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Joanne Hovis on Business Plans for Municipal Fiber

Fri, May 17, 2013 | Posted by lgonzalez

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.

Community Owned Network in New Mexico Helps Save Lost Pets

Mon, May 06, 2013 | Posted by lgonzalez

We recently learned about Aztec, New Mexico's, free downtown Wi-Fi  so we decided to contact Wallace Begay, the IT Director, to find out more. This desert community of about 6,600 people not only offers the free service, but uses its fiber to serve government, schools, and even four-legged residents.

Begay tells us that in 1998 the city and school system coordinated to install the original fiber and the entities share ownership. The school wanted better, affordable connectivity for students while the city wanted economic development opportunities. Community leaders used E-rate funding and a Gates Foundation grant to construct the original fiber aerial route.

The town provides water, wastewater, and electric services through municipal utilities with its SCADA system. The public library and all ten Aztec Municipal School facilities connect to the fiber network. Municipal government facilities also use the network.

Even though the city is a co-owner, it took several years for municipal offices to get on the fiber network. Aztec City Council originally decided to install the fiber network as a way to bring in revenue by leasing dark fiber, not as a way to connect offices. When Begay started at the city in 2001, administrative offices still used dial-up connections. Twenty dial-up accounts (and the crawling speeds associated with them) added up to $500 each month.

At the time, Qwest (not CenturyLink) was the provider in Aztec and could only offer microwave or copper connections. Connecting 13 facilities at 1.4 Mbps would have cost the city $1,200 each month. Begay used $500 from the electrical enterprise fund to purchase equipment and pay for tech labor to move municipal offices on to the existing network. The city electrical enterprise fund pays for expansions and updates. The network is now about 12 miles.

Begay is especially pleased about the 2004 expansion to the Aztec Animal Control facility, serving all of San Juan County. Before the expansion, Animal Control also used dial-up and spent a significant amount of time fielding calls from worried pet owners. Now, when a new animal arrives it is photographed and vitals are posted online. Staff spends more time working with animals rather than answering calls and more pets find their way home. Begay says Aztec Animal Control also teams up with local animal shelters to share video of potential adoptees to expand adoption possibilities.

Map of Aztec, NM near Four Corners

In 2010, new City Manager Joshua Ray, embraced the idea of providing free Wi-Fi. From a 2011 Farmington Daily Times article:

"Aztec has possibly the best fiber infrastructure for Internet in the entire southwestern United States, so we decided to capitalize on it and build a citywide Internet connection," he said. "I'm hoping we can eventually light up the whole city with free Internet."

…

"In other cities, you have to go hunt down the Starbucks or McDonald's to get free Internet," he said. "We'll have it throughout the city, and I think that will be incredibly attractive to businesses and tourists. It will really improve the quality of life for our citizens and visitors, and I think it will be an economic driving factor for Aztec."

With a New Mexico Certified Community Initiative grant and additional funds from the city, Begay purchased the equipment for the Wi-Fi network for around $75,000.

There are 19 hotspots, mostly along the business corridor. Begay says the community is considering expanding the range to reach residential areas. 

Begay told us Wi-Fi users sign on for two hour time blocks to discourage "squatters." The Wi-Fi offers up to 11 Mbps and many businesses downtown use it for Internet access and simple applications. They also appreciate the ability to offer access to patrons. Entrepeneurs in Aztec often contact the city to find out details about the Wi-Fi signal when choosing a location for a new business. Aztec sponsors several large outdoor festivals in Minium Park and the city provides free day-long access so vendors can serve customers and increase sales.

The city still intends to offer commercial dark fiber leasing and is vetting technical and legal requirements. Begay estimates Aztec will have pieces in place within three months and will be ready to sign up its first customer.

In Kansas, Ottawa Launches Own Fiber Optic Network

Thu, April 25, 2013 | Posted by lgonzalez

Ottawa, located in east central Kansas, recently launched its own municipal fiber network. The community of 13,000 in Franklin County watched nearby Chanute build and establish its own broadband utility. Ottawa plans a similar incremental strategy. Both communities boast strong farming traditions and host industrial employers that could not get what they needed from the existing providers.

