Empire Podcast - How Crypto Fixes the Internet Monopoly with Andrena

In this episode of Empire, which took place on September 10, 2024, Jason and Santiago hosted Neil Chatterjee from Andrena to discuss the decentralization of internet infrastructure, the launch of DAWN, and how wireless technology and blockchain can disrupt traditional internet service providers by lowering costs and improving accessibility and more! Read our notes below to learn more.

Background

Jason (Host) – Founder of Blockworks, Host at Empire & Pleasr

Santiago (Host) – Co-host at the Empire podcast

Neil Chatterjee (Guest) – CEO at Andrena & DAWN (Decentralized Autonomous Wireless Networks)

Disrupting Internet Access with DAWN, Industry Challenges, and Technological Advancements

Jason introduces Neil Chatterjee, the founder of Andrena, which recently launched DAWN and raised $18 million led by Dragonfly. Jason highlights Neil’s background, including his time at Princeton Robotics, dropping out to lead engineering at a startup, and developing close-range mobile data sharing hardware at Facebook before founding Andrena.
Neil provides a detailed explanation of the three-tier system of internet providers:
- Tier 1: This includes subsea fiber optic cables and data center interconnections. Neil describes this as a “magical place” that brings massive capacity to countries.
- Tier 2: Regional fiber providers like Crown Castle. Neil explains how Crown Castle operates by buying up small regional fiber companies and building their own infrastructure, interconnecting businesses along major highways.
- Tier 3: Local distributors like Andrena, Comcast, and Verizon. These providers distribute internet within specific markets or regions.
Neil highlights how this three-tier approach connects the entire world, from global interconnects to data centers, regional interconnects with fiber providers, and finally to local distribution.
Neil identifies two main issues with the current market for internet services: High prices and Lack of competition. He explains that providers often subdivide markets, avoiding direct competition, which leads to a form of localized redlining. Neil points out that the historical high cost of infrastructure has contributed to this problem, but notes that technology is changing the landscape.
Neil describes how Andrena started by partnering with Princeton University to utilize their excess bandwidth and rooftops to provide cheap internet to the town. He explains that Andrena has since expanded this model, becoming both a wireless and fiber internet service provider. Their goal is to bring internet to the last mile by partnering directly with residents and building owners.
Neil details that Andrena competes directly with established providers like Comcast and Verizon by offering a better product, more convenient internet experience, and cheaper prices. He mentions that Andrena currently serves over 10,000 households across 10 different states, working with various types of property owners including REITs, single-family homes, housing authorities, and new construction developers.

Wireless Technology and New Metrics are Reshaping Unit Economics in Telecommunications

Neil says that Andrena typically offers internet services to buildings for $25 to $30, which is significantly cheaper than traditional providers. He highlights that this pricing is for high-speed internet, highlighting the competitive advantage Andrena has developed in the market.
Neil explains that Andrena’s speeds are comparable to fiber optics, offering gigabit internet for as low as $35 in some properties. He then delves into the unit economics of internet provision:
Neil compares his home Verizon connection, which costs $128 per month, to the wholesale cost of the same bandwidth at a data center, which is only about 50 cents. He highlights the stark difference in pricing, noting that internet provision is a 99+ percent gross margin product for traditional providers.
Neil elaborates that the high retail price is due to the significant upfront infrastructure costs, with traditional providers spending $2,500 to $4,000 to bring a connection to a single home. In contrast, Andrena’s deployments cost around $200 per unit, mainly due to their use of wireless technology.
Neil discusses two key metrics in the telecommunications industry: the cost to cover a household and the cost to activate a household. He explains that historically, the cost to cover has been high while the cost to activate has been low to medium. However, with new wireless technologies like 5G and Starlink, this dynamic is shifting.
Neil explains that for 5G, companies like T-Mobile and Verizon are leveraging existing infrastructure and newly acquired spectrum to create extensive coverage. For Starlink, while the initial investment is high (tens of billions), it provides coverage for a vast number of households, effectively lowering the per-household cost.
Neil contrasts this with traditional fiber, where covering just 10 households might cost $20,000, whereas the same amount spent on wireless transmitters could potentially cover thousands of households.

Andrena: Leveraging Decentralized Broadband and Fixed Wireless Technology for Affordable Internet

