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In Minnesota, Rural Fiber to the Farm Project Expands

A rural Fiber-to-the-Farm project that started in Sibley County has added three new towns to its potential territory due to the extremely high interest in fast, affordable, and reliable connections to the Internet. The current providers aren't getting the job done and few expect that to change given the cost of improving services.

An article last year reported on present difficulties for many in Sibley:

Soeffker, who farms with her husband in rural Sibley County, said the dish receiver they must use works fine in good weather but balks during heavy rain and snowstorms.

Meantime, her husband struggles with a lagging Internet speed of .6 megabits a second that falls short of meeting his business needs when he’s selling commodities.

The committee organizing the network set a goal for demonstrating the interest of something like 50% of the population in the target area. There has been some confusion as to exactly how many they should have before committing to the project but with just two mass mailings, they have received nearly 3,000 positive responses (of the over 8000 households that could be served). This is a very strong response.

To keep the public informed, they have had numerous public meetings in each of the communities that will be involved. To be as open as possible, they would often have three meetings in a town per day -- a morning, afternoon, and evening meeting to accomodate everyone's schedule. As this project moves forward, no one can claim the group has been anything but open with the plan.

On January 19, they had a major meeting with over 100 people attending, including many elected officials from the towns. For over two and a half hours, they had five presentations and numerous questions. MPR's Jennifer Vogel was there and wrote about the project shortly afterward.

Participating communities--which include Renville County, Sibley County, Fairfax, Gibbon, Winthrop, Gaylord, Arlington, New Auburn, Green Isle, Buffalo Lake, Steward, Brownton and Lafayette--have been asked to decide by early March whether to continue with the project and release additional funds for marketing and administration.

Previously, the project included 7 potential towns. But some nearby towns in Nicollet County have expressed interest in joining and their density would make the project more viable. Most in Sibley have been dedicated to serving every household - town and farm alike. While the principle of equity is noble, it ultimately makes the project harder to finance due to the higher fixed costs required to serve the least dense areas. Bringing in a few more towns benefits everyone.

Unfortunately, the people around the those towns are frustrated that they are not slated for connections in the current plan -- see some of the discussions on their vibrant facebook page. They will have to draw the line somewhere but will undoubtedly be interested in expanding the network once they have built out in initial territory.

Minnesota law has a barrier to municipal networks and as a matter of law, it is not clear that it applies to a county-owned project. Under law, if a municipality wishes to own or operate a telephone exchance, it must have a successful 65% referendum -- an incredibly high bar given the imbalance of spending power in such contests. Incumbent providers can spend a lot to oppose a referendum whereas local governments cannot take a position and grassroots groups are limited in their financial resources.

Renville Sibley Fiber Network

However, as this network plans to neither own nor operate a telephone exchange, it should not have to pass a referendum. It seems as though the project is leaning toward a partnership with Hiawatha Broadband Communications, a well liked private firm from southeastern Minnesota. HBC already operates the muni-owned Monticello FTTH network.

While no financial plans are yet finalized, the most likely option appears to be non-recourse revenue bonds for nearly $70 million. These are bonds that are issued to private investors and will be repaid with revenues from the subscribers. If the network were to fail to produce enough revenue to make the debt payments, the towns and county would have the option of making up the difference from tax revenues but would be under no obligation to do so.

From Jennifer Vogel:

There would be some public obligation to the project, in the form of what McGinley called a "debt service reserve fund." In order to make the project appealing to investors, he said, the participating communities would be required to establish and replenish if necessary a $4.5 million rainy day fund that would cover any shortfalls. They also would have to cover the contributions of any communities that ducked out of the project down the road or couldn't pay into the fund.

If one town, Winthrop for example, decided not to ante up for the debt service reserve fund, other communities could cover the difference. As the network generates net income (perhaps 5-6 years down the road), the money comes back proportionally to those towns that created the reserve fund.

It bears noting that these people are not asking for any handouts. Whereas Frontier and other providers in the towns are incredibly unlikely to expand their networks absent taxpayer subsidies, the Sibley County Fiber Project will be locally self-reliant.