I spoke with Chuck Bigham, IT Director for the City of Ottawa, who gave me some nuts and bolts on the network. I also touched base with City Manager Richard U. Nienstedt, both are heavily involved in the establishment of the network.

Like in Chanute, local leaders have long nourished a vision for better connectivity. In recent years, they realized the vision was not only attainable, but necessary for the community to thrive.

Approximately seventeen miles of fiber, installed by USD 290 and Franklin County in the 1990s, was already in the ground when the project began. Students and staff connected to the Internet and linked the 8-10 school district facilities via its fiber network. These pre-existing resources became the backbone of Ottawa's new utility. Cooperation between the City Municipal Utility, USD 290, and Franklin County facilitated the configuration of the new network. Ottawa now provides business Internet access, expanded educational opportunities, and a higher level of service than was previously available.

Two years ago, the City and its Chamber of Commerce reached out to major businesses to determine the need for broadband. They found businesses in Ottawa were connected through existing providers, but were unhappy with price and level of service. The community's industrial park seemed especially disadvantaged. Businesses needed better upload speeds than the existing T1s, which ran up to $600 per month. While DS3 connections were available, they were unaffordable and there was no level of service between the two options. Businesses could not convince AT&T to offer something they could afford and, as Bigham noted, the telecom giant appeared to be "milking the cow."

Map of Ottawa, Kansas

This is a common complaint among communities - the big national telephone and cable companies often refuse to upgrade their level of service because the lack of alternatives for local business connectivity means the firms cannot switch away from the existing provider.

The City approach USD 290 and Franklin County and proposed a partnership. The City would use several available fibers on the existing infrastructure to serve as the community network backbone. The School District and the County would still own the fiber asset already in place, while the City would own any added segments and the routers and switches to make it work. The City and its utility would support and manage the network 24/7. The school board and county commission approved the proposal in the fall of 2012.

The School District now pays the City $3,000 per month with monitoring and network support from the City all day, every day. USD 290 gets double the bandwidth it used to get from AT&T, when it paid nearly $6,000 per month for a DS3 connection. Paying less, but getting double, seems like a very smart investment.

Ottawa followed Chanute's example by providing a floor instead of a ceiling as the foundation for service. In other words, customers contract for minimum capacity but are allowed to burst to whatever capacity is available at any given time. For example, the School District will soon connect with a minimum 250 Mbps with the ability to burst to 500 Mbps.

Over the course of ten years, Ottawa has spent less than $500,000 on its next-generation community owned network. All the revenue from the network goes back into maintenance and upgrades. City government facilities and two electric substations, which used to connect only to each other, now link to the main power plant via fiber.

Neosho Community College's Ottawa Campus connects to the network. Ottawa Cooperative Association recently joined the network to take advantage of the fast upload speeds needed to send data rich reports and get timely information on grain prices. The Coop previously had a slower DSL connection. Bigham and Nienstedt both expect to see more business customers when the network expands to the Northeast Ottawa Industrial Park, the next expansion project.

Nienstadt tells us via email:

Our main emphasis has been to use it [the network utility]  as a recruiting and retention tool and be able to say that, "We have your broadband needs solved and you do not have to worry about that issue when locating in Ottawa, Kansas."  Most assuredly, some of the businesses have been able to benefit from lower broadband costs since we  started surveying and talking about a fiber optic utility.  That, quite frankly, was one of our goals.

Carroll County Explains Many Benefits of County Owned Fiber - Community Broadband Bits #43

Tue, April 23, 2013 | Posted by christopher

Chief Information Officer for the Carroll County Public Schools Gary Davis joins me to explain why the Carroll County Government, Public Schools, Public Library, and Community College partnered to build their own fiber optic network. He is also the Chairman of the resulting Carroll County Public Network (CCPN) of Maryland.

The story starts the same as many others - the community anchors were paying too much and did not have access to the connectivity they needed. The telephone and cable companies (both massive international corporations) found higher returns on investment elsewhere and therefore could not justify improvements absent significant subsidy.