Santiago asks about how crypto plays into this changing CapEx landscape for Andrena.
Neil introduces Andrena’s approach, which involves using point-to-multipoint antennas on rooftops of data centers, apartment buildings, and commercial buildings to broadcast coverage. He explains that this “fixed wireless” technology has evolved significantly, allowing them to deliver multi-gigabit coverage with a single $400-$500 antenna.
Neil highlights that Andrena’s key advantage is their ability to provide “point-to-multi-gigabit coverage,” which allows them to offer speeds exceeding existing home internet connections while distributing the service effectively throughout the market.
Neil credits Helium for demonstrating that a community-driven network model could work, proving his initial doubts wrong.
Neil introduces DAWN, Andrena’s protocol for providing decentralized broadband. He explains that DAWN allows people to share excess bandwidth efficiently, regardless of whether they’re a household, data center, or internet provider.
Neil compares DAWN’s vision to what solar panels did for electricity, aiming to give consumers ownership of their internet infrastructure with a non-speculative ROI and a much faster payback period (6-12 months) compared to solar panels (5-6 years).
Neil mentions that customers currently paying around $100 for gigabit internet could, with DAWN, pay $200-$1000 for infrastructure ownership and then only $10-$20 per month for the same speed. He highlights that this is possible because the customer owns the infrastructure, eliminating the need for providers to recoup high CapEx costs through monthly fees.
Neil highlights that DAWN’s infrastructure is carrier-agnostic, allowing users to work with any provider across the decentralized network. He explains how users can sell their excess bandwidth to others, giving an example of how he’s only using 0.5% of his connection during their podcast recording.
Santiago calculates that the payback period for customers could be less than two months, which Neil confirms, stating it could even be less than a month in some scenarios.
Neil highlights that DAWN aims to appeal beyond the Web3 audience, targeting mass adoption by offering relatable technology that saves people money.
Santiago asks for clarification on the pricing of DAWN’s hardware, specifically distinguishing between indoor and outdoor units.
Neil says that the $200 price point refers to the indoor box, which is designed for individual household use and based on their underlying costs, they are aiming to price the outdoor boxes at around $1000.
Neil highlights the value proposition of the outdoor box, explaining that this $1000 investment would give users the ability to provide coverage for a 3-5 mile radius. He highlights that this extensive coverage area represents a “huge amount of coverage” for the price point.

Building a Decentralized Internet: Neil’s Vision for Andrena’s Scalable and Accessible Network Solutions

Neil shares that Andrena currently provides internet to over 10,000 households across 10 US states, working with landlords, real estate partners, and housing authorities. He explains that despite efficient capital deployment, they’re still limited by capital requirements.
Neil mentions DAWN’s vision to make their technology widely accessible, allowing people to build “mini Andrenas” worldwide, whether for sharing internet with neighbors or monetizing excess connectivity from data centers.
Neil explains that their goal is to create rules for data exchange and implement a “proof of backhaul” system for verifying data amounts. He describes their aim to assist with price discovery, helping users set competitive rates to incentivize network growth while gradually bringing internet prices down to wholesale levels.
Santiago asks about the lowest price point for internet service, wondering if it could be as low as $10, $20, $30, or $40.
Neil explains that $10 is likely the lowest price point they’re aiming for. He reveals that Andrena, along with three other internet providers launching with them, plans to offer a $10 gigabit internet plan. This aggressive pricing strategy demonstrates their commitment to making high-speed internet more accessible.
Neil explains that their approach will be a combination of both B2B and B2C. On the B2B side, he mentions working with building owners and node miners, drawing a parallel to the micro-businesses that emerged from deploying Helium nodes. For B2C, Neil describes scenarios where consumers could install dishes on their balconies or homes to participate in the network. He highlights their goal of allowing everyone to participate, highlighting the flexibility of their model.
Neil acknowledges the challenge posed by competitors’ large marketing budgets but outlines their strategy to overcome this. He mentions drawing inspiration from successful projects like Helium and Helium Mobile. Neil highlights leveraging the crypto community, which already believes in the vision of consumer-powered infrastructure. Their plan includes implementing strong referral programs and incentives for users to share internet with neighbors, effectively turning their user base into a grassroots marketing force. This approach aims to compensate for their smaller budget by creating a community-driven growth model.

Risks and Challenges in Decentralized Internet Solutions

Santiago asks about potential risks, wondering if someone could clamp down on the service or make it illegal, or if consumers might not appreciate it.
Neil identifies the biggest risk as understanding and managing the network’s shape in a trustless environment. He explains the technical challenges of validating user locations and ensuring network reliability.
Neil stresses the importance of creating a simple, positive consumer onboarding experience to avoid bad user experiences that could harm adoption. He acknowledges that while the underlying technology works and the economics are strong, ensuring consistent good experiences for users is crucial for the project’s success.
Neil explains their initial approach of selling their own boxes, which combine a wireless transmitter and a software-based router in a unique configuration. However, he highlights their commitment to open-sourcing everything, allowing people to build their own boxes or use existing solutions.
Neil describes their vision of creating a cloud internet appliance that can participate in various decentralized projects, not just internet provision but potentially extending to GPUs or storage in the future.
Santiago inquires about the importance of token incentives in solving the cold start problem in less dense areas.
Neil explains that their project doesn’t face a significant cold start problem compared to other decentralized networks. He attributes this to the nature of their fixed-based application, where even one node with excess bandwidth can provide immediate value to the surrounding area.
Neil contrasts this with mobility-based applications that require more extensive network coverage to be useful. He acknowledges that while token rewards will be part of their system, they are less critical for their growth compared to other decentralized projects due to the inherent non-speculative ROI of their model.