Johnson City Seeks Partner to Offer Broadband Services

One month after the Johnson City Power Board (Tennessee) approved a fiber-optic network, they have issued a request for qualifications to identify potential partners that would provide broadband services over the publicly owned fiber-optic backbone.

Johnson City lies between Chattanooga and Bristol (Virginia), two communities with advanced next-generation networks that have created significant economic development.

According to a feasibility study by the utility, the third-party vendor approach would give the JCPB the best return on investment, balancing low risk with possible profits. The Power Board would provide the “backbone,” while the vendor, working under JCPB’s brand, would provide the “last mile” services and equipment to the commercial customers. The utility’s telecommunications division would be self-sustaining, and have absolutely no effect on electric rates.

This seems similar to the approach of Lafayette, Louisiana almost 10 years ago. Lafayette eventually decided to build out the network to residents and all businesses when the ISPs using its network were not able to use the backbone to expand to serve everyone (the economics of building last mile fiber-to-the-home connections rarely coincide with private sector goals of maximizing short term returns).

Judging from their projections, Johnson City does not need to hit particularly ambitious targets:

To reach its revenue and return on investment projections, the JCPB would need to capture about 20 percent of the area’s total market for data services, about 15 percent of the market in phone services, and about 5 percent of private data services over five years, based on a market of 3,000 commercial users.

However, even those modest goals will be difficult unless they find a good, trusted partner. Most public power utilities have the trust of residents or businesses -- that trust may not extend to whoever they work with.

Johnson City Power Board Greenlights Fiber-Optic Broadband

Two years ago, we first wrote about the Johnson City Power Board considering using its fiber-optic network to encourage economic development and create more broadband competition. Last year, we again saw them examining their options, with a recognition that DSL and cable are not enough for economic development when Chattanooga and Bristol are so close by, as well as other publicly owned FTTH networks.

The JCPB has decided to move forward with a public-private partnership approach that will focus first on serving commercial clients and may later expand to offering residential services.

The decision on the third-party vendor approach stems from a feasibility study by Kersey Consulting, a firm that offers broadband consulting to municipalities and public utilities. The study began in July, and examined three models the JCPB could use to offer the services: having the JCPB be the retailer; leasing the extra fiber capacity to another company; or bringing in a third-party operator to provide the network access electronics, customer support, billing services, etc.

Working with a third-party vendor gives the JCPB the best return on its investment, balancing low risk with possible profits, said JCPB spokesman Robert White. The Power Board would provide the “backbone,” while the vendor, working under JCPB’s brand, would provide the “last mile” services and equipment to the commercial customers.

This approach could be somewhat similiar to the Opelika, Alabama, partnership with Knology, except Knology is clearly going after both residential and commercial customers right away.

The article uses these numbers, but they don't seem to make a lot of sense to me on first glance:

Initially, according to the feasibility study, the Power Board would most likely make a capital investment of $1.5 million over five years, which could include installing more of a fiber backbone to reach businesses if needed. On the flip side, revenues from the extra service could reach $1.3 million over 10 years, depending on the agreement with the third-party vendor.

To reach its revenue and return on investment projections, the JCPB would need to capture about 20 percent of the area’s total market for data services, about 15 percent of the market in phone services, and about 5 percent of private data services over five years, based on a market of 3,000 commercial users.

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I have to assume the revenue over 10 years would be more than the capital investment needed to get the project going.

Of course, CenturyLink is pretending that JCPB has no chance of competing against an entity as large as it, but CenturyLink's size may well be one of its biggest problems. It is a giant bureaucracy that provides crummy service at inflated rates. Bristol Virginia Utilities has been crushing it in the small business market because they offer local, reliable services and have the freedom to work with local businesses.

If Johnson City really commits to this, CenturyLink's poor DSL will pose little threat. But Johnson City should take care to listen to the experiences of those around them who went down this path. There are many good lessons for the communities that are willing to listen.

Redwood County, Minnesota, Latest to Study FTTH

Minnesota, land of 10,000 lakes, may soon also be the land of Countywide rural FTTH. Yet another County is doing a feasibility study to figure out how it can bring fast, affordable, and reliable broadband access to all of its citizens.

Redwood County’s Economic Development Authority (EDA) opted to move forward with a broadband feasibility study that would determine just what the county would need to do in order to get fiber to every premises.