Gary explains the savings generated by the network and how it has benefited students attending the local schools. We recently covered the CCPN and its incredible savings for the community in a post here.

We also cover some basics of what some community anchor institutions need to ensure they can take advantage of modern technology.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 30 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to Mount Carmel for the music, licensed using Creative Commons.

In Colorado, City of Durango Does Dark Fiber

Sat, April 20, 2013 | Posted by lgonzalez

This southwest Colorado community of about 17,000 contends with state barriers, but still makes the most of its fiber assets. We contacted Eric Pierson, Information Services Manager for the City of Durango, and Julie Brown, the City Finance Manager. The two shared some information on Durango's fiber network.

Currently, fifteen miles of City owned fiber run through town, providing connectivity for municipal and La Plata County facilities. Installation began in 1994 and the build-out continues. A combination of City capital improvement funds, grants from the State of Colorado Department of Local Affairs (DoLA), and funds from the Joint City/County Sales Tax fund have contributed to the $1.7 million network over the past twenty-one years.

Durango leases dark fiber to businesses and nonprofits to boost economic development and fund maintenance for the network. While dark fiber leasing could be far more lucrative, Durango's goal is to break even each year. According to Brown and Pierson, 2013 will yield about $10,000 to be shared with La Plata County and the Southwest Colorado Council of Governments.

Mercy Regional Medical Center partnered with Durango to install fiber as its primary bandwidth connection. Mercy is now an important anchor institution for a large medical office complex in what used to be an undeveloped area. In addition to the clinic, new businesses and residents continue to expand in the area.

According to Brown and Pierson, local ISPs that lease the fiber to serve residents and businesses have increased bandwidth for customers. A significant number of professionals that live in Durango work from home.

Even though Durango is not able to freely expand the network due to state restrictions that limit how it can use the fiber absent a costly referendum, community leaders found a way to optimize their network for residents and businesses. And should the state be wise enough to repeal this anti-competitive barrier, Durango will be well positioned to benefit local businesses.

Jefferson County, Washington, Set to Build New Fiber Network

Mon, April 08, 2013 | Posted by lgonzalez

Another county in Washington will soon be connected via a community owned fiber network. Peter Quinn, of the Economic Development Committee Team Jefferson, tells us that the Public Utility District of Jefferson County will be investing in the new infrastructure. The Northwest Open Access Network (NoaNet), will operate the Jefferson County network for at least the next five years.

Nonprofit NoaNet has been expanding wholesale fiber infrastructure across Washington since 2000. NoaNet works with local communities to bring the fiber backbone to community anchor institutions (CAIs) such as schools, libraries, hospitals, and government facilities.

The Jefferson County project is funded with a $3.2 million American Reinvestment and Recovery Act (ARRA) stimulus grant and a county contribution of $500,000. The network should measure approximately 70-100 miles, and connections to CAIs are expected to be 100 Mbps, however the planning is still in process.

The network will connect community anchor institutions including county schools, public safety facilities, city and county government facilities, several local libraries, healthcare clinics and hospitals, and state parks. Towns that will receive anchor connections include the City of Port Townsend, Port Ludlow, the Port of Port Townsend, Quilcene, Brinnon, and Chimacum. Approximately 90 community anchor institutions will be connected through fiber or the planned wireless network. Wireless will be offered where geography and expense preclude fiber installation.

Construction will start April 8th with a planned completion date of August 5th, 2013. Jefferson PUD will own the network and independent ISPs will provide service to the anchor institutions and have the option of expanding the network to serve local businesses and residents.

The plan is divided into three "tiers" and described on the Jefferson PUD Broadband Project website:

Tier 1 are anchor institutions that must have service to be compliant with the grant. 

Tier 2 are sites of anchor institutions that weren't initially submitted with the grant.

Tier 3 are locations that will be provided service if resources are available.

Tier 2 will include expansion of connections to mor CAIs and will also connect with PUD SCADA sites. In addition to the build, Jefferson County PUD is purchasing the existing electrical system in the eastern part of the county from Puget Sound Energy. Jefferson County PUD took over delivery of power via the system on April 1st. 

