A growing number of U.S. cities have broken up monopoly control of the Internet marketplace locally. They're promoting entrepreneurship while giving residents and businesses real choice in how they connect and reach new audiences. They've put a new wrinkle to an old model: the public-private partnership.
"Communities desperately need better Internet access, but not all local governments are bold enough to 'go it alone'", says Christopher Mitchell with Community Broadband Networks at the Institute for Local Self-Reliance. "Here, we've outlined a few remarkable cities who have demonstrated how smart strategies are helping them help themselves."
A city that builds its own fiber and leases it to a trusted partner can negotiate for activities that benefit the public good, like universal access. It may even require (as Westminster, Maryland did) that the partner ISP have real human beings answer the phone to solve a customer's problems.
The term "public-private partnership" has been muddied in the past. This report clears up the confusion: public entities and private companies must both have "skin in the game" to balance the risks and amplify the rewards.
- Partnerships in broadband have never been in greater vogue. Communities are realizing they don’t have to build it entirely themselves to get the benefits of gig networks in Chattanooga or Google cities.
- The report features the revolutionary Westminster/Ting partnership and notes its first copycat: Cruzio and the city of Santa Cruz. These networks are groundbreaking in terms of offering a "third way" for communities to join the ranks of gigabit cities.
- This report offers a roadmap for cities and outlines the important questions that need to be asked and answered in order to find the right partner with the right priorities for each community.
The transition from last generation basic broadband networks to next-generation fiber-optic networks is underway. The rise of municipal gigabit networks, Google Fiber cities, and many small entrepreneurial firms offering fast, low cost Internet access has forced major incumbents like AT&T and CenturyLink to upgrade their networks in a small number of cities.
But most Americans continue to only have one option for high-speed Internet access, according to the Federal Communications Commission, often a cable network with limited upload speeds. Smart cities are realizing they need to act or risk being left behind. However, many do not want to embrace the purely municipal model, where the city would engage in direct competition with existing providers.
One way for those communities to move forward is with a public-private partnership (PPP). But for all the excitement around this model, there are few concrete examples from which to draw lessons.
This paper explores lessons from PPPs and offers in-depth case studies of three high profile models: Westminster and Ting in Maryland, UC2B and iTV-3/CountryWide in Illinois, and LeverettNet in Massachusetts.
Westminster is building a citywide fiber network and leasing it to Ting, a relative newcomer to wired networks. Ting will operate the network and has an initial period of exclusivity, after which it will continue to be an ISP but also operate the network on an open access basis. Westminster owns the network, ensuring it will continue to meet local needs.
The Illinois cities of Urbana and Champaign built a core network called UC2B and leased it to a local provider iTV-3 to expand it citywide. But one year later a company named CountryWide announced it was buying iTV-3. Urbana and Champaign had written a right of first refusal into the contract with iTV-3, which gave them some leverage in the transition even though they decided not to use it.
Leverett had similar concerns as Westminster and UC2B regarding the challenges of operating a municipal network but used a series of bids and contracts to maintain local control while leaving key responsibilities to the private sector. The city sets the prices and has achieved a stunning 80 percent take rate.
Each of these approaches offers important lessons from how to set community expectations, define goals, negotiate with partners, and address common challenges. This paper identifies the key elements that allowed the communities to achieve their policy goals, from universal access to requiring that ISPs have humans answering the phone rather than automated systems.
A key lesson from the paper is that PPPs are increasingly viable but are not a panacea, which is why we discuss some failed PPPs. Partnerships can introduce additional risks while minimizing others.
Communities engaging in a PPP should retain some agency for future decision-making. Westminster, Leverett, Santa Cruz, and others own part of the network to retain that control. They have each spent tremendous effort educating the community and demonstrating support.
Finally, any PPP has risks and communities should be extremely wary of any potential partner that claims there are no risks with their preferred approach.
ABOUT COMMUNITY BROADBAND NETWORKS
MuniNetworks.org works with communities across the United States to create the policies needed to ensure telecommunications networks serve the community rather than a community serving the network. We publish original news, reports, multimedia, and fact sheets. Christopher Mitchell, the director of our Community Broadband Networks initiative at the Institute for Local Self-Reliance works on telecommunications issues — helping communities ensure the networks upon which they depend are accountable to the community. He has consulted the White House and FCC on publicly owned networks speaks at conferences across the United States on the subject, occasionally to directly debate opponents of public ownership.
We believe we make better and more informed policies when those who design those policies are those who feel their impact. ILSR works with citizens, activists, policymakers and entrepreneurs to provide them with innovative strategies and working models that support environmentally sound and equitable economic policies and community development. Since 1974, ILSR has championed local self-reliance, a strategy that underscores the need for humanly scaled institutions and economies and the widest possible distribution of ownership.