Jim Baller, Baller Herbst Law Group APA – Tech Division ... · Optimism, innovation and gigabits were the themes of this year’s FTTH Conference in Fort Lauderdale. BROADBAND POLICY

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Economic Development Conference Series

COMMUNITY FIBER NETWORKS

SPRINGFIELD, MASeptember 16–18, 2014

City Planning Seminar and Pre-conference Workshops – Tuesday, September 16

Conference Site: Sheraton Springfield Monarch Place Hotel – 18 miles from Bradley International Airport

Tuesday September 16: 6 Free Pre-conference Workshops – Value $1,500 Each

Special One-Day Seminar for Planners Sponsored by the American Planning Association Technology Division

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Program Chair Seminar Leader

Broadband RevolutionTackling America’s 21st Century Infrastructure Challenges

Kate McMahon, APA – Tech Division

Jim Baller, Baller Herbst Law Group

APRIL 14 – 16, 2015Renaissance Hotel – Austin

KNOWLEDGEABLE AND INFORMATIVE“Good clarification of options and recommendations for future considerations when planning infrastructures. All [panels] were good – information valuable! Speakers were very knowledgeable and informative.”

– Christine Taylor, Manager, Ancillary Services Forest City Residential Management

SUBSTANTIAL INFORMATION TO HELP OUR STRATEGY“Well planned and good updated information … substantial contact and information to help our strategy.”

– Rick Mervine, Vice President, Strategic Planning OnlIght Aurora

KEYNOTES WERE EXCELLENT“I appreciate the visionary forecasts of experts in the field of broadband. Keynotes were excellent. Lots of insights and great stories.”

– David Moore, Director Louisiana Broadband Initiative

PERSONAL EXPERIENCE BASED EVENT“Very useful, hands on, anecdotal, personal experience based event.”

– Michael Anderson, CIO Spiral Internet

VALUABLE INSIGHT“Summit always provides valuable insight into market trends.”

– Brian Pagnella, Senior Consultant Broadband Realty Advisors

PERTINENT TO COMMUNITIES“Very important, useful and impactful information pertinent to communities building and supporting networks.”

– Allen Meyer, Business Development Manager BHC Rhodes

CALENDARS

Here’s what attendees are saying about the 2014 Summit! Make plans to attend the 2015 Summit now.April 14–16, 2015 • Renaissance Hotel - Austin • www.bbcmag.com • To sponsor or exhibit: email [email protected] or call 505-867-3299

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APRIL 14-16, 2015 • AUSTIN SUMMIT MARK YOUR

2 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | AUGUST/SEPTEMBER 2014

EDITOR’S NOTE

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Community broadband networks have generated controversy for more than

a decade. Entire think tanks are devoted to proving these networks are unnecessary, dangerous and downright un-American. To some advocates, on the other hand, community networks are expressions of local autonomy and communities’ best hope for economic transformation, revitalization, social inclusion and even net neutrality.

BroadBand Communities has always held that building fiber-connected communities is the paramount goal and that who builds it is of less importance. What’s important is that someone do it – and generally, communities build fiber networks precisely because private operators are not doing so.

The great majority of community networks are successful. However, for a variety of reasons – some avoidable, some not – some community networks fail to achieve what their proponents hoped for. These failures are particularly troubling. For one thing, they provide “proof” to naysayers that communities cannot competently operate telecom networks, despite abundant evidence to the contrary. (Oddly, the fact that three-quarters of new businesses consistently fail is never cited as a reason to outlaw private businesses and neither is the fact that large segments of the financial industry and the auto industry collapsed in 2008 and had to be rescued by the public sector.)

More significantly, a failed public enterprise affects private citizens, some of whom never agreed to support the

enterprise in the first place. Public ventures such as broadband networks carry a special burden of responsibility because of both their potential costs and their potential benefits. A community that hopes to jump-start a lagging economy with the help of a fiber network generally has only one chance to get it right. As we said in earlier years, building a community network is not for the faint of heart.

GETTING IT RIGHTThis issue of the magazine – the annual community broadband issue – focuses on how communities can make the best use of that one chance they get. The articles don’t present a single right answer, though Andrew Cohill, in Worst Practices in Community Broadband, offers a number of common wrong answers. For the most part, the issue focuses on the many possible choices a community can make and the trade-offs among those choices.

Every community faces a different situation based on its political climate, its assets, its financial situation and its population. Communities must be creative in terms of whether and how they collaborate with the private sector, which business models they choose, how they finance their networks, which technologies they select, how they market their networks, which services they offer and much more.

The good news – as I believe the stories in this issue demonstrate – is that there are many paths to success. v

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Paths to Community Broadband

There are many right ways to build a community fiber network – as well as a few wrong ones to watch out for.

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LEAP


TABLE OF CONTENTS

COVER STORY – ANNUAL UPDATE: COMMUNITY FIBER NETWORKS

DEPARTMENTS

2 EDITOR’S NOTE

6 BANDWIDTH HAWK

58 MARKETPLACE ADS

59 ADVERTISER INDEX / CALENDAR

IN THIS ISSUE

10 Number of Community FTTP Networks Reaches 143 / By Masha Zager, Broadband Communities

The latest census of municipal and public-private networks shows communities launching, expanding and occasionally selling fiber networks.

COMMUNITY BROADBAND

24 The Art of the Possible / By Ben Lennett and Patrick Lucey, New America Foundation Open Technology Institute and Joanne Hovis and Andrew Afflerbach, CTC Technology & Energy

How communities considering building broadband networks can balance their requirements for control, risk minimization and reward.

30 Worst Practices in Community Broadband – Part Two / By Andrew M. Cohill, Design Nine

What not to do if you want your community network to succeed. (Hint: Don’t make the mistake of thinking it isn’t a business.)

33 Creative Financing for Fiber Networks / By Doug Dawson, CCG Consulting

Conventional sources of financing are largely unsuitable for public networks – but some communities are starting to think outside the box.

34 Five Models For Community Broadband / By Christopher Mitchell and Lisa Gonzalez, Institute for Local Self-Reliance

Five Minnesota communities take very different paths to improve broadband for government facilities, residents and businesses.

40 Lessons From Fiber Communities / By Masha Zager, Broadband Communities

Five more communities from around the country meet the challenges of getting better broadband.

FTTH CONFERENCE COVERAGE

48 FTTH Conference & Expo: Hardware, Software, Gigabit Business Cases / By Steven S. Ross, Broadband Communities

Optimism, innovation and gigabits were the themes of this year’s FTTH Conference in Fort Lauderdale.

BROADBAND POLICY

54 City Planners Need Broadband Education / By Kathleen McMahon, Applied Communications

Planners can help communities integrate broadband into comprehensive infrastructure plans – but they need to understand broadband better.

FEATURES

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Visit www.bbcmag.com for up-to-the-minute news of broadband trends, technologies and deployments

New York artist Irving Grunbaum envisions the connected community.

ABOUT THE COVER

40

PROVIDER PERSPECTIVE 8 Moneyball for PCOs /

By Bryan J. Rader, Bandwidth Consulting LLC

Service provider selection is becoming a high-stakes game..

THE LAST PAGE60 Bridging the Digital Divide /

By Michael Liimatta, Connecting for Good

Learning to use the Internet opened up new possibilities for three women left behind by the digital world.

48

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BANDWIDTH HAWK

Eight years ago, fiber-to-the-home pioneer John George of OFS wrote a long article for this magazine. In it, he predicted that homes would need at least 3 Gbps

of bandwidth by 2030 and maybe as much as 30 Gbps. His projection for 2020 was 558 Mbps to 2.2 Gbps. At the time, the Federal Communications Commission defined broadband as 200 kilobits per second. A Gbps is a 5,000-fold increase.

George got only one thing wrong: We’re hitting the midpoint of his 2020 projection five years ahead of schedule. That’s despite the fact that he underestimated how good video compression could become. (Read the article in the magazine’s archives at www.broadbandproperties.com/2006issues/sep06issues/george_sep.pdf.)

The wild card, of course, was the iPhone, introduced just after the article went to press. It went on sale in mid-2007, only through AT&T; within 18 months, AT&T’s mobile data traffic had increased 50-fold. Historically, the volume of Internet traffic worldwide has been increasing at a long-term, remarkably steady 42 percent a year, roughly doubling every two years, thanks to compounding. By the end of 2013, however, traffic was already at the level that relentless doubling and redoubling had predicted for the end of 2020. That’s seven years ahead of schedule, despite video compression! Only the fact that mobility spreads out peak traffic has kept the nation’s networks from beginning to congeal.

