As interest in publicly owned broadband network infrastructure increases, local communities seek out new ways to fund municipal networks. Revenue bonds, interdepartmental loans, and avoided costs have been the three most common methods for funding Internet network infrastructure, but local leaders are finding creative approaches to get the job done. The Creative Funding Sources For Fiber Infrastructure fact sheet presents new approaches, pros and cons, and provides examples for further study.

Download the fact sheet.

New Approach to an Ongoing Challenge

Communities that need better connectivity must consider numerous factors when fiber optic network infrastructure is on the table. In addition to the type of model that’s most appropriate, decisions include vendor selection, and the extent of the network footprint. A critical element to every community network are the choice of funding mechanisms local leaders choose to see the project from idea to implementation.

Communities such as Ammon, Idaho, and Kitsap County in Washington are using fresh ideas to fund their infrastructure development. In this fact sheet we describe the way these new mechanisms work and lay out some benefits along with some potentially negative implications. It’s important that communities take a frank look at all the possible repercussions as they move forward. 

This fact sheet will help your own creative funding ideas flow as you look for ways to finance your community’s high-quality Internet access project.

Download the fact sheet.

Local governments in Maine have been going all out in the past few years to address the problem of lack of high-quality Internet access in rural areas. Now, Cumberland County is using Community Development Block Grants (CDBG) to help develop a resource they hope will assist local communities interested in publicly owned Internet access infrastructure. They’ve released a Request for Proposals (RFP) to Develop Regional Broadband Planning and Management; proposals are due October 31, 2018.

Read the full RFP here.

The Playbook

Elected officials in Cumberland County report that local community leaders from different towns throughout the county have expressed an interest in a regional initiative for better connectivity. At least four towns and the Greater Portland area have been working to develop broadband plans with an eye toward regional possibilities. This RFP is an effort to bring all those separate plans together and examine the possibility of a regional utility.

The county has determined that the playbook should provide information in three main areas: resource mapping, financing, and utility development. 

Information to be included in the document will provide estimated costs and challenges of building fiber networks to each municipality in Cumberland County. This mapping portion of the playbook should compare last mile connectivity costs to middle mile network costs, consider specific plans for some of the county’s hard-to-reach areas, and examine working with privately owned fiber that is currently in place.

County officials want respondents to investigate and propose ways to finance a regional utility. They also want to know more about models that include both publicly owned and privately owned infrastructure. As part of the playbook, county officials expect a survey of residents in Cumberland County.

The U.S. Department of Housing and Urban Development (HUD) provided Community Development Block Grant funds (CDBG) to West Virginia as in other states. This year, the Community Development Division of the West Virginia Development Office that distributes CDBG funds will provide $1.5 million to local broadband projects that include planning and infrastructure.

Big Demand

Last July, the state’s Development Office announced that it would accept applications for broadband projects. The decision was a departure from past practice of focusing only on water and sewer infrastructure. By the time the application period was closed, 12 potential projects had been submitted for consideration; those projects touch 27 counties and reach about 300,000 premises, many located in the southern part of the state.

All twelve projects will receive some amount of CDBG funding.

One of those applications was from the Region 4 council, in the hopes of obtaining $125,000 for planning to improve connectivity in Webster, Fayette, Greenbrier, Nicholas, and Pocahontas Counties. The state will provide the funding, which will potentially affect future planning for six more counties. Region 4 will collaborate with a similar initiative by Region 1, which will also receive $125,000.

Another multi-organizational application came from Clay County, which plans to work with Calhoun and Roane Counties on a feasibility and business plan on how best to move forward to improve connectivity. Fayette County wants to use its award to map out where best to place fiber for maximum effect and Gilmer County will focus on planning to involve a local industrial park along with exploring other funding strategies.

Most people associate Pasadena with the annual Tournament of Roses parade and the Rose Bowl football game, but under the flowery surface, fiber is connecting Pasadena’s municipal facilities, businesses, and electric utility substations. Pasadena developed its fiber optic network to improve electric utility efficiency but also with an eye toward the future. When they invested in the infrastructure, community leaders anticipated that economic development would thrive in communities with ample high-quality connectivity.

Lori Sandoval, Telecom and Regulatory Administrator for Pasadena's Department of Information Technology was involved in the development of Pasadena's fiber network from the beginning and she shared the story with us. She also provided some lessons learned so other communities can get the most out of Pasadena's experience.

A Community Of Culture

The community of approximately 140,000 people was one of the first incorporated in what is now Los Angeles County and considered a cultural hub. IN addition to Caltech, Pasadena City College and the ArtCenter College of Design, the Pasadena Playhouse and several museums are there. JPL and Kaiser Permanente are two of its largest employers. Its school system, Pasadena Unified School District, extends beyond the reach of the city. Pasadena has been celebrated for its architecture, especially it 1930s bungalows and many historical estates.