The study, which is being conducted by the Blandin Foundation through what is known as the Robust Broad-band Networks Feasibility Grant Program.

The grant, which includes up to $40,000 for the county as it addresses the needs of every community and farm site from one end of the county to the other, requires matching funds, which are available through the county EDA.

Redwood County

Redwood County is in an interesting area, just north of the Windom area muni FTTH networks and west of the proposed project in Sibley and Renville counties. This study comes not long after Todd County started a feasibility study as well (the the latest on that). And though we haven't discussed it much on MuniNetworks.org, Lac qui Parle County to the northwest is working with a rural telephone cooperative to bring FTTH to many in their border as well.

And then beyond them, we have Cook County going FTTH with their electric coop and Lake County going its own way, both with the assistance of the broadband stimulus awards.

Minnesota could very well become the state with the most impressive rural connections. Unfortunately, thus far we have seen no assistance from the state in this matter, but perhaps the Dayton Administration will chart a new course. He has decided to appoint a new Governor's Task Force on Broadband as well as a Broadband Development Office within the Department of Commerce. Those interested can learn more from Blandin on Broadband.

Blandin on Broadband also has more information about Redwood Falls.

TonkaConnect Initiative Shelved, More Education Needed

The TonkaConnect project of the Lake Minnetonka Cable Commission, comprising many suburbs west of Minneapolis, is going to pause after some of the city councilmembers of communities within the project were unsupportive.

“I think [the LMCC executive committee] realized that if a municipal fiber network is ever going to be built, the cities need a considerable amount of time spent in educating and understanding the significance of building such a system,” said a memo from Sally Koenecke, LMCC executive director.

The $81 million proposal sought to provide 25,000 households in communities from the 17 member cities with Internet, phone and cable fiber optic services.

I have occasionally offered technical advice to this ambitious project and have watched as Mediacom and other incumbent providers spread rumors and lies to disrupt it. These companies will stop at nothing to preserve the limited competition they rely upon to maintain their market power.

“I’m personally against spending any money on the fiber optic project,” said Orono mayor Lili McMillan. “What I want to do is send a message. I don’t feel government should be in this.”

To be clear, if Lili McMillan doesn't want the government to build a next-generation network, they will have to continue relying on Mediacom cable and slow, unreliable DSL services. Their choice. Their incumbents do not have the capacity or interest to build a next-generation network themselves but they do have the capacity and interest to prevent any other party from doing so.

As Ann Treacy notes at Blandin on Broadband, this is not necessarily the end of the line and may actually serve to increase the desire of people in those communities to take action:

Unfortunately I think that having interest if the price is low enough might not be enough to motivate a community through the perils of community supported fiber. But I always remember the folks in Monticello saying that each set back in winning over the residents just made them stronger in the end. They were talking about the super majority referendum required for them to pursue their community network – but the same may apply here. You need full community support and interest to see a community network to fruition.

I am including a video they produced to explain the project below.

Video: 
See video

Encouraging Community Networks in Chino Hills, California

Chino Hills, California, knows what is like to need broadband - back in 2004 they had to poke and prod Verizon and Adelphia into offering broadband services in their town. Some of the folks from that effort are interested in exploring the idea of a community-owned broadband network.

Time Warner is an $18 Billion dollar company with $1.3 Billion in profits in 2010. Verizon did $106 Billion with $2.5 Billion dollars in profits in 2010. They're not worried about Chino Hills. In fact both of these companies are actively lobbying states around the country to prevent local municipalities from entering the broadband market. I'd like to see our city enter this business and give these national companies a run for their money.

Our video (included below) comparing community fiber networks to services from big incumbent providers has some there thinking that they should consider building their own network to prepare for the near future when much higher capacity networks will be needed to take advantage of all the applications moving to the cloud.

Video: 
See video

Oregon Town To Build Open Access Fiber Network Complement to Wireless Network

Sandy, a growing community of about 10,000 outside Portland in Oregon, is now building a FTTH network to expand on their successes offering city-run wireless broadband in 2003. They've done the whole wireless thing for 8 years but understand the future is high capacity, high reliability connections.