Two other developments are already beginning to increase traffic even more rapidly – the growth in uploading facilitated by local and regional data centers and, in the United States, the impact of a remarkably successful economic stimulus program. Although only $7 billion, or 1 percent of all stimulus funds, was spent on broadband and the spending came later than hoped for, it was for the most part brilliantly distributed. The smart grid, FirstNET and the Internet of Things still loom, and 50 billion machines are expected to be connected to the Internet by 2020.

Middle-mile fiber laid with the help of stimulus funds enabled gigabit builds in dozens of cities and towns nationwide. ADTRAN alone expects to provide equipment for 50 gigabit builds being announced by the end of this year and another 150 by the end of 2015. You don’t have to partner with Google to get a gig.

But is it hype? Even the technical community points out

that the only app needing a gigabit is the app that confirms you have it. There’s an answer for that: Every home is connecting dozens of devices, including multiple devices that multiple family members use at the same time. Bandwidth demand adds up fast.

The gigabit race reflects ongoing competition between telcos and cable companies. Cable companies adopted DOCSIS 3.0 to deliver 25 to 30 Mbps (and in some cases much higher) and blew the telcos that were providing DSL at 5 Mbps out of the water. Telcos used FTTH and advanced versions of DSL to get back into the game. Cable Labs countered with DOCSIS 3.1, which has not yet been implemented. But telcos quickly pushed FTTH service to a gig without much extra expense (all the new middle-mile fiber helped).

Although DOCSIS 3.1 has a theoretical capacity of 10 Gbps downstream and 1 Gbps upstream, actually delivering these speeds using DOCSIS will require a great deal of capital investment and network redesign. Faced with the cost of splitting and resplitting DOCSIS nodes, every large cable company is at least considering conversion to passive optical networks or merger with operators who can afford to deploy PON. PON vendors all report quiet PON tests and limited adoptions by cable operators.

The biggest telco holdout, CenturyLink, has publicly committed to FTTH in larger cities in its sparsely populated footprint and to bringing as much bandwidth as possible, as fast as possible, to businesses. Fiber profitably run to cell sites has helped make the business case better in such areas.

So the future is clear – telcos and cablecos eventually use about the same technology and offer about the same services at a gigabit per second or faster. In places where they can’t make a business case, local governments might – if citizens repeal the laws in 19 states that limit them from doing so.

There is a bigger payoff: economic development. Many businesses, even small ones, can benefit from that gig.

Fortunately, fiber is one of the cheapest, easiest-to-build categories of major infrastructure, and building for a gig adds little to the cost. Last year, a gig might have been hype. This year, it is the norm. v

Contact the Bandwidth Hawk at [email protected].

Gigabit: Reality, Not HypeLast year, major carriers called gigabit services Google-inspired hype. Now, they’re signing on. The impact may be greatest in rural areas.

By Steven S. Ross / Broadband Communities



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PROVIDER PERSPECTIVE

Michael Lewis, in his 2003 book “Moneyball,” described how the Oakland A’s scouted talent, made trades and assembled their team. They used

an analytical, evidence-based approach, called sabermetrics, to identify hidden, low-cost gems. The A’s general manager, Billy Beane, was a master of this new approach, which was essential to his low-budget club’s success.

Historically, general managers of baseball teams looked at batting averages, runs batted in, stolen bases and so forth to determine the value of a player’s contribution. However, using the old model could cause a team to overpay for a home-run hitter who never hit home runs in the late innings of a close game.

The goal for Billy Beane and the Oakland A’s was to field a very competitive team while having one of the lowest payrolls in baseball. Because Oakland is a small market, the A’s spent just $41 million in 2002, when moneyball was developed. For perspective, the New York Yankees spent more than $125 million. Thus, every payroll dollar mattered; teams couldn’t afford bad contracts.

The moneyball approach uses new ways to analyze prospects and evaluate existing players for trades. It has worked very well for the A’s, who have consistently been in the playoffs, even with one of the lowest budgets, and today nearly every major-league baseball team has adopted it.

RUNNING THE NUMBERSWhy does this matter to private cable operators (PCOs)? Because property owners are now beginning to use their own form of sabermetrics in making player (service provider) selections.

When a property owner or homeowners association is considering a new bulk services agreement, it usually starts from the same place as Billy Beane: “I want to get the most, and I want to pay the least.”

Owners do the same sort of analysis a team’s general manager would do. They assess their needs: What should be included in bulk? What tiers are individual users upgrading to? Are they subscribing to high definition? Do they sign up for DVRs? What Internet speeds do they want? Do they want HBO?

Once owners know what they need (just as the Oakland A’s might determine that they need a left-handed starting pitcher), they begin evaluating the market.

My firm helps building owners do this. We look at every player on the market: the local cable company, the telephone provider, a fiber company, a wireless operator and, of course, PCOs. Every left-handed starting pitcher is considered.

Then the moneyball starts. “Why would I pay $55 a month for one HD receiver and a 10 Mbps Internet connection when I can get a DVR included and 25 Mbps for much less from someone else?”

As the general manager of the process, I ask the owner to narrow his or her choices. “Which left-handed pitcher fits your needs best?”

Though many owners focus just on price, others are getting smarter about their analysis. They look at key sabermetrics to draft the right player or make a trade (that is, switch providers).

Their analytics now include looking at proposed performance standards in the agreement, response times, cure clauses. Owners look at trouble ticket summaries to determine network areas that might need attention, or they look at types of problems they experienced in the past.

They look at rate increase language, types of equipment used, number of comp accounts offered, fees charged to individuals for upgraded services. And when picking their next lefty, they care about the provider’s willingness to upgrade during the term of the agreement.

To get the best starter to add to the rotation, they look at track records in the same market. They talk to residents and on-site managers.

Moneyball works for baseball teams; it also works for property owners. The key is to build the right statistics on the back of a company’s baseball card to attract enough teams, I mean property owners, to want to sign you up.

Then you can hit the moneyball out of the park! v

Bryan Rader is CEO of Bandwidth Consulting LLC, which assists providers in the multifamily market. You can reach Bryan at [email protected] or at 636-536-0011. Learn more at www.bandwidthconsultingllc.com.

Moneyball for PCOsProperty owners are getting more savvy about choosing service providers. Private cable operators need to be able to keep up with them.

By Bryan Rader / Bandwidth Consulting LLC



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COMMUNITY BROADBAND

Number of Community FTTP Networks Reaches 143Despite the privatization of several community broadband networks, the number of public and public-private fiber networks continues to climb.

By Masha Zager / Broadband Communities

BroadBand Communities’ count of public and public-private fiber-to-the-premises network projects now stands at

143, a 6 percent increase from 2013. This small change in the total count masks larger changes in the composition of the list.

Additions to the list include a number of new projects as well as a few older, under-the-radar networks that were missing from earlier lists. These older networks identified for the first time were typically built strictly for municipal purposes – that is, to connect municipal offices or substations of municipal electric utilities – and later extended to connect a few nearby businesses. Networks of this type attract little attention outside or even inside their service areas, so it’s possible there are many more that we haven’t yet discovered.

Deletions from the list include several pending projects that were abandoned when their anticipated financing failed to materialize. Two of these, in Seattle and Chicago, attracted quite a lot of attention both when they launched and when they fizzled, and these projects may well be resurrected in some form.

Also deleted from the list were several functioning fiber-to-the-home networks, built by municipalities, that were sold and are now being operated by private companies. iProvo, built by the Provo, Utah, city government, was privatized for the second time when Google bought it in 2013. In addition, community fiber

networks in Connecticut, Florida, Indiana, Virginia and Wisconsin were sold. Typically, communities sell their fiber networks because they lack the managerial or financial resources to operate them professionally, market them adequately or keep their technology up to date. Not all these projects can be considered failures, even if they were sold at a loss. Sometimes building a fiber network and then selling it to the private sector is the best or even the only way for a community to acquire adequate broadband infrastructure.

Additional networks are likely to be privatized in the near future to access more secure funding streams for growth and upgrades. As of press time, the cities of North Kansas City, Mo., and Burlington, Vt., were considering seeking buyers for their networks, and several UTOPIA communities were negotiating with Macquarie Capital for a long-term lease arrangement.

Despite these sales, the majority of community fiber networks appear to be self-sustaining or even profitable. Many continue to expand or add new types of customers and services. Often, a municipal fiber network begins in one community and expands by popular demand into neighboring communities, though in some cases, expansions requested by residents have been quashed by state legislatures.

