Industry regulations have made open access networks a fixture in Europe and a recent report from CoBank’s Knowledge Exchange predicted the networks could end up disrupting the U.S. market as telecommunications firms look for additional revenue streams.

CoBank, a company that has described itself as one of the largest providers of credit to the rural economy, said business models for open access networks are simple to understand.

“A fiber network owner/operator sells wholesale network access to multiple internet service providers (ISPs), which then resell it to their respective residential and business broadband customers,” a summary of the report stated. “The ISPs are responsible for customer acquisition, billing and support services, while the network operator is responsible for network operations and maintenance.”

The report, published on CoBank’s website, theorizes that builders of open access fiber networks will first focus on urban and suburban markets due to the opportunity for growth.

“Rural markets will be a lower priority, especially ones that are considered high-cost markets,” CoBank’s report stated. “Open access network operators will likely explore Broadband Equity, Access and Deployment (BEAD) program financing options for these markets, and therefore could be a competitive force in surrounding markets if they pursue an edge out strategy from their BEAD markets.”

Jeff Johnston, the lead communications economist with CoBank, said rural providers are probably safe for now.

“But over time as the institutional investors look for new fertile ground, some rural markets may become a bigger priority,” he said. “Underserved markets eligible for federal funding from the Broadband Equity, Access and Development program will likely be among the first rural markets targeted by open access network builders.”

Regarding the potential impacts that open access fiber networks could have on rural markets, the report warned rural providers not to dismiss future competitive threats. Institutional investors have raised a significant amount, according to the report, which said there is an active ‘land grab’ in competitive urban and suburban markets.

“Therefore, as urban and suburban markets will be first to be built out, some rural markets could become fertile ground for open access network operators hungry for growth and backed by deep-pocketed investors,” the report said.

Read the full report by CoBank here on the company’s website.