Last week, Christopher Mitchell of ILSR joined other broadband and municipal network experts to present the webinar "How a Municipal Network Can Help Your City" from the National League of Cities.
Christopher was joined by Kyle Hollified, VP Sales/Marketing, Bristol Virginia Utilities, Bristol; Mary Beth Henry, Manager, Office for Community Technology/Mt Hood Cable Regulatory Commission in Portland, Oregon; and Colman Keane, Director of Fiber Technology, EPB, in Chattanooga, Tennessee.
The group discussed common challenges and benefits communities experience when investing in municipal networks.
We have been watching Johnson City, Tennessee, examine its options to improve broadband options in their community using extra capacity from fiber-optic investments for smart-grid implementation. Johnson City has been looking for a partner that would offer services to local businesses and perhaps residents.
We were concerned about that approach as a private-sector partner may be interested only in finding the most lucrative high-margin customers rather than seeking ways to serve the whole community.
We are now relieved to learn that Johnson City and BVU Authority have made an initial agreement and are working toward a final contract. BVU Authority originated in and continues to be based out of nearby Bristol, Virginia.
BVU Authority should be an excellent match as they provide excellent business services (they are tremendous pioneers in this regard) and have a focus on serving the community as a whole. BVU Authority's investments in southwestern Virginia have led to strong job growth and we expect them to have similar success in northeastern Tennessee.
We have chronicled how Bristol's BVU Authority, Chattanooga's EPB, and Lafayette's LUS built some of the most impressive broadband networks in the nation. The paper presents three case studies and then draws lessons from their common experiences to offer advice to other communities. Here is the press release:
The fastest networks in the nation are built by local governments, a new report by the Institute for Local Self-Reliance and Benton Foundation reveals
Chattanooga, Tennessee, is well known for being the first community with citywide access to a “gig,” or the fastest residential connections to the Internet available nationally. Less known are Bristol, Virginia, and Lafayette, Louisiana – both of which now also offer a gigabit throughout the community.
“It may surprise people that these cities in Virginia, Tennessee, and Louisiana have faster and lower cost access to the Internet than anyone in San Francisco, Seattle, or any other major city,” says Christopher Mitchell, Director of ILSR’s Telecommunications as Commons Initiative. “These publicly owned networks have each created hundreds of jobs and saved millions of dollars.”
“Communities need 21st century telecommunications infrastructure to compete in the global economy,” said Charles Benton, Chairman & CEO of the Benton Foundation. “Hopefully, this report will resonate with local government officials across the country.”
Mitchell is a national expert on community broadband networks and was recently named a “Top 25 Doer, Dreamer, and Driver” by Government Technology. He also regularly authors articles at MuniNetworks.org.
The new report offers in-depth case studies of BVU Authority’s OptiNet in Bristol, Virginia; EPB Fiber in Chattanooga, Tennessee; and LUS Fiber in Lafayette, Louisiana. Each network was built and is operated by a public power utility.
Mitchell believes these networks are all the more important given the slow pace of investment from major carriers. According to Mitchell, “As AT&T and Verizon have ended the expansion of U-Verse and FiOS respectively, communities that need better networks for economic development should consider how they can invest in themselves.”
About ILSR: Institute for Local Self-Reliance (ILSR) proposes a set of new rules that builds community by supporting humanly scaled politics and economics. The Telecommunications as Commons Initiative believes that telecommunications networks are essential infrastructure and should be accountable to residents and local businesses.
About Benton: The Benton Foundation works to ensure that media and telecommunications serve the public interest and enhance our democracy. We pursue this mission by seeking policy solutions that support the values of access, diversity and equity, and by demonstrating the value of media and telecommunications for improving the quality of life for all.
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.
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.
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.
At the 2011 Bristol Rhythm & Roots Festival, BVU set up the “BVU Pavilion,” a temporary technology hotspot. The pavilion offered free WiFi Internet, public laptops, as well as high-definition televisions and seating to festival guests throughout the entire weekend.
In addition to the BVU Pavilion, housed in downtown Bristol VA, BVU also installed equipment to provide WiFi Internet access throughout the twin city’s downtown areas. The access was a huge plus for users of mobile devices such as smart phones. Users could download festival applications like artist schedules, stage maps and more.
“As our second year providing this service, we knew people would be looking for us again. This is simply a gift to our city,” explains Gail Childress of BVU. “We are avid supporters of making our community a great place to live and visit. This complimentary service is just one way that we can say ‘Welcome’ to our visitors and ‘Thank you’ to our full-time residents.”
“BVU has been great to work with,” says Leah Ross, Executive Director for Rhythm & Roots. “This allows our fans to check their email, log onto Facebook or Twitter, blog about the festival or just surf the Internet. It’s really a win-win for everyone.”