Network Modeling, Redundancy, and the Future of Decentralized Internet Services

Santiago asks Neil about modeling the network, specifically how many nodes are needed to ensure good consumer experience in terms of redundancy, reliability, and performance.
Neil explains that two nodes are generally sufficient to provide a flexible and reliable network. He notes that the main issue affecting reliability is regional power outages, but having two separate sources of connectivity typically provides adequate redundancy and reliability for a good user experience.
Neil discusses their recently launched Chrome extension validator. He explains that this is an easy way for people to get involved with the network and potentially earn rewards. Neil describes how the extension works as part of their “proof of backhaul” system, acting as a decentralized speed test.
Neil says that the extension is very lightweight and only uses excess bandwidth when selected to perform a challenge, so it shouldn’t noticeably impact performance.
Santiago shares a personal anecdote about repeatedly testing his internet speed in San Francisco and confronting Verizon about not delivering the promised speeds.
Neil relates this to the value proposition of their “proof of backhaul” system. He explains how it enables a decentralized Service Level Agreement (SLA), where there’s no arguing about the user experience because it’s programmatically verified. This removes much of the traditional role of the service provider in managing customer expectations.
Neil describes a future where internet service becomes as ubiquitous and automated as having solar panels. He envisions software that automatically selects the cheapest internet plans on a month-to-month basis, with decentralized SLAs ensuring fair pricing and performance. Neil highlights his goal of automating internet service to make it a background utility that consistently delivers on its promises.
Neil then expands on his broader vision for DePIN. He describes wanting to create a small device for homes that not only provides internet connectivity but also participates in various cloud services. The aim is to shift the equity value currently held by data centers, cloud companies, and telecom companies to individual households. Neil sees affordable internet as a “Trojan horse” to get this device into homes, which could then participate in multiple DePIN protocols, fundamentally changing how internet infrastructure is powered and owned.

DAWN’s Future: Hardware Launch, Solana Integration, and the Road to Decentralized Validation

Santiago asks about the timeline for people to get their hands on the hardware and what the next 6-12 months look like for DAWN.
Neil outlines their focus on moving from dev net to main net, opening hardware pre-sales, and working with individuals and partners (including those familiar with Helium mining) to set up local networks. He encourages interested listeners to reach out about bringing DAWN to their neighborhoods.
Neil explains that Solana was chosen for its high transaction speed and infrastructure simplicity, which makes protocol engineering easier. Additionally, he notes that many other DePIN projects are on Solana, and interoperability within the DePIN ecosystem is crucial for realizing their vision of a multi-purpose home device participating in various decentralized networks.
Santiago asks Neil if Saga phone owners will get priority access to buy DAWN’s hardware.
Neil says that they haven’t figured out that aspect yet, but acknowledges it could be a cool approach. He then expands on a broader vision where the “black box” device they’re developing could potentially become powerful enough to serve as a Solana validator.
Neil explains that this could lower the barrier to entry for becoming a validator and improve Solana’s decentralization metrics. He expresses excitement about potential future partnerships and integrations with Solana.
Santiago agrees, noting that households could serve as proof of humanity and be used for various validation purposes. He highlights the importance of reliable testing to prevent gaming of the system, as people won’t want to give up traditional providers like Verizon or AT&T if the service isn’t dependable.
Neil highlights that this is a common challenge across DePIN projects. He explains that while creating supply through tokens is relatively easy, ensuring reliability and quality of service is crucial for mainstream adoption.
Jason asks Neil if they considered building on platforms other than Solana. Neil says that they did look at a couple of Ethereum Layer 2 solutions but ultimately chose Solana due to its alignment with their vision.
Neil advises other platforms to focus on creating partnerships where “one plus one equals three” and fostering a supportive community. He praises the Solana ecosystem for its cohesion and how the entire community supports each project’s success, which he hasn’t seen to the same degree in other communities.
When asked what other platform they might have chosen if Solana wasn’t an option, Neil reiterates that for DePIN projects, Solana is the clear choice. He mentions looking at other innovative chains like Bera and Base but highlights that at some point, the choice becomes similar to selecting a database – you need to pick one that works and allows effective market entry.
Santiago asks if Neil thinks the decision between blockchains will become less crucial in five years due to increased interoperability.
Neil mentions their partnership with Windscribe as an example of leveraging Ethereum’s security to reinforce their validator system. He discusses the potential of cross-staking for validation and mentions projects like Paracel that are working on interoperability solutions. Neil says that the maturity of this ecosystem will determine whether blockchain choice becomes less critical in the future.

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Show Information

Medium: YouTube (Video)

Show: Empire

Show Title: How Crypto Fixes the Internet Monopoly | Neil Chatterjee, DAWN & Andrena

Show Date: September 10, 2024