More important, well-run community fiber networks are instrumental in attracting

AUGUST/SEPTEMBER 2014 | www.broadbandcommunities.com | BROADBAND COMMUNITIES | 11

All the network deployers on this list

• Are public agencies, public authorities, public benefit corporations, 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)

• Are in the United States or U.S. territories.

Excluded are tribal authorities, municipalities that provide broadband services exclusively for city facilities and schools, those that serve private entities only by leasing dark fiber and those that provide broadband services only over cable or wireless networks.

This list includes only organizations with functioning networks or with approved plans and funding. However, plans do not always materialize; several projects that were reported on earlier versions of the list failed to survive. Others, although still in progress, have not met their deployment goals.

Multiple-municipality projects have become more common because they can achieve economies of scale in construction and operation and, by aggregating demand, can attract third-party service providers more easily. UTOPIA, in Utah, is an example of an early FTTH network built by a consortium of cities. More recent projects include ECFiber in Vermont, SMBS in Minnesota and FastRoads in New Hampshire.

Even a network owned by a single town or city may provide service beyond city limits. For example, Jackson Energy Authority and Chattanooga EPB in Tennessee both serve areas adjacent to the cities that own them. The city of Williamstown, Ky., used broadband stimulus funding to expand its community network beyond city borders. (Its original network was hybrid fiber-coax, but it is using FTTH for its expansion.) In Washington state,

though each public utility district builds and operates its own network, most or all belong to the Northwest Open Access Network (NoaNet), a coalition of public utility districts that linked their fiber optic networks together to achieve economic feasibility in underserved areas. NoaNet offers long-haul transport and last-mile access to wholesale communications providers throughout the Pacific Northwest.

Networks identified as public-private partnerships are those in which both public and private owners made significant investments (which may include pre-existing conduit or fiber). Of course, many other types of public-private partnerships are possible and are described in other articles in this issue. The private partner may be a retail service provider or an operator; the public partner may contribute low-interest loans, grants, access to rights-of-way, expedited permitting and so forth. Such partnerships are not considered public-private networks for the purposes of this list.

new businesses and retaining existing businesses in their communities. The most common rationale for building community networks is to provide businesses with affordable fiber connections; in fact, many networks are built or extended to accommodate specific requests by local businesses.

WHY AREN’T THERE MORE COMMUNITY FIBER NETWORKS?In the last few years, some community networks, such as EPB Fiber Optics in Chattanooga, have achieved superstar status. Their successes have been touted in the mainstream media and

helped make “gigabit” a household word. They’ve inspired dozens of other communities to consider building their own networks; many of these have taken positive steps toward this goal, such as conducting feasibility studies and market research. A BroadBand Communities reader wrote recently to

BroadBand Communities maintains updated information about community fiber networks and other FTTP deployments in the U.S. in a searchable database at www.fiberville.com. The database field labeled “Community Benefits” contains a wealth of information on the economic development and other benefits of these networks.

WHO’S ON THE LIST?

http://www.fiberville.com

http://www.fiberville.com


COMMUNITY BROADBAND

ask why, in light of all this interest, the number of community fiber networks isn’t growing faster than it is.

There are several answers to this question. One is that some communities now conducting feasibility studies will eventually build their own networks – the process is slow.

Another answer is that 19 states either prohibit communities from building community networks altogether or impose restrictions that discourage or effectively prevent them from building such networks. Tom Wheeler, chairman of the FCC, has expressed interest in overturning those bans, but whether the commission will do so and whether Congress and the courts will permit such actions remains to be seen.

A third reason is that some previously underserved small and midsize communities are finally getting better broadband from the private sector. It isn’t always as fast or affordable as they might have wanted, but it may be good enough to blunt demands for community-owned networks. In some cases, this occurred as incumbent providers worked their way down their list of investment priorities. In other

cases, it occurred when communities proactively sought out competitive overbuilders. For example, the town of Gothenburg, Neb., attracted Pinpoint Networks to build a broadband network there (see p. 45), and the town of Wake Forest, N.C., featured in the March-April 2014 issue of this magazine, attracted RST Fiber to build a network in its community. Both Pinpoint Networks and RST Fiber are deploying gigabit fiber networks.

Finally, the smallest, poorest rural communities often can’t finance broadband networks without subsidies of some kind. Broadband stimulus funding allowed several community fiber networks (for example, Lake Connections – see p. 40) to be built in extremely rural areas. However, other such communities have struggled for years to finance the networks they would like to build. The July 2014 passage of the Massachusetts IT Bond Bill may permit some western Massachusetts communities to begin building last-mile networks, and funding from the FCC’s rural broadband experiment may enable some other communities to do so. However, neither program is adequate to meet the

needs of all the communities that still need better broadband.

DIFFERENT APPROACHES There is no single model for public broadband. Each project takes a slightly different approach, depending on the legal and political landscape, the availability of financing, the interest of potential partners and the skills and assets public agencies possess. Communities have many options and should explore as many of them as possible before committing to a plan or deciding that public broadband is not for them. (See “The Art of the Possible” on p. 24.)

Political opposition to municipal broadband often constrains cities’ options. State legislatures aren’t the only entities to impose constraints; opposition may come from community members who disapprove of municipal broadband on principle. Because the pendulum of public opinion shifts constantly, a broadband project that proves legally or politically impossible one year may become feasible a few years later, even in a conservative community. In several cases, city leaders and broadband activists

Community broadband networks operate in 37 states and American Samoa (Alaska and American Samoa not shown.)


succeeded in changing public opinion by educating citizens about the economic and social benefits of high-speed broadband.

Some states now actively support municipal broadband projects. For example, in Illinois, Gov. Pat Quinn launched a competition that will award up to $4 million in funding to ultra-high-speed broadband deployment projects as part of the Illinois Jobs Now! economic development program and has aready funded several networks, including those in the cities of Aurora and Evanston.

MUNICIPAL UTILITIESMunicipalities are more likely to become broadband providers when they are already in the business of providing electric power. Citizens in these municipalities are already used to the idea of government-provided utility services. Many public power utilities were set up in response to the failure of the private sector to deliver adequate services, and residents accept that government might set up public communications utilities for the same reason. In most cases, citizens have had positive experiences with their municipal utilities and are prepared to buy additional services from them.

In addition, public power utilities already have back-office operations, such as billing and customer service, needed for providing telecom services. Finally, public power utilities are increasingly building communications networks for smart-grid applications; once they begin planning these networks, they often realize the networks are suitable for purposes such as business or residential broadband. Municipal utilities that distribute Tennessee Valley Authority electricity have been in the forefront of combining smart-grid and telecom applications.

In some cases, such as Wilson, N.C., the city operates a municipal electric utility but set up the telecommunications utility as a separate entity or department. A few cities, such as Salisbury, N.C., do not have municipal electric utilities.

WHO ARE THE CUSTOMERS?Cities often begin by installing institutional networks to serve municipal office buildings or utility substations, then extend fiber to commercial buildings or business parks, add multiple-dwelling-unit properties and greenfield residential developments, and finally reach single-family households and small businesses. The list shows deployers at various points along this path.

Fifty-four of the municipal networks, or more than one-third, deliver fiber services only to businesses, and several others serve mainly businesses. Many of these also deliver residential broadband services via cable or wireless. A few fiber networks that began as business-only, such as Gainesville Regional Utilities in Florida, now serve residential customers in MDUs or greenfield developments, and several, such as nDanville in Virginia and Cedar Falls Utilities in Iowa, built out fiber to residential customers citywide. However, other municipal providers that once planned to follow a similar path, such as Ashland Fiber Network, have been stymied by lack of funding.

WHOLESALE OR RETAIL?Municipalities are more likely than private deployers to allow third-party providers access to their networks – either because state laws require them to do so, because they do not have the expertise to provide services themselves or because they want to offer a wider variety of services than they could provide on their own. Twenty-nine municipal networks either allow or plan to allow multiple retail service providers to deliver services. Twelve others have

contracted with a single third-party service provider to deliver services (some of these are open to additional service providers). Some municipal providers have both wholesale and retail strategies. For example, ECFiber was conceived as an open-access network but is offering retail services until the network grows large enough to attract other providers. Urbana-Champaign Big Broadband, originally a retail provider, recently announced a partnership with iTV-3, which will expand the FTTH network and deliver services to both old and new customers.