They are starting with a pilot program that seized on energy created by Google's gigabit initiative -- they held a "Why Wait for Google?" contest that asked neighborhoods to show their potential interest in a fiber-optic network.

When the Cascadia Village and Bornstedt Village won the contest, they were asked how they wanted to be involved:

What happens now? This is a pilot program, so we’re taking it step-by-step. We want the residents and property owners in Cascadia/Bornstedt Villages to be partners with us in making decisions on how this service will work. And we want it to be democratic: whatever we do, it will only be with the support of the majority of the residents and property owners who get involved.

The first thing we need to know is: how would you like to be involved? We have a lot of options, depending on your level of interest, and how busy your life is. On one end of the spectrum is simply asking us to keep you informed through e-mail or letters, and at the other end is your active participation (over a course of several meetings) in the detailed planning for the implementation of this pilot project. (Note: in the case of rental properties, we encourage both the landlord and the tenant to stay involved, and we have tried to mail this letter to both, based on available records).

This is a far cry from the massive cable and telco approach of "you will get what we give you when we offer it on the terms we decide."

SandyNet Logo

SandyNet is going to continue providing access to the Internet, but according to the FAQ, they will operate the network on an open access basis, encouraging independent service providers to offer dial tone and television services on it as well.

The Oregonian covered the SandyNet story -- nearby Portland has long considered a publicly owned network that the Oregonian has skeptically covered.

The plan is an underground deployment that could take 10 years. When we have previously seen communities consider such a long deployment horizon, it is because they plan to build the network opportunistically without issuing debt. But Sandy is considering financing the network with muni bonds. Regardless of when it is available, the goal is to offer 100Mbps at $40/month -- which would make it one of the most attractive broadband deals in the nation, indeed on the continent.

Sandy has also passed an ordinance requiring new developments to install underground fiber along with other utilities -- a rule we will take a greater look at in the near future.

Rural Todd County Embarks on Fiberband Feasibility in Minnesota

Todd County, a rural community "where the forest meets the prairie" along I-94 in the geographic center of Minnesota, is the latest of many counties to examine local solutions to their lack of affordable, fast, reliable, and certainly universal access to the Internet. This could be a blueprint for how to initiate a process to improve broadband in a rural community.

Todd County is quite rural, with about 10,000 households and businesses that could be wired for service.

From what I have learned, this initiative originated with a group of beef farmers who are tired of being left behind on the rural world wide wait. They pushed the Todd County Livestock Advisory Committee, which pushed on the County, which approved the following resolution [pdf]:

RESOLUTION OF SUPPORT TO ESTABLISH RECIPROCAL BROADBAND SERVICES COUNTY WIDE, KNOWN HEREAFTER AS TODD COUNTY FIBERBAND

WHEREAS, the world’s cultural and economic environment is becoming increasingly more knowledge-driven and information-based, and Todd County citizens, businesses, and agriculture need access to that information, and;

WHEREAS, research indicates that introduction of broadband in to rural areas increases the rate of job growth and income of rural areas and that the presence of broadband in a community is the greatest indicator of future economic success, and;

WHEREAS, broadband access has evolved from a luxury and entertainment item to an essential infrastructure for business, health care, education and government and the speeds needed to maintain local and global competitiveness are greater than telecommunication companies serving Todd County are willing to provide, and;

WHEREAS, demand exists for broadband access, but without a concerted and unified effort being made to obtain appropriate access for the citizens of Todd County, it is likely that demand will not be met, and;

WHEREAS, this body wants its citizens to maintain the highest quality of life and its businesses to be as competitive and productive as possible, the highest speed, highest capacity broadband, and other telecommunications services are critical for maintaining a healthy and competitive community, and;

WHEREAS, high speed, high capacity access to telecommunications services should be thought of as an essential public service that should be available to all citizens of Todd County, similar to the way the street and highway system is available to all citizens, and;

WHEREAS, private sector providers are currently unwilling and/or unable to provide the highest speed, highest capacity access to broadband services to the citizens and businesses of Todd County via last mile fiber, wireless or other means.

