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Broadband Communities Economic Development Conference September 16 - 18

Join Chris in Springfield, Massachusetts for the Community Fiber Networks conference in September. The meet-up is part of Broadband Communities Magazine's  Economic Development series; Chris will present at the event. The conference will run September 16 - 18 at the Sheraton Springfield Monarch Place Hotel.

Jim Baller, Conference Chairman and Principal at the Baller Herbst Law Group notes:

During the last fifteen years, thousands of communities across the United States have sought to attract or develop advanced communications networks, recognizing that such networks can provide them and the nation multiple strategic advantages in the increasingly competitive global economy. In virtually every case, fostering robust economic development has ranked at or near the top of the list of considerations motivating these communities.

Broadband Communities chose Springfield because there are multiple projects in the region, including MassBroadband123, Leverettnet, and Holyoke.

You can register online for the event and check out the agenda to plan your weekend.

2014 Broadband Communities Summit In Austin, Texas Set for April 8 - 10

The 2014 Broadband Communities Summit is scheduled for April 8 - 10 in Austin, Texas.

Chris Mitchell will be speaking at 3 p.m. on April 8 during the Economic Development Program as part of the talk titled "Economic Development: The Killer App." Chris will be back on April 10th to speak during the Rural TeleCon segment. He will present information on the state of broadband in regions that continue to struggle with connectivity. The "Envisioning a Future for Broadband Deployment" panel from 11:00 a.m. - 12:20 p.m. CST.

Other panel discussions in the Rural TeleCon segment will be:

  • The Bandwidth of the States: Where They Stand in 2014 (a quick review of broadband in all 50 states as stimulus projects roll out)
  • Financing Future Bandwidth
  • Disruptive Technology Is Spurring Learning In the Classroom
  • Measuring Prosperity from Rural Broadband Utilization
  • Cool Things Rural Communities Are Doing With Broadband

You can view the entire summit agenda online, review details about free workshops, and plan your trip. You can also register online for the event, to be held at the Renaissance Hotel in Austin.

Broadband Communities Mag Publishes List of Municipal Fiber Networks

This summer, Broadband Communities Magazine published its list of 135 municipalities that have invested in their own FTTH networks. In the May/June issue, Masha Zager finds that a growing number of communities are building fiber to the home networks. Subscriptions to the magazine are available here.

In her accompanying article [PDF], Zager describes her precise criteria for inclusion on the list:

All the network deployers on this list

• Are public entities, consortia of public entities, consortia of public and private entities or, in a few cases, private entities that benefited from significant investment or participation by local governments. 

• Own all-fiber networks that connect local homes or businesses to the Internet (or are actively developing such networks). 

• Make available – directly or through retailers – such services as voice, Internet access or video (or are planning such services). 

Zager left out commuities with Institutional Networks (I-Nets) that only serve government or schools. The list also omits communities that only lease dark fiber and those that provide services over cable or wireless.

The article discusses commonalities between municipal network communities, including the fact that many communities first run their own electric utility. Often I-Nets come first, serving municipal facilities, schools, and libraries. Next the network will serve commercial and industrial clients. Expansion to single and multi-dwelling households is usually the last step in community connectivity. As our readers know, the deployment and funding approaches can be as unique as the communities they serve.

Zager notes that a growing trend shows larger cities entering the telecommunications business. In the past, networks graced primarily small to mid-sized communities. Those communities were large enough to have necessary resources, but small enough to be ignored by major telecommunications providers.

The article also describes different types of partnerships between the public and private sectors as a way to find the right business model for delivering services. As Zager notes, state law can limits available options by creating barriers and unique regulations that only apply to publicly owned entities.

As we found in our research, FTTH networks are geographically concentrated. The census used to compile BBP Mag's data, showed nearly half of all networks located in only seven states. Zager also discussed the variety of offerings from municipal FTTH networks. She noted that some open access networks seek vendors to offer diverse services beyond triple play:

For example, on St. Joe Valley Metronet, 30 providers deliver 20 different types of services, including such offerings as conferencing, disaster recovery and video surveillance. Enabling a wide variety of broadband services could become a way to make more community networks financially viable. If this strategy succeeds,
more municipal networks – at least larger networks – may follow suit.