Certain states, such as Utah and Washington, prohibit municipalities from providing retail services. This can pose a problem for municipal fiber deployers at startup, when third-party providers (especially for residential services) may not find joining the network worthwhile.

OTHER PARTNERSHIPSAt least 13 municipal fiber systems contract with third parties – local exchange carriers or other network operators – to operate their networks. Such partnerships (which also exist in the private sector) can be helpful for municipalities without experience operating telecommunications networks. On the other hand, like any critical outsourcing contracts, they must be intensively managed. Several such arrangements have ended abruptly or even resulted in lawsuits.

Some municipalities have formed agreements with real estate developers that allow municipal providers to build fiber in new buildings or developments or to provide fiber backbone and services if developers build the local access infrastructure. New partnership

Cities often begin by connecting municipal facilities with fiber, then extend their networks to serve businesses, followed by MDUs, new developments and other residential areas.


COMMUNITY BROADBAND

models continue to be developed all the time.

VENDORS AND TECHNOLOGIESBecause of open-access requirements and the importance of business customers, active Ethernet networks are slightly more prevalent among municipalities than among private network builders. (Supporting open access is easier on point-to-point than on PON systems – or at least it was until recently.) At least one-third of municipal deployers use active Ethernet technology.

Several electronics vendors have sizable shares of this market, with no single vendor taking a leading position. Alcatel-Lucent, Calix, Aurora (which acquired the Wave7/Enablence portfolio) and Ciena each have several deployments and at least one sizable

system, and a number of other vendors have also had significant customer wins.

GEOGRAPHIC DISTRIBUTIONLaws that govern municipalities’ ability to compete as telecommunications providers vary from state to state. Some states give municipalities a free hand, and others do not. Municipal electric utilities are more common in some areas than others, and some regions are better served by private providers than others are.

Given all these factors, the chances for municipal broadband are wildly uneven in different parts of the United States. This census identified community fiber systems in only 37 of the 50 states and in American Samoa. Seven states account for a large number of deployments: Washington

(13), Kentucky (11), Minnesota (10), Tennessee (8), Iowa (8), Illinois (7) and Florida (7).

TRIPLE PLAY AND BEYONDThough some municipalities offer only Internet access over their fiber networks, most whose planned or actual services we could determine offer the triple play of voice, video and data. Specialized business services are common, as are smart-grid applications. Broadband stimulus funding and encouragement from the Tennessee Valley Authority have made smart-grid applications more prevalent in the last few years, and these applications are likely to become still more important in the future.

A few open-access networks are actively recruiting many different kinds of services. For example, on the 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. v

Masha Zager is the editor of BroadBand Communities. You can reach her at [email protected].

NETWORK DEPLOYER COMMUNITY(IES) STATE(S) PUBLIC-PRIVATE OR MUNI

DATE PROJECT STARTED

VENDORS (FTTH Electronics)

TECHNOLOGY SERVICES MARKETS SERVED BY

FIBER (all premises unless

otherwise noted)

SERVICE PROVIDER

(if other than network owner)

OPERATOR (if other

than network owner)

AccessEagan Eagan MN MUNI 2013 Active Ethernet

Business Services, Data

Businesses only Multiple

Algona Municipal Utilities

Algona IA MUNI 2013 ADTRAN Active Ethernet,

GPON

Data, Video, Voice

American Samoa Telecom

American Samoa MUNI 2008 Calix GPON Data, Video, Voice

Anderson Municipal Light and Power

Anderson IN MUNI 2009 Active Ethernet

Data Businesses only Multiple

Ashland Fiber Network

Ashland OR MUNI 2000 Data, Video, Voice

Mainly businesses

Multiple (also sells services directly)

Auburn Essential Services

Auburn IN MUNI 2006 Enablence EPON Data, Smart Grid, Voice

Fiber networks operated by muncipal electric utilities often implement smart-grid applications along with the triple play of data, video and voice.







otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

Barbourville Utility Commission

Barbourville KY MUNI 2010 Calix GPON Data, Video

Barnesville Municipal Utilities

Barnesville MN MUNI 2009 Calix GPON Data, Video, Voice

Bellevue Municipal Utilities

Bellevue IA MUNI 2006 Enablence EPON Data, Video, Voice

Benton County Public Utility District

Kennewick, Prosser and Benton City

WA MUNI Business Services, Data


Bowling Green Municipal Utility

Bowling Green (also serves

Warren County)

KY MUNI 2007 EPON Data, Voice Businesses only

Braintree Electric Light Department

Braintree MA MUNI 2008 Active Ethernet

Data Businesses only

Bristol Tennessee Essential Services

Bristol TN MUNI 2005 Alcatel-Lucent GPON Data, Smart Grid, Video,

Voice

Buffalo Municipal Utilities

Buffalo MN MUNI 1996 Data Businesses only

Burlington Telecom Burlington VT MUNI 2006 Calix GPON Business Services, Data,

Video, Voice

BVU OptiNet (BVU Authority)

Bristol (also serves surrounding

areas)

VA MUNI 2003 Alcatel-Lucent, Calix

GPON Business Services, Data,

Smart Grid, Video, Voice

Calnet (Calhoun Utilities)

Calhoun GA MUNI 2012 (Lit services)

Carrier Ethernet

Data, Voice Businesses only

CC Communications Churchill County NV MUNI 2004 Calix, Enablence Active Ethernet,

EPON

Data, Security, Video, Voice

CDE Lightband Clarksville TN MUNI 2007 Ciena, Zhone Technologies

Active Ethernet

Data, Smart Grid, Video,

Voice

Cedar Falls Utilities Cedar Falls IA MUNI 2006 ADTRAN, Calix Active Ethernet,

GPON

Data, Smart Grid, Video

Chanute Utilities Chanute KS MUNI 2005 Data Businesses only, planning

residential expansion

Chaska.net Chaska MN MUNI Active Ethernet

Businessses only

Chelan County Public Utility District

Chelan County WA MUNI 2004 Alcatel-Lucent GPON Data, Video, Voice

Multiple

Chicopee Electric Light

Chicopee MA MUNI Data Businesses only HG&E Telecom

Circa (Idaho Falls Power)

Idaho Falls ID MUNI 2007 Active Ethernet

Data, Voice Businesses only Multiple


COMMUNITY BROADBAND NETWORK DEPLOYER COMMUNITY(IES) STATE(S) PUBLIC-

PRIVATE OR MUNI





otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

City of Ammon Ammon ID MUNI 2011 Data Multiple

City of Cortez Cortez CO MUNI 2011 Calix Active Ethernet,

GPON

Data, Video, Voice

Businesses only, planning


Multiple

City of Evanston Evanston IL MUNI 2013 Businesses only

City of Hamilton Hamilton OH MUNI 2014 Calix Active Ethernet,

GPON


Businesses only

City of LaGrange LaGrange GA MUNI Calix GPON Business Services, Data,

Voice

Businesses only

City of Laurinburg Laurinburg NC MUNI 2014 Data Businesses only Broadplex LLC

City of Leesburg Leesburg (also serves Lake

County)

FL MUNI 2001 Data Businesses only

City of Mishawaka Mishawaka IN MUNI 2012 Data Businesses only St. Joe Valley

MetroNet

City of Mount Vernon Mt. Vernon (also serves Burlington

and Port of Skagit)

WA MUNI Businesses only Multiple

City of Ponca City Ponca City OK MUNI Businesses only

City of Vernon Vernon CA MUNI 1999 Data Businesses only

City of Westminster Westminster MD MUNI 2013 Data Pilot project Multiple

Clallam County Public Utility District

Clallam County WA MUNI 2002 Cisco Active Ethernet

Data Multiple

Coldwater Board of Public Utilities

Coldwater MI MUNI 2010 EPON Data Businesses only

Community Network Services

Thomasville GA MUNI 1999 Carrier Ethernet


Community Network System (Pend Oreille County Public Utility District)

Pend Oreille County

WA MUNI 2001 Zhone Technologies

Active Ethernet

Business Services, Data,

Video, Voice

Multiple

Crosslake Telephone Crosslake MN MUNI 2005 Calix Active Ethernet,

GPON

Data, Video, Voice

DiamondNet (Sallisaw Municipal Authority)

