Muni Broadband Network Plans Vary, but all Seen Serving Growing Need
As the municipal broadband pre-emption challenge by North Carolina and Tennessee against the FCC moves through A federal court (see 1509290070), other similar networks across the country continue to be built. For three projects we reviewed, status varies from fully deployed to being in the beginning stages of the planning and financing. Experts said that from the very beginning of the process all the way through the end, municipalities can run into roadblocks, including financing, competition from the incumbents and low take-rates. While proponents of government-owned networks (GON) see them as sometimes the only path to broadband access, others see networks owned by municipalities as unfair competition to existing or possible private providers.
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In Longmont, Colorado, the municipal broadband network is expected to be fully built out in 2016, with two, soon to be three, phases of the project connected. Western Massachusetts’s WiredWest has nailed down support from 24 municipalities and is moving forward with the planning process. Spanish Fork City, Utah, which has had a successful network in operation since 2001, recently paid off all debt and is working on deploying fiber-to-the-home using the budget savings.
With the deployment of the networks comes a host of challenges ranging from the basic financial hardship that can result from a poorly planned project to competition from incumbent providers that refuse to be pushed out by a GON, said Chris Mitchell, Institute for Local Self-Reliance director-community broadband networks initiative. When a municipality decides to move forward with a GON, it’s not because it wants to be involved in broadband, it’s because it thinks it has no other option to get its residents satisfactory broadband service, he said. It’s easier for an elected official to make the decision to spend millions of dollars on building or fixing a bridge because it’s clear that infrastructure will be used, but it can be intimidating to decide to spend the same kind of money on fiber, he said. Regardless of the challenges, Mitchell said every municipality needs to have some kind of broadband plan: "If a city thinks they can just sit back and do nothing and compete in the digital economy, most of those cities would be wrong."
If a city already has a municipal electric company -- like Longmont -- it can be easier for it to start and deploy a broadband network, Mitchell said. Longmont’s NextLight is partially connected already, with two of the nine phases completed, four more started and an expected completion date in 2016, said a Longmont Power & Communications (LPC) spokesman. Before the power company could tackle this project, the city had to vote to opt out of Colorado’s restrictive broadband law (see 1507100053), he said. The next hurdle was getting financing, and the city chose a $40.3 million bond issue that it expects to pay off in 10-11 years, he said. Once the city of Longmont is fully connected to the Internet, officials will start talking about connecting the areas outside the city limits, he said.
Competition can present a major challenge for any municipal broadband network, experts said. That is especially true in Longmont, said the LPC spokesman. Incumbent providers have increased speeds, trying to compete with NextLight through each step of the planning process, but he said the city has responded by offering much-reduced pricing to residents that opt in within a few months of service becoming available in their area. Those who opt in within three months will pay half-price -- $49.95/month for 1 Gbps symmetrical -- for life, he said. "We wanted to see a good take-rate very early on in the system, and to do that we were going to need something special to get people’s attention. Frankly, people get very cynical about telecommunications deals because they’ve seen what the various incumbent providers offer as ‘introductory rates’ that quickly go away.”
The same isn't true for WiredWest, where many of the rural towns that are part of the project have been told no one is coming to build out a comprehensive fiber network, said Mitchell. There are pockets of DSL, satellite Internet, and fixed and mobile wireless networks in some of the towns involved, but those options are either unaffordable or too slow, said WiredWest Chairwoman Monica Webb.
WiredWest is in the earlier stages of the planning process (see 1505140025), but 24 small towns in western Massachusetts have committed to spend a combined $38 million to build a fiber network, she said. Massachusetts has municipal lighting legislation, which makes it possible for municipalities to team up and build it, she said. And the state is providing about 40 percent of the expected cost of the build-out, Webb said. For WiredWest, the biggest challenge, after figuring out funding and garnering interest, has been working with so many government entities, she said. “Working with different levels of government does definitely slow the process down,” Webb said. “Everybody agreeing on different policy decisions and different financing decisions definitely delays the progress.”
Competition between incumbents and GONs leads to a conflict of interest on the municipality’s part because the government provides rights of way and permits to private companies, said Free State Foundation President Randolph May. So if the government wanted to, it could slow down the private companies, he said. It’s also possible the government network may disadvantage incumbents because the muni networks have taxpayer funding and bond guarantees the private companies don’t have, he said. In areas like western Massachusetts, where there isn't a strong commercial option, municipal broadband networks may be a “sound policy,” May said. But “it’s much better for government to leave broadband to the private sector, where they’re willing to provide the service," he said.
Having a cooperative take charge of a network like WiredWest allows the municipalities to combine their resources and proceed together, Webb said. An individual rural town would rarely be able to pull together the resources to build a successful broadband network on its own, she said. In more rural areas, there is also less likely to be an adequate private network provider at all, she said.
After paying off debts, the Spanish Fork Community Network in Utah is working on building a fiber-to-the-home network, which would give residents 1 Gbps symmetrical, said the network’s website. Installation began in September, it said. Representatives of the network didn't comment. The network is the kind of success story that other cities have been looking for, Mitchell said. “They never missed a debt payment,” he said. “They do an estimate every year of how much more everyone would be paying in the community without Spanish Fork Community Network and it’s a community of 35,000 people and they estimate that they saved about $3 million per year."