Community Anchor Institutions in Rural Washington Connected by NoaNet

Thu, April 04, 2013 | Posted by lgonzalez

Adams County, situated in eastern Washington, is now connected to the regional Northwest Open Access Network (NoaNet) infrastructure. Ritzville, the county seat and home to about 1,600 people, connected last fall, funded through a combination of American Reinvestment and Recovery Act (ARRA) stimulus grants, funds from public utility districts, and surrounding communities. As with other NoaNet projects, connectivity will include community anchor institutions in Ritzville such as the library, schools, and local healthcare clinics.

NoaNet, a nonprofit corporation, is bringing wholesale fiber backbone infrastructure across the state of Washington, connecting community anchor institutions (CAIs). Schools, hospitals, libraries, and government facilities connect via the open access network and retail providers bring service over the network. NoaNet's membership includes municipal utilities, tribes, cities, and counties. The collaboration began in 2000 and received $140 million in federal stimulus dollars to connect rural Washington state. 

The community celebrated in November with a Ritzville Public Library Open House to show off the new technology. From the NoaNet Press Release:

“We’re just very excited about having consistently fast, high-speed Internet for our patrons.  The benefits will be huge for everyone from online students watching class lectures to tech junkies trying to stream Pandora while downloading YouTube videos, to library staff offering reference help to the public” said Kylie Fullmer, Director of the Ritzville Public Library. “And once it becomes more widely available throughout the community, I think people are going to be just as excited as we are.”

Local community members recognize the importance of what the new connection an do for this agricultural community. Like many other small communities across the country, rural towens like Ritzville see their youth leave for larger markets for career reasons. From an editorial in the Columbia Basin Herald:

We are pleased Ritzville has this service and hope more educational, job and business opportunities abound for the area.

We hope the project helps even the playing field for people living in the rural communities of the Columbia Basin.

Doing so could mean we have more family wage jobs and opportunities for our youth.

Virginia Town Provides Free Wi-fi in City Park, Fiber to Community Anchors

Wed, March 20, 2013 | Posted by lgonzalez

Last summer, the city of Staunton, Virginia, sent out a press release about its new citywide free wi-fi service. Four hours later, a destructive storm ripped through Gypsy Hill Park knocking down trees and damaging buildings. Nevertheless, the equipment held on. Five days later, celebrants at the city's July 4th party used the free service in droves.

A William Jackson GCN article from December, 2012, highlights the popularity of the network:

Wi-Fi use in the park had begun well before the formal launch. Almost as soon as installation of the access points began in May, park workers noticed people congregating with their laptops in areas near the points, Plowman said, demonstrating the demand for Wi-Fi access.

Public Wi-Fi has become a popular feature at the park. “People are finding creative uses for it,” [chief technology officer for Staunton, Kurt] Plowman said, such as the woman who used a laptop Web camera to send a ball game in the park to a player’s grandmother.

As we have seen in other communities, a wireless network enhances local connectivity as a complement to a fiber network. Staunton is the County seat of Augusta and home to nearly 25,000 people.

The City owns two separate networks. In addition to the fiber used by city facilities, there is a separate dark fiber network. The city installed the dark fiber with the intention of leasing it to the Staunton Economic Development Authority. The Authority then leases it to local phone, Internet, and wireless provider, MGW. MGW serves residential and commercial customers in south and west Virginia.

In 2012, the city built a new fiber institutional network to avoid having to lease from the private sector.

We touched base with Kurt Plowman who told us that the fiber connects twelve major city facilities, including libraries, fires stations, and public works facilities. There are also over fifty traffic signal cabinets and ten facilities in Gypsy Hill Park on the fiber.

When compared with the city's past lease payments for fiber and data circuits, payback will be complete in 10 years. Additionally, there are more facilities connected and bandwidth is increased.

Plowman also told us that the $1.25 million cost of the project was well below estimates. The build was a Public-Private Educational Facilities Infrastructure Act (PPEA) project in conjunction with Lumos Networks from Waynesboro, Virginia. Lumos performed the engineering, contracting, and project management in exchange for several strands of the fiber. Plowman tells us that all connections are 1 gig but that there is considerable room to increase capacity. Additional dark fiber was engineered into some routes for future expansion. Schools and libraries are connected for free. Update: We connected with Kurt Plowman again who told us that prior to Staunton's infrastructure investment, schools were paying $2,000 per month just to lease fiber.