Sallisaw OK MUNI 2004 Enablence EPON Data, Video, Voice

Momentum Telecom

Douglas County Public Utility District

Douglas County WA MUNI 1999 Telco Systems Active Ethernet

Data, Video, Voice

Retail service

providers







otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

Dover Technology Dover OH MUNI 2004 Hitachi Data Businesses only

ECFiber Consortium of 23 Vermont towns

VT MUNI 2010 Calix, Zhone Technologies

GPON, Active Ethernet


Voice

EmeryConnect Emery CA PUBLIC-PRIVATE

2013 Active Ethernet

Multiple PAXIO

EPB Fiber Optics Chattanooga TN MUNI 2007 Alcatel-Lucent GPON Data, Smart Grid, Video,

Voice

EPlus Broadband (Jackson Energy Authority)

Jackson (also serves part of

Madison County)

TN MUNI 2004 Enablence EPON, Carrier Ethernet


Voice

FastRoads Monadnock Economic

Development Corporation

(covers Enfield and Rindge)

NH MUNI 2011 Calix Multiple

Fayetteville Public Utilities

Fayetteville TN MUNI 2010 CommScope EPON, RFoG Data, Video, Voice

FiberCom Cartersville GA MUNI Business Services, Data,

Voice

Businesses only

FiberNet Monticello Monticello MN MUNI 2008 Calix GPON Data, Video, Voice

Fibrant Communications

Salisbury NC MUNI 2008 Zhone Tech-nologies, Calix

Data, Video, Voice

FPUAnet Communications (Fort Pierce Utilities Authority)

Fort Pierce FL MUNI Cisco Active Ethernet


Frankfort Plant Board

Frankfort KY MUNI 2009 CommScope Carrier Ethernet,

RFoG

Data, Video, Voice

Franklin County Public Utility District

Franklin County WA MUNI Active Ethernet

Data, Business Services

Multiple

Franklin Municipal FiberNET

Franklin KY MUNI 2013 Data Businesses only

Gahanna Net Gahanna OH PUBLIC-PRIVATE

2010 Business services, Data

Businesses only WOW Business

Gainesville Regional Utilities

Gainesville FL MUNI 2001 Active Ethernet

Data Businesses, MDUs, greenfield

developments

Glasgow Electric Plant Board

Glasgow KY MUNI Data Businesses only

Glenwood Springs Community Broadband Network

Glenwood Springs

CO MUNI 2002 Calix GPON Data, Voice ROF.NET



PRIVATE OR MUNI





otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

Goshen Fiber Network

Goshen (city and school district)

IN PUBLIC-PRIVATE

2008 Data, Video, Voice

Businesses only New Paris Telephone

New Paris Telephone

Grant County Public Utility District

Grant County WA MUNI 2000 Active Ethernet

Data, Video, Voice

Multiple

Grays Harbor County Public Utility District

Grays Harbor County

WA MUNI 1998 Data Multiple

Greenlight Wilson NC MUNI 2008 Alcatel-Lucent GPON Data, Video, Voice

Harlan Municipal Utilities

Harlan IA MUNI 2010 Calix GPON Data, Video, Voice

HES EnergyNet Hopkinsville KY MUNI Calix Data Businesses only

HG&E Telecom (Holyoke Gas & Electric Department)

Holyoke (also serves Chicopee and Springfield)

MA MUNI 1997 Carrier Ethernet

Data, Voice Businesses only OTT Com-munica-

tions

Highland Communication Services

Highland IL MUNI 2010 Calix GPON Data, Video, Voice

Holland Board of Public Works

Holland MI MUNI Data Businesses only Multiple

Hometown Utilicom Kutztown PA MUNI 2002 Calix BPON, GPON Data, Smart Grid, Video,

Voice

D&E Com-munica-

tions

Independence Light & Power

Independence IA MUNI 2013 ADTRAN GPON Data Businesses only

Indianola Municipal Utilities

Indianola IA MUNI 2012 Calix Active Ethernet

Data, Video, Voice

Mahaska Commu-nication Group

Kitsap County Public Utility District

Kitsap County WA MUNI 2000 Active Ethernet

Data, Video Mainly for businesses

Multiple

KPU Telecom- munications

Ketchikan AK MUNI 2007 ADTRAN, Enablence,

Zhone Technologies

Active Ethernet,

GPON

Data, Video, Voice

Lac qui Parle County/Farmers Mutual

Lac qui Parle County

MN PUBLIC-PRIVATE

Calix GPON Data, Video, Voice

Lake Connections (Lake County)

Lake County (also serves part

of Saint Louis County)

MN MUNI 2010 Calix Active Ethernet,

GPON

Data, Video, Voice

Lenox Municipal Utilities

Lenox IA MUNI 2008 Calix GPON Data, Video, Voice

Leverett Municipal Light Plant

Leverett MA MUNI 2012 Calix Active Ethernet

Data, Voice Crocker Communi-

cations

liNKCity North Kansas City MO MUNI 2007 Calix, Ciena Active Ethernet

Data







otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

Lit San Leandro San Leandro CA PUBLIC-PRIVATE

2012 ADVA Optical Networks

Businesses, MDUs

Loma Linda Connected Communities Program

Loma Linda CA MUNI 2005 Allied Telesis Active Ethernet

Data, Video, Voice

Multiple

Longmont Power and Communications

Longmont CO MUNI 2012 Calix GPON Data, Voice

Los Angeles Department of Water and Power Fiber Optic Enterprise

Los Angeles CA MUNI Carrier Ethernet


Businesses only

LUS Fiber Lafayette LA MUNI 2007 Alcatel-Lucent GPON Data, Smart Grid, Video,

Voice

Marshall Municipal Utilities

Marshall MO MUNI 2005 Data, Smart Grid

Martinsville Information Network (MINet)

Martinsville (also serves parts of Henry County)

VA MUNI 2009 Business Services, Data,

Voice

Businesses only

Mason County Public Utility District

Mason County WA MUNI 2000 Ciena, Telco Systems

Active Ethernet

Data Multiple

Mayfield Village OH MUNI 2012 Data Businesses only One Com-munity

Medina County Fiber Network

Medina County Port Authority

OH MUNI 2012 Businesses only One Com-munity

MI-Connection Mooresville, Davidson and

Cornelius

NC MUNI 2009 Calix GPON Data, Video, Voice

MINET Monmouth and Independence

OR MUNI 2007 Alcatel-Lucent GPON Data, Video, Voice

Montana Economic Revitalization & Development Institute/Fatbeam

Butte MT PUBLIC-PRIVATE

2013 Business Services, Data,

Voice

Businesses only

Morristown Utility Systems (MUS Fibernet)

Morristown TN MUNI 2006 Alcatel-Lucent GPON Data, Smart Grid, Video,

Voice

Murray Electric System

Murray KY MUNI 2000 Active Ethernet

Data, Video, Voice

Businesses only

nDanville Danville VA MUNI 2007 Calix Active Ethernet,

GPON

Business Services,


Multiple

NetQuincy Quincy (also serves surrounding

areas)

FL MUNI 2003 Alcatel-Lucent BPON Data, Video, Voice



PRIVATE OR MUNI





otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

New Albany Net New Albany OH MUNI 2010 Business Services, Data

Businesses only WOW Business

Norwood Light Broadband

Norwood MA MUNI Data, Voice Businesses only

Ocala Utility Services Ocala FL MUNI Active Ethernet


Businesses only

Okanogan County Public Utility District

Okanogan County WA MUNI 2002 Active Ethernet


OMU Fibernet (Owensboro Mu-nicipal Utilities)

Owensboro KY MUNI 1998 Data Businesses only

ONE Burbank (Burbank Water and Power)

Burbank CA MUNI 2010 Cisco, MRV Carrier Ethernet


Businesses only

OnLight Aurora Aurora IL MUNI 2012 Carrier Ethernet


Businesses only

Opelika Power Services

Opelika AL MUNI 2010 Alcatel-Lucent GPON Data, Smart Grid, Video,

Voice

Optilink (Dalton Utilities)

Dalton GA MUNI 2003 Alcatel-Lucent GPON Data, Video, Voice

Orangeburg County Broadband

Orangeburg County

(serves nine communities)

SC MUNI 2010 Calix Active Ethernet

Data, Voice

Pacific County Public Utility District

Pacific County WA MUNI 2000 Data Multiple

Palm Coast FiberNET Palm Coast FL MUNI 2009 Cisco Active Ethernet


Voice


PES Energize (Pulaski Electric System)

Pulaski (also serves Giles

County)