How It All Started

In the mid-1990s, the community included construction of a fiber optic network in its strategic plan. Pasadena Water and Power had been using old copper lines for communications between substations and needed to replace them with something more reliable that also provided more bandwidth. During this same period, the City Manager’s Office was investigating ways to create new revenue and local businesses were finding that they could not obtain the Internet services they needed from incumbent ISPs.

In 2008, the counties of Accomack and Northampton created the Eastern Shore of Virginia Broadband Authority (ESVBA) to serve local needs and boost economic development. NASA provided key funding to build the backbone of the regional network. Today, the ESVBA has already improved wireless services in several communities and is at work on a Fiber-to-the-Home (FTTH) test project.

The space agency played a key role in bringing high-speed connectivity to rural communities on the Eastern Shore of Virginia. Wallops Flight Facility on Wallops Island, Virginia, employs 1,100 people, launches rockets, and features a visitor center. Government agencies, local schools, and healthcare institutions on the shore all needed reliable connectivity for their programs.

Internet Service Like Lightspeed

The FTTH test project started last September in Harborton, Virginia, as part of the Town Broadband Initiative Project. The landscape is typical of rural Virginia with little density as houses and businesses spread out into the woods. They have recently signed up the first few customers; this small town on the eastern shore has about 100 homes.

Community Effort: Local Seed Funding

In 2008, the counties of Accomack and Northampton created the public, not for profit entity through the Virginia Wireless Service Authorities Act to solve a growing problem on the shore. The lack of connectivity was having a negative impact on local rural communities. The counties provided an initial sum of about $270,00 to ESVBA to plan the network. 

Publicly owned Internet infrastructure is typically funded with revenue grants, interdepartmental loans, or through avoided costs at the local level. Part of the planning and infrastructure costs, however, can sometimes be covered by state and federal grants known as Community Development Block Grants (CDBG). Nelson County, Virginia, leveraged CDBG to expand their fiber network and maximize benefits to the community. 

CDBG funds, are distributed to 1,200 units of state and local government by the federal Department of Housing and Urban Development (HUD) and can go toward a variety of infrastructure and development purposes. When communities consider ways to use CDBG funding, they can get long-term valuable benefits by directing those funds toward Internet infrastructure.

Nelson County Broadband 

Currently, the network has 39 miles of middle mile fiber and laterals. Nelson County began preparing for the network in 2007, when it received an initial planning grant of CDBG funds. The grant allowed the county to develop a project which improved their eligibility for federal funding from the American Recovery and Reinvestment Act (ARRA).

They applied and in 2010 for stimulus funding and received a $1.8 million grant from the Broadband Technology Opportunities Program (BTOP) to build out a middle mile network. In the first phase of their construction, the county used the BTOP funding and approximately $456,000 in required local matching funds to deploy 31 miles of fiber backbone. The second phase added another eight miles to the network in 2015, funded in part by $200,000 of CDBG funding; the community has also contributed about $690,000 in other local funds. 

“It becomes a win-win for residents and businesses and for service providers,” said Alan Patrick, Chair of the Nelson County Broadband Authority. “Residents and businesses have an opportunity to receive broadband access, which may have not been available prior to the county building infrastructure in the area, and it is also a benefit to the service providers.”

Nelson County, Virginia, recently released a Request for Proposals (RFP) for a vendor to operate its open access fiber network. Proposals are due February 3, 2017.

BTOP And Be More

The Nelson County Broadband Authority (NCBA) obtained grant funds under the Broadband Technology Opportunities Program (BTOP - one of two federal broadband stimulus programs), which allowed it to deploy 31 miles of backbone and laterals. In 2015, the county used a Community Development Block Grant (CDBG) and a Local Innovation Grant (LIG) to expand the network further to a total of 39 miles. The NCBA also uses several towers to complement wireline service.

The network now has approximately 350 customers. In keeping with the terms of the BTOP criteria, the network is open access and the NCBA describes itself as a wholesale Ethernet transport provider. Internet Service Providers (ISPs) offer Internet access and other types of services via the infrastructure.

According to the RFP, the NCBA requires:

The primary roles are to operate, monitor, and manage the network meaning to configure to order using the management systems of Calix, capture and report network outages and anomalies including traffic throughput issues, and manage projects for the continued enhancement of the network as required by the NCBA. Other roles include monthly billing of SPs and generating monthly billing and other financial reports to be provided to NCBA. 

Quiet And Connected

Nelson County is an extremely rural area in the north central part of the state; only about 15,000 people live in the entire county. The county seat of Lovingston has a population of 520. Tourism and a variety of home-based businesses are important to the Nelson County economy. Thanks to the Blue Ridge Mountains and the George Washington National Forest, the county is filled with hilly terrain, hiking trails, fishing, and vineyards. 

Access the full RFP online; the due date for proposals is February 3, 2017.