Zager's article is a good resource to share with those who may not be well-versed in the world of municipal FTTH networks. She concentrates on some major trends and provides just enough detail to whet a curious appetite. Recommended.

Consultant Argues Never Used Financing Mechanism Also Won't Work in Palo Alto

I was troubled to see Broadband Communities publish an odd and misleading story about Palo Alto in the May-June issue [pdf]. Authored by Stephen Blum of Tellus Venture Associates, a consultant that has been hired by Palo Alto in the past, it showed a remarkable level of ignorance about community owned fiber networks and broadband more generally.

The title alone, "Can FTTP Work in Palo Alto?" is just odd. Why exactly would FTTP not work in Palo Alto? It works in hundreds of other cities and towns, most of whom are less well positioned than Palo Alto for such a venture. A more honest title would have been "Consultant Argues Never Used Financing Mechanism Also Won't Work in Palo Alto." Blum made a very good case for that narrow argument but fails to lay out any convincing evidence that a variety of other models are doomed.

Parts of the article can only be called cable and DSL boosterism - such as repeating the talking point that AT&T's U-Verse and Comcast already offer "high levels of service at competitive rates." Competitive to what? Neither can deliver the speeds offered by modern fiber networks and are only "competitive" if one ignores the much slower upstream speeds, higher prices, lesser reliability, problems of oversubscription, and poor customer service one gets from those providers.

Reminds me of "Slick Sam" from Lafayette and the "functional equivalence" between DSL and FTTH.

Blum apparently knows better - that Palo Alto residents are "happy" with the existing services because they have not spontaneously marched down El Camino Real demanding faster speeds at lower prices. This is the wrong measure - reminiscent of the now oft-quoted Henry Ford line that if he asked people what they wanted, they would have said "faster horses."

The number of specific errors in this piece are many, and have been well documented by those familiar with the history of Palo Alto's studies. I want to focus on just a few. Let's start here:

Overall, 79 percent of households would have to pay $3,000 apiece to fully fund FTTP construction costs.

YIKES! Cue the foreboding music! Palo Alto has something like 25,000 households. If 20,000 of them paid $3,000 then the City would have $60 million in addition to its present $14 million dark fiber reserve - a staggering $74 million of theoretical money that has nothing to do with anything. I know of no network that has been built in this manner.

This is an absurd measure for whether a network is feasible. Networks are not financed in this way, partially because, as the author adroitly notes, it doesn't appear likely to work. Community owned networks are financed using a few common methods, most often revenue bonds issued by the utility. Palo Alto's past studies of this approach reflected a desire to avoid that path and the results of those studies in no way determine whether a city owned FTTH network is feasible in 2013 given the present assets and environment.

The user-financed model remains a peculiarity and quite possibly will have a role to play in the future (though almost certainly not to finance the entirety of a system). Palo Alto would be crazy to hinge its decision of whether to invest solely on the feasibility of each home owner paying its full connection cost up front.

Palo Alto Logo

In examining the likelihood of success for Palo Alto, it makes sense to consider similar communities that have made the investment:

Although there were some apparent FTTP successes (for example Bristol, Va., and Cedar Falls, Iowa), cities that had more in common with Palo Alto, such as Alameda and Provo, Utah, were failing.

There is nothing "apparently" successful about Cedar Falls or Bristol. They are unambiguously stunning successes, with take rates north of 70 percent and have led to thousands of jobs. And both can deliver a gigabit anywhere in town at a moments notice at rates a fraction of what major carriers charge. But he believes Alameda (with an older HFC cable system) and Provo (having to deal with strict state laws not present in California) are more relevant comparisons. There are some 140 other citywide networks that might be more relevant, but Blum ignores them.

google-gig.png

He ultimately concludes that Google's experience in Provo will somehow inform local government decisions around network investments. This is some of the worst advice I have read. First of all, Google's costs are different than any other firm, let alone a local government because it already runs one of the largest fiber networks on the planet (possibly the largest). The most brilliant engineers on the planet work for Google. It doesn't publish its costs and is a private sector firm with far different motivations and incentives than a local government.

