As downtown Detroit office space fills up and new high-rise construction begins, there's an emerging rivalry for internet services between cable giant Comcast Corp. and Rocket Fiber LLC, the homegrown fiber optics internet service in businessman Dan Gilbert's family of companies.
Rocket Fiber CEO Marc Hudson says the company is months away from rolling out a "fully featured cable TV product" that will compete directly with Comcast and other media carriers for television service over its gigabit-per-second internet connection.
As Rocket Fiber expands beyond regular internet service, executives at both companies are starting to throw a few elbows when asked about the competition for customers.
In a recent interview with Crain's, Comcast Senior Executive Vice President David Cohen said he doesn't see Rocket Fiber as playing on the same field as Comcast does, reaching into every home and business through cable television lines.
"Rocket Fiber so far has had more of an impact, maybe its only impact, in the business services sector and in MDUs (multiple dwelling units)," Cohen said. "And I'm not saying this to be judgmental, it's just a factual statement. Like many competitors in other cities, they're sort of going after the easy cream of the crop."
Over the past two years, Rocket Fiber has laid fiber optic cable throughout downtown, Corktown, most of Midtown and recently crossed the Lodge Freeway to start delivering internet service to the Woodbridge neighborhood.
Cohen seemed well aware of where Rocket Fiber is wooing Comcast customers in Detroit.
"We don't build out only to wealthy areas," Cohen told Crain's. "We don't build out only to commercial business districts."
Marc Hudson, co-founder and CEO of Rocket Fiber, takes exception with how the name-brand competitor views his company's strategy.
"That's the opposite of what we're trying to do," Hudson said.
Rocket Fiber's expansion isn't stopping at the edges of downtown and Midtown, Hudson said.
"Our mission is all of Detroit," he said.
But there are challenges. Fiber optic cable is expensive and many of Detroit's neighborhoods are sparsely populated, giving Comcast and AT&T an advantage to deliver internet and TV over existing cable and phone lines, respectively.
"The rest of the city, obviously, is massive, geographically," Hudson said.
While not providing exact figures, Hudson said 80 percent of Rocket Fiber's customers are outside of Gilbert's family of 100-plus companies.
That customer base was built by a $30 million investment in 2015 by Gilbert's Rock Ventures LLCto lay 5.5 miles of fiber-optic cable network in the central business district to provide gigabit-per-second internet service. Hudson said Rocket Fiber is still working off that initial capital investment.
Large commercial customers are providing the "game-changing" growth Rocket Fiber needs to expand into Detroit's neighborhoods, Hudson said.
Rocket Fiber is developing a wireless service to beam internet signals from a downtown building to the Cody Rouge neighborhood on Detroit's far west side. Other expansions into Detroit's neighborhoods will be through a mixture of "both wired and wireless strategies," Hudson said.
Cohen acknowledged Comcast has "felt the competition" in Detroit.
"But we're competing," he said. "We're not surrendering."
Rocket Fiber, while priding itself on "white glove" customer service, also is fine-tuning its messaging that its technology is superior to the "legacy" coaxial cable (the kind Comcast uses to deliver internet and TV service).
"Enterprise clients, in particular, usually require fiber optic infrastructure and don't consider older, slower technologies like coax cable networks to meet their current, let alone future needs," Hudson told Crain's. "Many of our clients cite the inconsistent speeds and frequent outages of their legacy copper service as reasons for switching to Rocket Fiber."
Rocket Fiber is testing its TV service with a limited number of customers and could have it available for all customers by the end of the year, Hudson said.
Cohen predicted Rocket Fiber would struggle to break into the single family home residential TV and internet market, which Comcast has spent years battling for market share of with AT&T and satellite services like DirecTV and Dish Network.
"I think that Rocket Fiber, like everyone else, will find that it's very difficult, very expensive, with much more questionable returns, to build out their plant, to be able to reach every household in the city of Detroit and compete household-to-household for residential broadband services," Cohen said.
LightSpeed Communications LLC also is offering fiber-optic internet service in select downtown Detroit buildings. But a co-founder of the East Lansing-based startup said its focus is on expanding an existing service in Southfield into other suburbs.
"That's where we think we're going to make a big dent," said Tim Lebel, vice president and co-founder of LightSpeed. "The big carriers have been ignoring the suburbs."
In the Comcast vs. Rocket Fiber battle, the LightSpeed executive is sort of rooting for the other new game in town.
"They're cut from the same cloth we're cut from — they're disrupting the market," Lebel said of Rocket Fiber.