TN MUNI 2007 Calix , Enablence

EPON Data, Smart Grid, Video,

Voice

Philippi Communica-tions System

Philippi WV MUNI 2005 BPON Data, Video

PowelLink Powell WY MUNI 2007 Calix GPON Data, Video, Voice

Tri County Telephone,

open to other

providers

PPS FiberNet (Paducah Power System)

Paducah (also serves McCracken

County)

KY MUNI 2004 Alcatel-Lucent, Allied Telesis

Active Ethernet,

BPON



Princeton Electric Department

Princeton IL MUNI 2003 Data Businesses only IVNet IVNet

Reedsburg Utility Commission

Reedsburg (also serves nearby communities)

WI MUNI 2003 Calix BPON, GPON Data, Video, Voice







otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

Rochelle Municipal Utilities

Rochelle IL MUNI Zhone Technologies

Active Ethernet


Voice

Rock Falls Electric Utilities

Rock Falls IL MUNI 2007 Businesses only Essex Telcom

RS Fiber Cooperative Communities in Renville and Sibley Counties

MN PUBLIC-PRIVATE

2014

Russelville Electric Plant Board

Russelville KY MUNI 2010 Calix Active Ethernet,

GPON


Voice

Sandersville FiberLink

Sandersville GA MUNI Data

SandyNet Fiber Sandy OR MUNI 2011 Calix Data, Video, Voice

Businesses only, planning


Santa Monica City Net

Santa Monica CA MUNI 2004 MRV Carrier Ethernet

Data Businesses only Multiple

Scottsboro Electric Power Board

Scottsboro AL MUNI Active Ethernet

Data, Smart Grid

Businesses only

Sebewaing Light and Water Department

Sebewaing MI MUNI 2013 Calix GPON Data

Sherwood Broadband

Sherwood OR MUNI 2004 Data Businesses only Multiple

Southwest Minnesota Broadband Services

Bingham Lake, Heron Lake,

Lakefield, Jackson, Round Lake, Brewster,

Okabena, Wilder

MN MUNI 2010 Calix Windom Telecom-munica-

tions

Spencer Municipal Utilities

Spencer IA MUNI 2007 Calix GPON Data, Smart Grid, Video,

Voice

SpringNet (City Utilities of Springfield)

Springfield MO MUNI 2000 Active Ethernet


Businesses only

Sun Prairie Utilities Sun Prairie WI MUNI 1999 Ciena Carrier Ethernet

Data, Smart Grid

Businesses, MDUs

INOC

Swiftel Communica-tions (Brookings Municipal Utilities)

Brookings SD MUNI 2006 Calix GPON Data, Video, Voice

Sylacauga Utilities Board

Sylacauga AL MUNI 1997 Alcatel-Lucent Active Ethernet

Data

SyncSouth (SGRITA) Baker, Calhoun, Early, Miller,

Mitchell, Terrell, & Seminole

Counties

GA MUNI 2007 Mainly businesses



PRIVATE OR MUNI





otherwise noted)

SERVICE PROVIDER


OPERATOR (if other

than network owner)

Taunton Municipal Lighting Plant

Taunton MA MUNI 2001 Calix, Enablence EPON Data

Town of Jupiter Jupiter FL MUNI 2014 Carrier Ethernet

Multiple

Town of Rockport/GWI

Rockport ME PUBLIC-PRIVATE

2014 Mainly businesses

GWI GWI

Tullahoma Utilities Board

Tullahoma TN MUNI 2007 Enablence GPON Data, Video, Voice

UC2B (Urbana-Champaign Big Broadband)

Urbana-Champaign

IL PUBLIC-PRIVATE

2010 ADTRAN Active Ethernet

Data, Video, Voice

iTV-3 iTV-3

UTOPIA Consortium of 16 cities

UT MUNI 2004 Alcatel-Lucent, Allied Telesis

Active Ethernet

Data, Video, Voice

Multiple

Williamstown Cable & Broadband

Williamstown (serves Corinth

and parts of Grant and Owen

Counties)

KY MUNI 2010 Data, Video, Voice

Fiber outside Williamstown

only

Windomnet (Win-dom Telecom-munications)

Windom MN MUNI 2004 Calix GPON Data, Video, Voice

Wired Road (Blue Ridge Crossroads Economic Development Authority)

Carroll & Grayson counties, city of

Galax

VA MUNI 2009 Data Multiple WideOpen Networks

Zing (St. Joe Valley Metronet)

South Bend, Mishawaka, St. Joseph County

IN PUBLIC-PRIVATE

2005 Business Services,

Data, Security, Videoconfer-encing, Voice

Businesses, MDUs

Multiple

Dozens of local governments are now exploring ways to obtain better broadband services for their communities. Some may deploy community networks, others may develop partnerships with private sector companies and still others will encourage private companies to build next-generation networks for their residents.




COMMUNITY BROADBAND

The Art of the Possible Communities trying to acquire high-speed networks have a variety of options for owning and operating such networks. Though there are trade-offs among the options, many have proven successful.

By Ben Lennett and Patrick Lucey / New America Foundation Open Technology Institute and Joanne Hovis and Andrew Afflerbach / CTC Technology & Energy

A community should consider three issues when considering a public broadband project:

1 Control: who owns the network and decides how it operates?

2 Risk: how do the costs associated with developing and running the network balance against the revenue it generates?

3 Reward: what benefits are achieved through successful implementation of the project?

Achieving the desired level of control, minimum risk and maximum reward is difficult. Officials should consider carefully which components of these three items are important and be prepared to make sacrifices where appropriate.

A community may or may not wish to control an entire network or even parts of a network. In some instances, it is beneficial for a municipality, county, or tribal government to become a service provider itself and to sell services over the infrastructure it has built. In other cases, a community has no interest in this level of control as long as it can guarantee that a private partner is meeting certain goals for the project, such as affordability, level of service or service to a specific constituency.

Achieving these goals does not necessarily require a local government to control or provide the service. However, ensuring sufficient accountability for private partners will require developing a strong governance model. A locality seeking partners should therefore figure out the specific goals of the project, determine what kinds of control or accountability measures these goals require and evaluate local risk tolerance. This analysis will help a community decide which ownership and governance models are most suited for a project.

Some communities have no tolerance for financial risk; others can afford to spend significant resources for a potential long-term payoff. If a community has a significant financial stake in a network, it will likely need strong assurances that it will be able to break even on the investment, that the network will pay for itself over time or, at minimum, that it will service debt from bonds or other financial instruments.

Nonfinancial risks also exist, including the risk of falling short of stated goals. A local government can reduce financial risk with a good private partner, but, without the right arrangement, there can be a high risk of failing to achieve the goals that led the community

Editor’s note: This article was adapted from a report published by the New America Foundation. The complete report is available at http://oti.newamerica.net/publications/policy/the_art_of_the_possible_an_overview_of_public_broadband_options

http://oti.newamerica.net/publications/policy/the_art_of_the_possible_an_overview_of_public_broadband_options

http://oti.newamerica.net/publications/policy/the_art_of_the_possible_an_overview_of_public_broadband_options


to pursue a broadband project in the first place. Achieving community-driven goals such as open access, increased competition, affordable pricing, universal service, economic development and service to public institutions may not be realistic without taking a financial risk.

Communities should seriously consider that doing nothing is also a risk. Entering into a costly infrastructure project with or without private partners is certainly a risk but so is the prospect of citizens’ and businesses’ lacking sufficient access to high-speed Internet and the associated benefits it provides.

The most common measurement of success is financial. However, with due consideration to financial goals and constraints, communities can measure success based on other benefits, such as spurring economic development or improving educational and health care outcomes. After all, building a network that prioritizes these aspirations is often among the reasons for public sector involvement in broadband planning and provisioning. Yet these types of rewards for a community are not specifically reflected in the financial statements of the community broadband enterprise. It would be unusual for a municipality, county or tribe to enter the broadband market simply to generate income like a private company. Other community benefits can be more difficult to evaluate than revenues and profits, but they should not be ignored.

PUBLIC OWNERSHIP In a public ownership model, a local government takes the lead in building and operating a broadband network. Generally speaking, publicly led projects use bond financing to pay for capital construction costs and revenue from subscribers or private providers’ leases to pay for operational costs.

As a result of taking on much of the financial risk, these communities enjoy high levels of control over their projects. Local governments design the networks, determine service offerings and prices, operate the networks and control future decisions, including when to expand networks or upgrade services.