In short, there might not be a worse comparison than Google for a local government evaluating its own plan for meeting long term telecommunications needs.

All of this being said, Palo Alto could rationally choose not to invest in a FTTH network. It would have to compete against Comcast and AT&T, who engage in predatory tactics while federal regulators ignore potential Sherman Anti-Trust violations.

Given the many wonderful aspects of the community, particularly for people who don't like winter, maybe DSL and Comcast cable will be good enough for the heart of Silicon Valley. That is their choice, not mine (my wife and I love Minnesota winter). I just hate to see such an imbalanced and inaccurate case made suggesting it could not work.

Leadership Panel Set For November Broadband Communities Conference

In November 2012, Broadband Communities Magazine hosted the first of its Economic Development Conference Series in Danville, Virginia. The second conference, scheduled for November 5-7, 2013, will bring another group of leaders together in Tinley Park, Illinois, just outside of Chicago.

This year, the conference will focus on the Midwest with discussions about Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

As usual, our own Christopher Mitchell will speak there and will be generally available to discuss community owned networks with those who attend.

From the announcement:

We are assembling an outstanding multi-disciplinary roster of national, regional, and local experts who have extensive experience in using advanced communications capabilities to foster economic development and create jobs. We will examine what is working well, what is not, and what lies ahead, particularly as federal stimulus funding ends.

Our speakers will provide attendees a wealth of economic research, case histories, how-to materials, and other practical information that they can use effectively in their communities. We will address the latest "hot" topics, including Google Fiber, FirstNet, the Connect America Fund, the FCC's new Health Care Connect Fund, emphasizing their potential to foster economic development and job creation. We will also provide ample time for networking and learning about relevant cutting-edge products and services.

The leadership panel includes:

  • Jim Baller - Conference Chariman and President of Baller Herbst Law Group
  • Joel Mulder - Illinois Broadband Deployment Council, Illinois Municipal Broadband Association, and Senior Director of Business Development, G4S Technology
  • Gary Evans - Former CEO of Hiawatha Broadband Communications
  • James Salter - CEO, AEG
  • Susan Crawford - Roosevelt Institute Fellow
  • Lev Gonick - CEO, OneCommunity (as of July 2013)
  • Blair Levin - Executive Director, Gig.U
  • Diane Kruse - Former Chair, FTTH Council and President of Neo Fiber

You can register now until July 1 for the Special Early Bird Rate. The event will be at the Tinley Park Convention Center and the adjoining Holiday Inn offers a special rate for conference attendees.

Upcoming Broadband Communities Mag Issue Dedicated to Community Networks

We look forward to the next issue of Broadband Communities magazine, due on June 15th. This upcoming edition is titled "Fiber Nation: Are We At The Tipping Point?" and focuses completely on local communities that created their own networks.

Broadband Communities puts on the annual Broadband Communities Summit, which we just attended in Dallas in April. The magazine is free and features a lot of information useful to those thinking about building networks.

According to the announcement, you can subscribe now and have the issue delivered to your door and/or your inbox. The issue will include:

  • Annual Census and Analysis of Muni Networks
  • FTTH Deployments with Case Studies
  • Best Practices for Broadband Adoption
  • Deployment of Advanced Broadband on University Campus
  • Financial Modeling for Rural FTTH Builds
  • Economic Development and Broadband
  • Gigabit Communities - The Fast Few

Joanne Hovis on Business Plans for Municipal Fiber

Joanne Hovis, President of CTC Technology and Energy, recently published a must-read article in Broadband Properties Magazine. Whether you are a community leader investigating the possibility of a publicly owned network or an engaged citizen looking for pros and cons, this piece explains practical benefits succinctly. In her article, The Business Case For Government Fiber Networks [PDF], Hovis looks at life beyond stimulus funding. She points out how we should evaluate municipal networks in an environment where shareholder profit is not the first consideration.

