-committing survey asking questions about the performance of their current Internet connection and of course how likely they are to sign up to the new network potentially being built. If the take-rate target is reached in Survey phase, the zone can be moved to the next phase which is the Signup phase. This phase is suitable to use if you know you will be able to start building the network in the near future if the take-rate targets are met. The customers would agree to the terms of the connection to the network and later we also added functionality to gather deposits.

From our customers building fiber we’ve gotten to know that the most hectic phase is still the construction phase since the subscribers typically have a lot of questions at this stage. They want to know when the installation will happen, how it will affect their house, their lawn, etc. The zone phase Construction is therefore important in order to be proactive in spreading information to the subscribers in those zones. The last phase is Connected and in this phase you will direct the subscribers already connected to your Marketplace to sign up for services or sign up laggards who didn’t sign up before.

Still, the most important feature is probably the Champion functionality. This is a way to automate the identification, signup and management of the local grassroots. On the COS Service Zones platform there is an entire program relating to the Champions. They apply to become your champions on the website, you approve them manually after checking their willingness to really help out. All champions will get a referral code and can thereafter go out and recruit their neighbors to the network.

Late 2013, the first version of the software was ready for launch. Imagine our surprise when during developing the platform, Google Fiber had launched in it’s first city, Kansas City, using a methodology similar to ours but without the first Survey phase. What we called zones, they called Fiberhoods and we got a much easier way of communicating what our platform did! The methodology even got its own term; Demand Aggregation.

So, that was the background, now what about the learnings from over 100 demand aggregation projects so far in the US?

First, a big misconception has to be made clear. The methodology was not, unlike many beliefs, designed to help private providers cherry pick the richest and most profitable neighborhoods, to leave the rest of the city unserved. Where we come from the networks we work with are generally community owned Open Access Networks (You can read more about open access here). In this model the fiber infrastructure is treated as a city owned utility that is open for any provider to deliver services on. The goal is to build fiber to everyone, just as with electricity and water. But I believe I speak for any taxpayer in the world when I say that you would expect your politicians to use the taxes you pay in a responsible and effective way. By building the network first to where high take-rates ensures a positive return on the investment, the cash flow from good neighborhoods can eventually be used to cover cost for further expansion. This means that the neighborhood that potentially could benefit the most might not get it first, but at least they will get it. If just building in random order or only to unserved areas the money might not last long and large parts of the area remain unserved. Use the method to connect all and remember – the biggest benefit is not the revenue generated, but all the benefits access to high-speed internet will bring to the community.

It was hard to choose when it comes to concrete advise we want to share in this post when running a demand aggregation campaign. Please feel free to reach out if you want to discuss more.

  • Don’t make the zones too large. We have found that an ideal size is 50-100 homes. If the number of neighbors you need to convince into signing up is for example 200, it will feel like your effort won’t make a difference. If it says you need 20 more it will feel like it’s within reach and you will be more eager to go out and spread the word.
  • Kick the campaign off with a blast. Even though the platform builds upon word-of-mouth and neighbors talking to each other, you need to make people aware of the project and the COS Service Zones site as a start. If you already send bills to your community (ideal for utilities), include information about the fiber project. Talk to local news, both papers and radio and make them write about the project. Invite people to an information meeting. Those who show up will be the ones most eager to get fiber. Have them sign up at that meeting and convince them to be your champions. They will be your best sales people.
  • Use the community to spread information. In underserved and unserved areas it’s not sure people understand why they would need better internet and some education might be needed. By uploading both marketing and educational information on the COS Service Zones site, you make it available for download and print-out to anyone who wants to share it. This way it will reach more people and you will be able to control the messaging.
  • Use your first buildouts as marketing. We’ve found that in areas where there have not been many options for high speed Internet before, the experience of the first customers is a very good thing to market. Interview your first customers in their homes and let them share their story about how their new service works.
  • Communicate like a pro (or use a pro). Even if building fiber is an incredibly positive thing, there still might be those questioning the project. It might be your competitors who are threatened or just people who think money should be spent on something else than new technology (especially if it’s a municipally funded buildout). You must quickly respond in a professional way to any misconceptions being spread. If you don’t have this competency inhouse you could hire a communications firm to help you with this as well as with marketing.

What we have found over the years is that with the COS Service Zones platform, some smart marketing tactics and good communications, you can really use your entire community as your sales organization and quickly reach remarkable take-rates. In fact, if successful you will be doing much more than just demand aggregation – Perhaps it is time to update the industry term to Demand Generation?


For additional information contact:

Isak Finér
CMO & VP North America
COS Systems
+1 (540) 988-3224