Decentralized Internet Service Providers
Note: Data in this section last updated September 12th, 2022
How Does the Internet Work?
We discussed previously that information travels over the internet via wires (and sometimes via radio waves).
Map of all Major Internet Cables on Earth
These wires are owned by companies known as Internet Service Providers (ISPs) which are split into three levels, also known as “Tiers”:
Tier 1 - International: Tier 1 internet providers form the “backbone” of the internet. They are responsible for maintaining the high-speed cables that cross continents and major oceans. These providers do not deal directly with end users, and instead charge national and regional networks for carriage. Notable Tier 1 ISPs include AT&T, Verizon, China Telecom, PCCW, Singtel, NTT, Telstra, British Telecom and Deutsche Telekom.
Tier 2 – National and Regional: Tier 2 providers provide a bridge between the first and last mile. They pay Tier 1 networks for transit and sell transit to Tier 3 networks (and sometimes directly to large companies and governments). Major Tier 2 providers include Comcast, Virgin Media, Cox Communications and CTS Telecom
Tier 3 – Local: Tier 3 providers are responsible for connecting homes and small businesses to the internet. As such, they are often known as the “last mile”. The bulk of these connections run through the wires provided existing cable TV networks (although fiber optic service is growing)
As mentioned previously, the vast majority of global internet traffic is routed through a handful of Tier 1 providers. This presents several problems including: i) the ability to charge high premiums and extract monopolistic profits, ii) the power to block or censor traffic and iii) vulnerability to failures and outages (e.g. the entire island of Tonga lost its internet connection for over five weeks due to a damaged undersea cable) .
Decentralized ISPs, such as Helium, aim to fix this by allowing users to host their own internet access points.
How does a Decentralized Internet Work?
Helium is a decentralized wireless network powered by cryptocurrency. The company was founded in 2013 by Shawn Fanning of Napster, Amir Haleem, and Sean Carey, and is backed by a notable list of investors that includes Pantera Capital, Khosla Ventures and a16z.
Unlike traditional ISPs, transmission occurs over a global network of independently owned “hot spots” – small devices that can send data over long distances using radio frequencies. Owners can purchase these gadgets for around $500 and transmit the signal to nearby internet-enabled devices (this is similar to the Wi-Fi hotspot on your phone, but ~200x more powerful).
Helium has made significant progress to date and deployed nearly 1 million devices across 182 countries. This makes it the world’s largest user-owned wireless network.
The Helium Network Hosts Nearly 1 Million Hotspots Across 182 Countries
Although many have tried to disrupt the existing network of ISPs, Helium is the only company to make headway on this endeavor.
This is largely due to its novel use of cryptocurrencies as an incentivization mechanism. In exchange for hosting hotspots, Helium providers are rewarded with the project’s native coin, HNT. While earnings can vary greatly from user to user, some hosts have reported making upwards of $2,000 a month.
To ensure the stability of the network, the protocol uses a process known as “Proof-of-Coverage”, which randomly pings hotspots to verify that they are in the correct location and actively transmitting a signal.
Helium, also known as “the People’s Network”, eliminates many of the traditional concerns of centralized ISPs and may help:
Lower Fees: Transitioning from the current oligopoly of ISPs to a highly-competitive, decentralized network should significantly reduce prices in the long-run.
Eliminate Censorship: Anyone can use the Helium network, it can’t censor transactions and the network can’t be shut down by a third party
Reduce Failures and Outages: The use of multiple, overlapping hotspots reduces reliance on a single point and helps reduce the risk of outages
At the time of writing – September 12th, 2022 – Helium’s fully-diluted market cap is $1.2 billion.
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