NOW, THEREFORE BE IT RESOLVED,

  1. That this body supports any action to establish by any means legally available, a municipal telecommunications utility system county wide that provides the highest speed (reciprocal) internet, highest capacity access to broadband services, and;
  2. with the passage of this resolution this body supports efforts to bring reasonably priced, stable and accessible quality broadband access to all places in Todd County, and;
  3. that this body supports and adopts the following goals:
    1. All places within the city limits of a city within Todd County shall have fiber to the premise broadband services at a reasonable price no later than 2014, and;
    2. All places within Todd County, regardless of location, shall be able to access quality broadband services at speeds of no less than 20 mbps download, and 10 mbps upload by no later than 2016.
  4. That this effort will from this point forward be known as the “Todd County Fiberband Initiative”.

BE IT FURTHER RESOLVED, that all resolutions or parts of resolutions in conflict with the Resolution are hereby repealed to the extent of such conflict and that provisions of this Resolution are hereby declared to be separable and if any section, phrase or provision shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases and provisions hereof.

Todd County Logo

Note that they set goals and are prepared to build a network to meet them -- compare that to the state of Minnesota, which set hollow goals and identified no path to actually achieving them. This is one reason we prefer local governments more involved -- they are far more likely to actually get something done.

Todd County's next step was to reach out to many in the community with the following letter as well as copies of a blank letter of support [pdf] and a clean copy of the resolution [pdf] for additional organizations to show their support.

On behalf of the Todd County Board of Commissioners, the Todd County Development Corporation, the Long Prairie Healthy Communities Partnership, the Todd County Healthy Communities Partnership and the Todd County Livestock Advisory Committee you and/or your organization are invited to sign on in support of the Todd County Fiberband Initiative.  

Broadband is quickly becoming a necessary infrastructure, and its uses are growing beyond our local capacity.  The Todd County Board and other organizations feel strongly that the time is now to take this in to the hands of the community.  Todd County must come together as a community to stand up for our future. 

Please join the Todd County Board of Commissioners and other organizations throughout Todd County in supporting deployment and availability of high speed, reciprocal broadband to be available throughout this area.  Also, please feel free to share this letter and resolution with any individual or entity you think may be interested.  Should you desire more information or an electronic copy of these enclosures, please contact: 

Staples Word, a local newspaper covered the impressive news and noted that Staples had already started its own feasibility study.

Swanville, a nearby town straddling the county line, decided to wait on supporting the resolution to see what happened in following steps.

On May 2, the Todd County Development Corporation officially joined the effort by passing a resolution in support of Fiberband.

The first big meeting to discuss the idea came on May 12, with a meeting at the Long Prairie/Grey Eagle high school with 75-80 people in attendance for a panel and discussion. This is an impressive turnout considering the early stages and long drive for some attendees.

The Independent News Herald offered an excellent recap of the meeting, including some of the comments from speakers:

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He [Mark Birkholz of Arvig Communications Systems] also talked a little about the National Broadband Plan which entails delivering 100mg service to 100 million homes.

“For the others, they say that 4 mg will be fast enough. Imagine walking along the freeway at 3 to 5 miles per hour as the cars on the freeway are zipping past you at 75 mph. That is what the 4 mg service would be like,” said Birkholz.

Karl Samp from the Blandin Foundation also stopped in briefly to speak. He said that change was coming and that it is the only constant.

“If you want to compete in this economy and have your kids come back, you have to have high speed,” he said.

Mark Erickson of Fiber to the Farm in Sibley County (which we have written about previously) spoke about their motivations and lessons learned.

The meeting showed enough interest for the County to commit $20,000 to a feasibility study. Arvig, a potential private partner, has put up another $20,000 and the Blandin Foundation has put up a match of $40,000 to get the study rolling. Blandin's match support in other communities has been very helpful to communities who are reluctant to put too much money into a study that may tell them the network is too difficult and expensive to build.

Lake Minnetonka Communities Complete Market Study

The Lake Minnetonka Communications Commission has finished its market study of some 17 communities in the western suburbs of Minneapolis. LMCC has long been examining solutions that will expand fast, affordable, and reliable access to the Internet.

Dick Woodruff, chairman of the Tonkaconnect working group and a member of the Shorewood City Council, said that overall the results were positive. He said that the majority of the people surveyed indicated that they had no objections to the LMCC getting into a competitive FTTP business and that they would become customers if the Tonkaconnect services were offered at a lower price than providers already in the area.