Rhythm & Roots guests who prefer to use their own laptops or devices found available space within the pavilion to sit and log on. If guests came without a computer, laptops were available for use within the facility.
BVU personnel staffed the facility all weekend to answer questions and keep things running smoothly.
BVU is proud to step up for this community ensuring that both locals and visitors receive the best service for the second year running.
Because BVU has wired the whole community with fiber-optics, offering Wi-Fi is much easier. A significant difficulty in blanketing areas with Wi-Fi is the backhaul that takes the wireless traffic back to the central office and then out to the greater Internet. With fiber everywhere, the backhaul problem is solved.
Remapping Debate, an organization dedicated to "the full spectrum of domestic policy issues," has turned its focus on community broadband networks in an article called "Wave of the Future?" The article notes the tremendous success of Bristol, Virginia, in creating jobs. Most are well aware of the 700 jobs created by CGI and Northrup Grumman due to the network, but there are other success stories too:
Fiber has helped Bristol and the surrounding counties hold onto existing businesses as well as attract new ones. Alpha Natural Resources, a coal giant, pointed to the BVU service as a key factor in its 2009 decision to keep the company’s corporate headquarters in Bristol after a merger with Foundation Coal, a rival based in the more cosmopolitan Baltimore-Washington corridor. BVU’s fast service (up to 30 megabits for downloads and 10 megabits for uploads) will allow Alpha management to maintain close electronic watch over a combined network of mines in West Virginia, Kentucky, Pennsylvania and Wyoming.
The article goes on to discuss Chattanooga. Once again, we knew that its muni fiber network had already led to many more jobs from Amazon and Homeserve, but we learn more about exactly how the network has improved health care:
Chattanooga’s fiber network has been a foundation for high-tech business startups. One new company, Specialty Networks, allows doctors spread across many area hospitals and offices to get quick image analysis from radiologists specializing in the cancers of various regions of the body. In the past, according to Dr. Jim Busch, the radiologist behind the venture, eye, nose, and throat doctors would get initial readings from radiologists who did not necessary understand the particular subtleties of cancers affecting those areas. Now a single head-and-neck expert reads the images for just about all of greater Chattanooga’s ENT doctors. “The relatively inexpensive nature of all this bandwidth has been great for patient care,” Dr. Busch told Remapping Debate.
The rest of the article discusses other benefits of community networks and policy options for moving forward. Recommended reading.
“We’re going through the VRA pool which helps fund 88 cities and service authorities. Because of that – and because of the market – we’re potentially looking at very low interest rates of 3.3 percent,” Rose told the board during his presentation.
The debt currently has an interest rate approaching 5%. After refinancing, the utility expects to save some $500,000 to $750,000 a year - for a period of 20 years. The cost of refinancing is $900,000.
This story is worth noting for two reasons:
Restructuring debt is not necessarily a sign of weakness -- BVU's OptiNet is quite successful.
A reminder that small communities can benefit significantly by pooling bonding through programs like Virginia's VRA. States should help communities to work together in this way.
On August 19, 2010, I was one of hundreds of people telling the Federal Communications Commission to do its job and regulate in the public interest. My comments focused on the benefits of publicly owned broadband networks and the need for the FCC to ensure states cannot preempt local governments from building networks.
I’ll start with the obvious.
Private companies are self-interested. They act on behalf of their shareholders and they have a responsibility to put profits ahead of the public interest.
A recent post from the Economist magazine’s technology blog picks up from there:
WHY, exactly, does America have regulators? … Regulators, in theory, are more expert than politicians, and less passionate. …They are imperfect; but that we have any regulators at all is a testament … to the idea that companies left to their own devices don't always act in the best interests of the market.
They go on to say
If companies always agreed with regulators' rules, there would be no need for regulators. The very point of a regulator is to do things that companies don't like, out of concern for the welfare of the market or the consumer.
When we talk about broadband, there is a definite gap between what is best for communities and what is best for private companies. Next generation networks are expensive investments that take many years to break even.
With that preface, I challenge the FCC to start regulating in the public interest.
The FCC does not need a consensus from big companies on network neutrality. It needs to respect the consensus of Americans that do not want our access to the Internet to look like our access to cable television.
But while Network Neutrality is necessary, it is not sufficient. The entire issue of Network Neutrality arises out of the failed de-regulation approach of the past decade. Such policies have allowed a few private companies to dominate broadband access, giving communities neither a true choice in providers nor any ability to influence the networks on which they depend.
The FCC must ensure all communities have the authority to build the networks they need.
Outside of DC, community networks are not a partisan issue. Last week, Opelika, Alabama, voted by a 62% margin to build one. The City Council President noted: “As a council we have never been more unified on a single matter than we have been on this.”
One of the most conservative cities in America - Lafayette Louisiana now operates the best broadband network in the US as measured by value. For less than $30/month, anyone can get a 10Mbps symmetrical connection - I have to pay more than 3 times as much in Saint Paul for a similar upload speed.