Hovis gives a brief history of how local communities reached this point of need. As many of our readers know, local communities used to be able to negotiate with cable providers for franchise opportunities and rights-of-way. Often cable providers would construct broadband infrastructure in exchange for a franchise to operate in a given community, creating I-Nets for local government, schools and libraries. Once states inserted themselves into the process with state-wide franchising, local negotiating power evaporated. Many of those franchise agreements are ending and local leaders are considering municipal fiber optic networks.

Hovis stresses that municipalities do not function in the same environment as the private sector. While they still have a fiscal responsibility to their shareholders (the taxpayers) the main function is providing public safety, encouraging economic development, offering education, and using tax dollars to better the quality of life. Hovis describes how redefining return on investment (ROI) needs to go beyond the balance sheet bottom line. 

These benefits have nothing to do 
with traditional financial measures. Rather, they represent the return 
to the community in terms of such largely intangible societal benefits 
as enhancing health care quality, narrowing the digital divide, providing enhanced educational opportunities to school children, delivering job search and placement opportunities at public computer centers and helping isolated senior citizens make virtual social connections.

joanne-hovis.jpg

Even without the intangible benefits, Hovis argues the financial benefits to local communities cannot be ignored:

First, a government network can help avoid existing and future costs by replacing services for which the government previously paid third parties. Second, a network can bring revenues to a community, especially given new E-Rate regulations that make government networks eligible for subsidy if they serve schools and libraries. Together, these cost savings and revenue streams can add up to significant dollars – potentially to amounts that justify financing the necessary construction.

Hovis explains the economics of government need to lease circuits, an extremely lucrative practice for phone companies or providers. In addition to being expensive, Hovis notes they are often low-bandwidth. Hovis takes it one step further:

Build the network and you will shave this amount from your accounts payable.

In fact, because a government network can deliver far higher-capacity connectivity than the jurisdiction
 had previously leased, its value is even greater than simple cost avoidance. 
A government that owns a network 
can use inexpensive, off-the-shelf equipment to connect its facilities to one another at no cost for bandwidth (because the traffic is “on network”
 and not going out to the Internet). It can also deliver Internet connections to these facilities at a per-unit cost much lower than that of leased connections because it can aggregate the needs of all departments and purchase commodity bandwidth. This is particularly true for a jurisdiction that can develop a mutually beneficial partnership with a provider of wholesale bandwidth.

Considering the fact that capacity needs continue to grow, savings with a publicly owned next-generation network increase exponentially. Eliminating the need to lease now eliminates the need to lease more later.

Hovis also examines in detail the different ways municipal networks can provide revenue. She examines:

  • Dark or lit fiber to community anchor institutes (CAIs): We have documented hundreds of communities that lease dark fiber to CAIs and also to commercial customers. That list continues to grow.
  • Middle Mile Capacity: Providing infrastructure to private ISPs is more speculative, but encourages economic growth and provides connectivity to businesses and individuals who would not otherwise have it.
  • E-Rate Subsidies: As of September 2010, nonprofit and public networks are eligible for E-rate subsidies for providing broadband to schools and libraries. This potential source can contribute toward network self-sustainability.

The article also stresses one of the factors we find most compelling when considering investment in publicly owned networks - keeping local money in the local economy:

Circuits leased from a large national provider require the delivery of a big monthly check to a potentially far- away corporate entity, but monthly fees paid to a government-owned network stay in the community to be spent on other government services and to be multiplied when network employees go out to eat or spend money at other local businesses.

The concept of planning, financing, and building a municipal network is daunting to many communities; it should be a unique local decision. Few people have experience like Hovis, who does an excellent job of laying out critical considerations.

Broadband Communities Magazine Spotlights ILSR's Chanute Report

We are pleased to announce that an excerpt of our report, Chanute's Gig: One Rural Kansas Community's Tradition of Innovation Led to A Gigabit and Ubiquitous Wireless Coverage, is now highlighted in the newest Broadband Communities Magazine. The November/December 2012 issue focuses on economic development.