Municipal electric utility. In some of the most successful community broadband networks, a locally owned municipal electric utility plays a central role. The networks in Chattanooga, Tenn., and Lafayette, La., are examples of this situation. Bristol Virginia Utilities (BVU) was among the nation’s first municipal utilities to build a fiber-to-the-premises (FTTP) network to serve residents, local businesses and community institutions such as schools and libraries. BVU OptiNet, like many other networks built and operated by municipal electric utilities, offers a full suite of retail services – including broadband, cable television and telephone – directly to the public.

Part of the reason for the success of municipal electric utilities in deploying broadband services is that utilities already have experience in managing infrastructure. They own repair trucks and employ field engineers who can perform installations and conduct maintenance. Utilities also have experience with customer service, managing individual accounts and staffing call centers to handle questions or complaints. With a local electric utility as a partner, a network automatically has an important anchor tenant. Finally, utilities have established institutional structures to provide for local oversight. Public utilities have boards of directors to guide their activities as well as mechanisms for oversight by a city council or other governing body. As local supervision is a natural component of public utilities, community control and input are likely to be built into the network.

City department. Not every community has a locally owned electric utility to serve as the lead for its project. A network can be operated as

a division of local government, perhaps within an information technology (IT) department, instead of as a branch of a power utility. Local utilities provide significant resources and experience that help lessen some of the financial and operational risks associated with broadband projects, and communities that wish to proceed without the possibility of a utility as a partner will have to address these risks in a different way.

For example, communities may choose to build out networks slowly over time or choose not to issue large, project-specific bonds. They may focus on serving the connectivity needs of local government and community anchor institutions before considering a full FTTP network to serve residents.

Santa Monica City Net in Santa Monica, Calif., is an example of a successful community network operated by a municipality through an IT department. Santa Monica chose to implement a community network in a cautious manner. Buildout occurred gradually, focusing first on serving communications needs of the local government and community anchor institutions such as libraries and a local university. The network expanded over time by following a local “dig once” strategy, a process that took advantage of planned construction to install fiber when road maintenance occurred. The city further leveraged its fiber network to support local businesses by working with commercial building owners and property managers to cover the up-front costs of buildout to those locations.

Santa Monica City Net now offers up to 10 Gbps broadband service to at least 19 commercial buildings. Businesses in these buildings can choose services, including IP transit,

Building a community network through a municipal electric utility is one way to mitigate risk while retaining significant community control over the network.


COMMUNITY BROADBAND

virtual private networks and cloud services, from more than 160 Internet service providers, all of which are interconnected to the Santa Monica network Internet exchange point in Los Angeles.

Another example is Farmington, a city in northwestern New Mexico. The city already has about 80 miles of fiber in its possession. Currently, the municipality’s electric utility, the Farmington Electric Utility System, is the only user of this fiber, but the city is exploring expanding the use of the fiber to provide service to residents and businesses. After studying possible business models, the city determined that leasing the municipally owned fiber to existing ISPs is the best option.

The resulting partnership model is public ownership and private operation, which allows the city to offer use of the fiber at a low cost while guaranteeing an open-access network to private providers. The city stands to benefit financially both from leasing the fiber and from the economic development benefits of better broadband service.

Leverett, a small town in rural western Massachusetts, is in the process of building its own FTTP network. Leverett received a support grant from the Massachusetts Broadband Institute to do initial feasibility planning for a local broadband network. When asked whether the town should move forward with the proposal, voters overwhelmingly supported a referendum to request bond funding financed by an increase in property taxes to pay for the network.

Leverett then issued a request for proposals for network design and construction and selected a vendor. The network is currently under

construction, and the town’s goal is to complete the network and begin providing service by the end of 2014.

PUBLIC-PRIVATE PARTNERSHIPIn some sense, every infrastructure project involves both public and private participation. In traditional business models used by incumbent providers, infrastructure must be built in public rights-of-way and often on publicly owned or regulated utility poles. In public ownership models, private entities are hired to build, operate or maintain the network (or some combination of the three). Therefore, even when infrastructure is owned, operated and maintained by a public entity, the private sector will play some role and will benefit from the public investment.

However, not every community has to finance or operate a local broadband network on its own. In some cases, it makes sense to share the risks, rewards and control of the project across several parties. Partners can include private for-profit companies, local nonprofits and even local residents. The variety of public-private partnership models reflects the diversity of interests, goals and resources among communities.

In some cases, the locality plays only a limited role in the partnership and may only provide access to rights-of-way or other city infrastructure, such as light poles or local government buildings. In other cases, a local government may agree to become an anchor tenant and pay for service on the network for an extended period, providing business case stability for the network project partner. In more extensive partnerships, the locality can play a larger role, such as paying for

part or all of the network construction and leaving the operation of the network to the project partner.

When public and private partners share the capital or operational costs of a local network, the public entity is in a better position to drive its policy goals, and the private partner is able to address its business goals. Sharing the risks and benefits allows communities to pursue projects that might otherwise be unattainable. For a local jurisdiction to conduct a costly buildout to unserved areas can be a formidable challenge, and the same can be true for private providers; a public-private partnership can help control costs for all parties. Public-private partnership models for broadband are relatively new and are in a constant state of change, largely driven by the business needs and interests of companies that are willing to partner with local communities.

For that reason, communities should approach them with a certain amount of caution and apply a critical lens to partnership models as well as to claims that any financial or other risks to the community can be removed entirely.

The most talked about example of a public-private partnership is the Google Fiber project in the Kansas City area. After a public search and application process, Google chose Kansas City, Kan., and Kansas City, Mo., as partners for a public-private broadband project because of their commitment to facilitate access to local infrastructure and rights-of-way. Kansas City, Mo., also committed to waive local permitting fees and even provided Google with dedicated city staff to support the project. Some commenters point out that these terms amount to public subsidies for Google Fiber.

In return, Google agreed to build and operate the network and provide Internet access service with 1 Gbps speeds. Google Fiber will not serve all households in the Kansas City metropolitan area; Google will build only in neighborhoods (called “fiberhoods”) where enough residents (between 5 and 25 percent of households, depending on the estimated cost of construction in the

Some cities choose to share the risks, rewards and control over a broadband network with private partners, whether those are for-profit companies, nonprofits or individuals.


fiberhood) preregister for service. At the end of the registration period in the Kansas City area, 90 percent of neighborhoods qualified. Google has indicated a willingness to offer fiberhoods another opportunity to qualify for service but only recently provided details for such a process.

An emerging, smaller-scale example of a public-private partnership for a local broadband network is Westminster, Md. In 2013, the Westminster City Council voted to fund two FTTP pilot projects, one in a business area and the other in a large residential senior community. The city is building fiber optics to all premises in the pilot areas and is in the process of seeking private providers who are interested in selling competing services to residents and businesses over that fiber. The council left open the possibility of expanding the network to other areas of the city at a later point.

Westminster and Kansas City are both examples of a municipal partner that facilitates access to local infrastructure in return for varying levels of commitment from private partners to build a fiber network and/or offer next-generation broadband service. This approach reflects the reality that municipalities and other local governments control local rights-of-way and conduit and private firms have more experience providing telecommunications services to customers.

In the Kansas City model, local governments do not commit funds to build networks; as a result, they face limited financial risks associated primarily with transaction costs and forgone revenues. However, it is important to note the relative uniqueness of Google Fiber’s projects in Kansas City and other locations. In many examples, despite favorable rights-of-way policies, most incumbent broadband providers have not been willing to provide levels of service on par with Google’s commitments. In contrast, by owning the fiber itself, Westminster is able to ensure that fiber-based services are extended to all areas it selects.

There is another trade-off: In the Kansas City–area arrangement, the communities ceded control over the projects to their partners. Google leads the projects and makes all current and future operational decisions. Local leaders cannot determine how the network is designed, which services are offered or what customers are charged. Nor do they control whether the network will be built out to all residents, whether it will be upgraded in the future or even whether it will operate at all over the long term. Those decisions ultimately will rest with the private partner.

In contrast, Westminster took more financial risk but secured more control over the network. The community determined that it can better ensure meeting its goals by funding part of the infrastructure.

In a related model, a community can provide an alternative form of funding by agreeing to provide a private operator with a steady revenue stream through a long-term agreement to use the network. A local government could agree to share some portion of capital or operating costs with a private partner to incent the private partner to offer next-generation service. It is up to the community to negotiate any service-level requirements or other conditions on the local investment. This type of partnership makes sense in communities in which the subsidy for a private provider is relatively modest compared with the economic benefits for small businesses, institutions or residents.