Lafayette is not alone. The single fastest widely available broadband tier in this country is offered by Chattanooga- at 150Mbps symmetrical, few even come close to it.
Long before Verizon's FiOS network, Bristol, Virginia built a fiber-to-the-home network for its rural community, which attracted new investment and hundreds of high-paying jobs.
Here in MN, Monticello is unique, being the only community in the country with two citywide fiber-to-the-home networks competing head to head. The incumbent phone company previously maintained DSL was sufficient for their needs.
But when Monticello moved ahead with their superior network, the incumbent used a lawsuit to delay the community network while it invested in faster services. Monticello won the lawsuit, but lost a year. Nonetheless, Monticello now has the best broadband deals in the Midwest.
In Utah, the UTOPIA network offers more than 10 service providers to every subscriber. This is a real choice between service providers offering some of the fastest speeds in the country at affordable prices. Yet they have struggled financially -- in part due to constant attacks from massive incumbent companies and crippling laws passed by a state Legislature seemingly controlled by cable and telco lobbyists.
Eighteen states have barriers to discourage community networks, including Minnesota. Cook County, our most rural county, has long depended on a sole fiber line from Qwest for all connectivity. They begged for a redundant connection over many years to no avail.
This past January, a single accident left them without telecom services for 12 hours. No business could process credit cards. 9-11 did not work. US border security had to use Canadian communications. ATMs ceased to function. Police officers could not run plates.
The previous November, a majority of their citizens had actually approved building a community fiber network to create middle mile redundancy and last mile services. They even agreed to a small tax on themselves to help fund it. But MN law requires a super-majority of 65% for a community to build this kind of network. This is 5% more than the impossible 60% threshold in the US Senate.
Such a restrictive law is great for incumbent companies who are protected from competition. Offering a single fiber line to Cook is a profitable decision for Qwest's shareholders. It is a disastrous decision for the community.
This is why the FCC must stand up for all of us. States must not be allowed to cripple communities, forcing them to watch history pass them by.
We demand both Network Neutrality and the right to build our own networks when we choose. The FCC has authority on these issues and must start to use it.
An antiquated state law also stands in the way of communities that want to pursue their own version of FiberNet Monticello. With research increasingly demonstrating that high-speed service boosts rural economic development, communities underserved by current providers should not be held back by the unfair 65 percent threshold for popular support the law requires to go forward. A simple majority would suffice.
Finally, they corrected noted that broadband has been a total sleeper issue. If the next governor pays as little attention to broadband as current Governor Pawlenty, the state will be in dire straits.
Bristol Virginia is again expanding broadband access in rural Virginia. Following a $22.7 million BTOP (broadband stimulus) grant and matching $5.7 million grant from the Virginia Tobacco Commission, in combination with in-kind contributions from the Virginia Department of Transportation, BVU will greatly expand middle-mile broadband throughout 8 counties in Southwest Virginia. The project is expected to take 2.5 years to complete.
“With this broadband network, Bristol Virginia Utilities will enable service to more than 120 of what we refer to as anchor institutions,” [US Senator] Boucher said. “That includes schools, libraries, hospitals, clinics, major government facilities and other large public facilities. The new network will also come within two miles of 18,000 homes and 500 businesses. That makes it feasible for what we refer to as last mile service to be provided to these 18,000 homes and 500 businesses. Some of these have broadband today, but not all of them do.”
This project will add onto the economic development successes resulting from previous networks built by the publicly owned utility:
Boucher said the original broadband line deployed across the region several years ago has already helped to create a number of new jobs, including 137 new virtual call center jobs that have been created in the region by DirectTV, and another 700 plus jobs that have been created by the Northrop Grumman and CGI technology centers in Lebanon.
Though BVU is expanding middle mile access, it cannot offer last-mile services in most of these communities. Virginia law prevents BVU from offering some services outside its existing footprint - a policy that is great for telco profits but terrible for people that actually want modern telecom services.
For its existing broadband subscribers where it is allowed to offer services, the utility has boosted downstream and upstream speeds [pdf]. The new tiers remain asymmetrical, as with a number of the earlier muni broadband networks. Tiers are now 16/2, 30/10, and 50/20.
For its electrical customers, BVU has announced a smart-grid investment, as have many other utilities in the forward-looking Tennessee Valley - a hotbed of publicly owned utilities following the private sector failure to wire their communities 100 years ago.
Indeed, many municipal broadband projects are undertaken because the Wall Street metric does not work. The town may be too remote, the population may be too sparse, or the demographic nature may not be consistent with the template used by private sector companies in their profit-maximizing decisions on where and whether to deploy. Those are precisely the circumstances, however, in which the community benefits of providing broadband become most profound, and most valuable.