Editors chose our report because it shows how a community can successfully develop a network to address community needs. The result is greater economic development and a range of increased community benefits. In addition to our report, several other articles focus on economic development and come from authors such as Reed Hundt and Blair Levin, Doug Adams and Michael Curri, Ken Demlow, Craig Settles, and David Moore.

You can access the digital edition online and see the entire issue table of contents at Broadband Communities Magazine Online.

You can still download the full report from the ILSR website and check out some of our other resources including case studies, fact sheets, video and audio.

Canadian Community Brings Fiber to All in Alberta Town

Back in 2010, we reported on SuperNet in Alberta, Canada. We noted how, even though it resulted in significant middle-mile infrastructure expansion, there were still many, many Canadians along the route that were not connected. We drew a parallel between that experience and the focus on middle mile infrastructure via the broadband stimulus programs.

In October, Broadband Communities Magazine carried Craig Settles' article on Olds, a small community in Alberta that overcame the last-mile challenge by working for over 10 years to create that last-mile connection, culminating in O-Net. This town is an inspiration for other communities who decide to take matters into their own hands and find a way to get members connected and engaged. 

Settles tells how the process began as a collaborative effort to get organized and revitalize the economy. A technology committee was charged with bringing fiber throughout the county, but the expense was prohibitive. From the article:

"The initial estimate to lay fiber optic cable throughout the county was approximately $80 million [Canadian dollars], well beyond OICRD's [Olds Institute for Community and Regional Development] funding ceiling,” states Joe Gustafson, who was OICRD chairman at that time. “The Tech Committee subsequently refocused on just the town of Olds and its population of just over 8,000, which brought the estimate down to $13.5 million, or about $3,140 per premises passed.”

The story goes on, taking us through several stops and starts the community experienced when working with private providers:

“To date, few incumbents see value in working with a community on a network such as this,” states Craig Dobson, currently the director of Olds Fibre Ltd. (OFL) and initially a consultant for the institute. “In essence, they believe strongly in facilities-based competition and appear to be threatened by market- based services competition that open- access networks enable.” Open-access networks rely on service providers for revenue – without them, the networks are not sustainable.

After working with the private providers to no avail, the organization decided to build the network themselves. The community next tried to work with a partner that would manage the network while the town retained ownership but even that partnership fizzled. OICRD remained the nonprofit organization that owns the town's for-profit network manager, Olds Fiber Ltd (OLF).

Olds Fiber Network Logo

The results have been favorable:

Owning its network enables a town to make business decisions that are in the best interests of its community. By having a well-managed, community-owned enterprise, a town such as Olds could retain the millions of dollars that other- wise were leaving the community every year for voice, Internet and TV services.

...

OICRD, a nonprofit organization, owns the for-profit OFL and provided it with a shareholder loan to build the dark fiber network – which the institute also owns. OFL licenses the network from the institute and is responsible for operating it. OFL sells broadband services and pays the institute a per-subscriber fee based on a formula that enables OFL to generate enough money to cover operating expenses. The institute uses the revenue from these fees to fund community economic development projects.

Local leaders find that the province is giving communities room and opportunity to be self-reliant in achieving connectivity. Olds received a government loan that covered some of the initial costs and OFL President/CEO Lance Douglas told Settles:

“The province is shifting toward a policy of letting communities take responsibility for their own economic and social development. Our community said, ‘We’ll take the risk.’ And government basically said, ‘Take your taxes back and build away.’”

Services from O-Net vary and, while triple-play packages are available, the network makes it easy for new applications to be developed (for example, a telehealth application allowing Doctors to interact with patients using their television). There is also a loyalty reward after 36 months of contiguous triple-play service -- they drop the price considerably. O-Net highlights the value of community owndership. From its website:

As Canada's first community owned and operated Fibre-to-the-Premises network is now lighting-up new orders, you are encouraged to support your community and help pave the way for your future, and the future of many generations to come.

You, the citizens of Olds, own this story.