There has been no shortage of news stories about the abysmal state of Internet connectivity in the city of Detroit. As the Motor City attempts to remake itself as a tech hub, the fact remains that only 40 percent of households here are online—the second-lowest number in the nation after Laredo, TX.
The state of Detroit’s digital divide took another turn last November when Rocket Fiber, a newly formed startup initially nurtured inside Quicken Loans, announced it was making ultra high-speed 10-gigabit internet service available to residents of downtown Detroit, with plans to expand into the Midtown neighborhood in 2016.
Marc Hudson, Rocket Fiber’s CEO, said part of the reason he started the company was to help solve the digital divide, although there’s not a set timetable dictating where and when the company will expand. He and his co-founders, Randy Foster and Edi Demaj, were inspired to create the company in 2014 after reading about the Google Fiber initiative in Kansas City.
“Seeing how transformational Google Fiber was to Kansas City, we thought it could really help with Detroit’s revitalization,” Hudson said. “We’re all from Michigan, and one-third of our employees live downtown.”
Having gigabit Internet allows people to complete bandwidth-intensive tasks quickly. With gigabit speeds, doctors can scan and upload images in a fraction of the time it would take with the Internet running at traditional speeds, or one could operate an Internet of Things environment—a smart home, for instance—without bogging down the network. Gamers and creatives also tend to be fans of gigabit speed Internet. But at this point in the country’s online evolution, gigabit Internet is generally considered a deluxe offering.
In 2014, Hudson and Foster worked on Quicken Loans’ software engineering team, while Demaj worked for Bedrock, Quicken chairman Dan Gilbert’s real estate arm. Quicken has an internal site called the Cheese Factory, where employees can submit business ideas and receive feedback. The trio turned in their idea for Rocket Fiber and got a positive reaction.
“But it’s a really big project, so we emailed Dan directly to get on his radar,” Hudson recalled. “He came back and said it was worth looking into.”
From there, the co-founders spent three months building a business case and hired two different fiber optic companies to run feasibility studies. They aggregated data and began pitching the idea—now with actual data attached—internally up the chain of command.
In May 2014, the three were finally granted an audience with Gilbert, where they pitched their now fully formed idea for Rocket Fiber. Gilbert liked it so much that he backed it with a $31 million investment and a commitment to help build the network in downtown Detroit, starting with some of the residential properties Gilbert owns.
“There’s a lot of capital required to lay fiber and build the technology platform behind it,” Hudson said. Fiber optics technology has been around for 20 or 30 years, he added, but it has “advanced exponentially” in recent years. Many telecomm companies will lay fiber down as a backbone for the area it services and then run copper lines out to offer customers access to cable and phone services. With Rocket Fiber, “we’re running the fiber right into people’s homes,” he said.
Rocket Fiber charges $299 per month for 10-gigabit Internet service, with no contract and no installation. So far, Rocket Fiber only offers Internet service, but it expects to add cable TV soon. The company has already laid 17 miles of fiber optic cable downtown and began providing service to customers in the Capitol Park district at the beginning of the year.
Hudson and his co-founders realize that taking on the “800-pound gorilla”—the market dominance held by Comcast and AT&T—might be a fool’s errand, but the company has more in mind than just profit, he said. Once a fiber optic infrastructure is established in wide swaths of Detroit, Hudson sees it as an economic development tool to keep young millennials flocking to the city. Rocket Fiber also intends to offer customer service vastly superior to the often-criticized market leaders. Of the company’s 32 employees, 14 work as customer service agents.
After Midtown, Rocket Fiber plans to build out to the greater downtown area and surrounding neighborhoods like Woodbridge and Corktown, and it’s also considering making forays into nearby suburban communities. Hudson hopes Rocket Fiber will eventually play a role in bridging Detroit’s digital divide once the company proves sustainable, though he declined to name which community organizations he has been meeting with. The company has so far been “funded internally.”
“There’s a lot on the table; lots of potential,” Hudson said. “We’re trying to get gigabit Internet in the hands of everyone, and when the infrastructure is in place, it will allow tech companies to innovate quicker. We’re working with a number of nonprofits, and as we expand, the digital divide will become more of a focus. We’re definitely aware of it and want to get involved once we get the business rolling.”