While the results of the market survey are encouraging to the Tonkaconnect group, there is still more work to be done before they can deem the project feasible. Woodruff said that the next step in the process would be to complete a business plan and financial model for the fiber project.

LMCC will consider what to do next at a meeting in June but has not budgeted funds for the next step in building a universal FTTH network in those communities that choose to take part.

Regarding the survey:

The first question, though, asked if respondents believed that the LMCC and local governments should "provide locally-owned, competitive choice of TV, Internet and telephone services to every home, business, school, governmental buildings, etc. in the LMCC area."

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Strong majorities consistently agreed that LMCC and local governments should get involved but the survey was also very clear that respondents were mostly concerned with price. We see the same results elsewhere, particularly in times of economic stress.

Consider a national cable network, "National Cable." In Anywhere USA, most people subscribe to National Cable at a monthly rate of $140/month for phone, video, and broadband. Anywhere decides to build a community fiber network and charge $105 for similar services but the broadband is considerably faster and more reliable using the next-generation network. National Cable responds by offering a deal for $95/month for what people had been paying $140/month for. After all, National Cable is so big, its costs are lower than the new community network. And National Cable, if it chose to, could run its Anywhere operations at a loss for many years due to its fat margins in all the communities without a real choice in providers.

Do not be surprised to see a lot of people going to National Cable to save that extra $10/month, even though it may deprive the community fiber network of the revenue necessary to meet the business plan. If the community network were to disappear, National Cable would raise its prices right back up to $140/month.

This is a real community conundrum. The community network provides tremendous benefits, but may not be appropriately recognized as the agent responsible for saving everyone in the community a lot of money.

Stephens County Considers Broadband Feasibility Study in NE Georgia

Counties in northeast Georgia are among the latest to examine their options to improve access to the Internet in local communities due to the massive failure of the private sector to adequately invest in essential infrastructure needed for economic development and maintaining a high quality of life.

Those involved may include Stephens County, Hart County, Franklin County, Rabun County, and Habersham County. However, Franklin County refused to contribute to a feasibility study, with some arguing that the "utility owners" should do it - though it is not clear which "utility owners" are referenced here. Others found this troubling:

“I think some of the other commissioners maybe feel like it’s more of a private matter, that some of the commercial businesses should be putting in infrastructure,” he said. “However, someone like Windstream, if they have a potential customer for a data center, they’re going to steer that customer to where they have infrastructure. They don’t care about Franklin County.”

It’s important to understand, he added, that high-quality jobs will not come to Franklin County if it is not up-to-date with its infrastructure.

This is exactly correct -- what does a private sector provider care about a single county in Georgia? They care about a fast return on their investment, not about a community's vitality.

In the meantime, Stephen's County has contributed $500 toward a match for the study.
Minutes from the Feb 28 meeting of Stephens County Development Authority [pdf] offer more details of the study:

OneGeorgia’s Nancy Cobb has approached the Joint Development Authority of Franklin, Hart & Stephens Counties and “offered” to fund 80% of a Broadband Connectivity Feasibility Study (expected to cost about $240,000) in northeast Georgia. Her offer is contingent upon us actually officially requesting it and matching it with 20%. We anticipate her next meeting to be sometime in May/June. The more we study this Broadband Connectivity issue, the more we realize that many parts of northeast Georgia are technologically underserved. This study would assess existing broadband resources and their ability to expand in the region and the feasibility of constructing, maintaining and operating a fiber optic backbone through six (Banks, Franklin, Habersham, Hart, Rabun, and Stephens) northeast Georgia counties. The study would take into account existing broadband resources including but not limited to ILECs, CLECs, cable companies, and utility companies as well as other significant NTIA and RUS federally funded projects. The awarding of this contract to qualified consultants is contingent upon receiving both the OneGeorgia 80% and the local 20% match. The consultant work will cost $5,000. Stephens County Development Authority's contribution will be up to $10,000 for the study. Motion was made and seconded to approve SCDA to spend up to $15,000 towards the JDA North Georgia Network feasibility study: Lee Hicks[Tim Ash], All in favor, none opposed.