Orange Wireless logo

In addition to serving schools, libraries, and government facilities, the fiber supports the free wi-fi. From the article:

For Staunton, the driver for public Wi-Fi was the creation of a 30-mile fiber optic city backbone about two years ago to replace the city’s leased lines. Thirteen years ago, telecos had leased the city’s dark fiber, but over the years they had become more interested in selling services than capacity, and the city decided to build out its own infrastructure in cooperation with a local carrier.

“Cost was a driving factor, along with bandwidth,” Plowman said. “We built a better network as a public-private partnership and saved a lot of money in the long run.”

The fiber links about 30 government locations, including Gypsy Hill Park, which has heavy use all summer. The park’s bandstand offers entertainment four or five times a week throughout the summer and there are frequent festivals and other activities. Officials decided that, “for what we’re spending putting fiber in, let’s put something in to give the public something for the expense,” Plowman said.

Staunton first invested in wi-fi about 10 years ago when it was installed in the public library. While city leaders considered providing it in other areas, they did not feel technology was ready to meet their needs. They were also concerned about competing with private carriers. Technology has since advanced and the city has taken special steps to avoid competing with private carriers in the vicinity of the park.

“I’m almost embarrassed to say how easy it was,” Plowman said of the wireless segment. “It was an opportunity to give something back to the public.”

County and State Partner For Local Connectivity in Iowa

Wed, January 16, 2013 | Posted by lgonzalez

In 2010, the Iowa Communications Network received a $16.2 million Broadband Technology Opportunities Program (BTOP). The project will connect all 99 counties in the state by upgrading an existing 3,000 mile network (PDF of the project summary). The state plans to bring 10 Gbps capacity points of presence to each county and to provide 1 Gbps service to about 1,000 anchor institutions. The project will be managed by the state's Department of Transportation, which will be using fiber primarily for traffic management.

A recent Ames Tribune article reports that the local community will be partnering with the state to capitalize on the existence of the fiber for connectivity. Story County, located in the very center of the state, will soon be using several strands in the Ames area to create a loop between city and county offices. The 20-year arrangement will cost the county $15,000 and provides ample capacity to support the county's work and support future uses. From the article:

“For us this is a huge windfall,” [Story County Information Technology Director Barbara Steinback] said. “If we were to go on to a project like this on our own, it would cost between $250,000 and $300,000.”

The opportunity comes at a good time for Story County. The sheriff’s office recently began using new mobile laptops that Steinback said have been putting a strain on the network and, along with some other projects, has been resulting in some slowness issues.

“So we do need to take advantage of this opportunity,” she said.

Extensive Fiber Route Snaking Its Way Across Michigan

Wed, October 24, 2012 | Posted by lgonzalez

The nonprofit Merit Network, Inc., of Michigan, started in 1966 as a way to provide networking help to the state's research and educational facilities across the state. Over the years, the organization has kept up with the times and is now spearheading the Rural, Education, Anchor, Community and Healthcare - Michigan Middle Mile Collaborative (REACH-3MC II) project.

The project will bring connectivity to community anchor institutions and underserved rural communities in the Upper and Lower Peninsulas. The exentive fiber project is funded with two Broadband Technologies Opportunities Program (BTOP) grants totaling $103.2 million. When completed, Upper and Lower Michigan will house an additional 2,287 miles of fiber.

Matt Roush recently reported on the project, which is well underway in Monroe County in the southern part of the state. Roush brought news about installation of telecommunications huts, an early step in expanding the network into northern Michigican. From the article:

REACH-3MC will connect 105 community anchor institutions as the network is built and will pass 900 more over time. Led by Merit Network, REACH-3MC includes sub-recipients from the private sector to make broadband readily available to households and businesses that lack adequate service options in the 52 counties that make up the project service area.

For more details on the project, including a map of the proposed routes, follow this link to a PDF of the project overview.