COOPERATIVE MODELIn many rural parts of the country, electric cooperatives provide electricity. Several of these member-owned organizations can trace their histories

to the push for rural electrification in the 1930s. At that time, the newly formed cooperatives received targeted loans and technical support from the federal government to build out electric transmission lines to unserved areas. Some communities also formed cooperatives to operate local telephone networks.

Today, some cooperative electric utilities and cooperative phone companies are constructing broadband networks within their existing service areas. Similar to municipally owned electric utilities, cooperative utilities are in many way natural partners for public broadband projects. Working with a co-op enables benefits such as access to utility poles, existing maintenance crews and experience with customer support. Many of the cooperatives building these broadband networks have received, or are eligible for, federal loan and grant support from programs targeted to broadband deployment and other rural development initiatives.

Kit Carson Electric Cooperative, a cooperative electric utility in New Mexico that serves nearly 30,000 members, applied for and received $63.7 million in combined grant and loan funding from the USDA Broadband Initiative Program to build a 2,400-mile FTTP network. Prior to receiving the funding, Kit Carson offered dial-up and limited DSL service to its members. The fiber project will connect thousands of households as well as businesses and nearly 200 community anchor institutions located in the cooperative’s service area.

Co-Mo Electric Cooperative is a 25,000-member cooperative utility located in central Missouri. Co-Mo attempted to secure federal funding for a FTTP network but was denied on

By limiting their risk, municipal governments in the Kansas City area ceded control over broadband deployment to Google, which makes all operational decisions.


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several occasions. However, through door-to-door outreach and member-to-member conversations, 25 percent of existing electrical customers agreed to purchase broadband services, enough to justify building an FTTP network with its own funds. Co-Mo is constructing the network in a phased deployment over the next few years with a goal of expanding the network throughout its entire electricity service area. In December 2013, the cooperative announced a series of speed increases on its broadband service tiers, including upgrading its top speed offering to 1 gigabit per second.

There are currently only a few viable examples of cooperatives formed specifically for broadband service (rather than phone or electric service), and most depend upon local governments rather than individual subscribers for support. East Central Vermont Community Fiber Network (ECFiber) is a cooperative project among 24 towns in rural Vermont to build an FTTP network in their communities. ECFiber is organized with an interlocal contract according to Vermont law, under which municipalities can contract with one another to provide services; the cooperative governing board consists of delegates appointed by the select board or city council in each of the member towns. ECFiber contracts with ValleyNet, a local nonprofit that has extensive experience bringing Internet connectivity to residents and businesses in the region, to operate the network.

Another example is WiredWest, a project among towns in western Massachusetts to build and operate a regional FTTP broadband network. WiredWest is an intermunicipal

cooperative according to state law, which will allow it to issue municipal bonds. Founded in 2011 by 22 member communities, the project now boasts 42 municipalities. Each municipality that joins WiredWest has a representative on the cooperative’s board of directors, and the project is led by an executive committee elected from existing board members. WiredWest plans to build a last-mile fiber network by capitalizing on improved access to middle-mile fiber thanks to the MassBroadband 123 project, a middle-mile network in western Massachusetts that received state funding and federal support from the Broadband Technology Opportunities Program.

The cooperative received a network planning grant from the Massachusetts Broadband Institute and is supported by membership dues, donations and in-kind staffing contributions from volunteers. Like other cooperative broadband projects, WiredWest has also been collecting presubscription pledges for service from area residents and businesses to prove market demand and bolster the project’s business planning.

BUSINESS MODELS A community should perform a robust feasibility analysis to demonstrate that a business case exists and that social and economic goals will be realized through a particular business model. All such projects and business models entail financial and other risks for the community at the same time that they enable enormous direct and indirect benefits.

Retail Service. In this model, a local government builds an FTTP infrastructure and offers retail phone, video and Internet services to businesses

and residences. In terms of direct financial factors, a “pure” retail FTTP network operated by a community entails more significant risks than other business models because of the size of the up-front capital commitment necessary and the ongoing operating costs to run the network.

In this business model, the locality may also be an overbuilder, providing services in competition with existing phone and/or cable incumbents. Although the potential exists for the community to obtain sufficient market penetration and cash flow to sustain its network, this can be a significant challenge, particularly when well-resourced incumbent providers can aggressively market or discount services in response to the entry of a public provider.

Open Access. In this model, the local government builds, owns and maintains fiber optics all the way to homes and businesses. Rather than becoming a provider serving the public, however, it leases access to private providers who then offer services directly to the public. Under an open-access model, a community can operate and maintain the fiber and the transport electronics, or it can contract these tasks out to a private-sector partner. Private providers then lease access to the infrastructure, which they use to deliver phone, video and Internet services.

Thus a wholesale or open-access model separates the infrastructure from the retail service. In this way, a community can address the high cost of market entry for providers and facilitate the ability of multiple providers to serve residents and businesses over the same infrastructure. The result is the potential for new competition.

The business model involves significant risk with respect to recovery of project costs through network revenues. A number of factors outside the control of the local government, including the interest of retail providers in offering services over the network and the retail providers’ marketing success, have the potential to reduce revenues below break-even cash flow needs.

A community should conduct a feasibility analysis to determine whether a business case exists and whether the selected business model will yield social and economic benefits.


Institutional/Middle-Mile Model. In this model, a local government builds a network focused on connecting government and community anchor institutions, including government agencies, schools, libraries and hospitals. It can also lease out excess capacity to private providers that offer services to the public.

This model requires a smaller capital investment than does more extensive FTTP deployment. Experience suggests that a community with an institutional network can realize a modest revenue stream by leasing parts of the network and at the same time reduce its own cost of purchasing communications services from private providers. This model requires less involvement in operations than does a retail model because it does not require a local government to go into the business of providing communications services.

Though this model has the potential to benefit some business customers, it is unlikely to address the needs of most residents and small businesses. The model offers some incentives for a private provider to construct its own infrastructure, but this may not be enough to attract private sector investment in a communitywide FTTP network because it lowers the cost of outside-plant construction by only a few percent.

The following local governments, school districts, or other anchor institutions were able to realize substantial cost savings by shifting their broadband services from private providers to local options.

• Santa Monica, Calif., operates its institutional network in conjunction with the school district and a local college. By self-provisioning their bandwidth needs instead of purchasing commercial services, within a few years of operation the three local partners were saving a combined $500,000 annually on their telecommunications service budgets.

• Martin County, Fla., operates an institutional network with several local partners. The school district in Martin County saves more than $82,000 annually by purchasing

services from this local network rather than from commercial entities. Once the school district’s share of capital investment payments for the local fiber network is completed in 2017, the annual IT budget savings is expected to grow to $340,000 annually. In addition to enabling substantial savings, the local network provides the school system with superior networking speeds of 1 Gbps.

• Martinsville, Va., saves approximately $140,000 on telephone services alone by self-provisioning services over the local fiber network rather than leasing from a private provider.

• The City of Greenacres, Fla., saves more than $24,000 a year while increasing bandwidth capacity sixfold by switching service from a commercial provider to a locally owned county fiber network.

• Highland Public School system in Medina County, Ohio, saves $82,000 a year after switching broadband service to a local municipal network.

• In Royal Oak, Mich., a suburb of Detroit, the municipal government and school district are partnering on the construction of a local fiber network to serve their sites. The school district estimates that self-provisioning its broadband will save it more than $114,000 annually.

Infrastructure Participation. Most local governments own assets in key locations that could reduce FTTP deployment costs for private providers. Construction costs could be reduced through use of such assets as fiber optics, communications conduit and facilities. In this model, the public sector makes selected assets available for

lease to a private sector entity, enabling the private entity to more efficiently and expeditiously build and operate a network. Extending fiber into business parks and selected neighborhoods could provide some attraction to a private sector investor or operator.

This model seeks to encourage private investment. However, to attract an investment, public financing guarantees may be required, entailing public risk with limited control.

As government leaders evaluate their options, it is important that they focus on developing the most appropriate network model to meet the goals of the community while accounting for fiscal realities and associated risks. There is no one-size-fits-all approach. A government can utilize any number of different permutations for a public project that offer different benefits and trade-offs. Taking the time to perform the proper due diligence on any broadband project is critical to developing a successful, sustainable and scalable project. v

Ben Lennett is a senior research fellow at the Open Technology Institute, Patrick Lucey is a policy program associate at the Open Technology Institute, Joanne Hovis is president of CTC and Andrew Afflerbach is CEO and director of engineering of CTC. Hibah Hussain and Nick Russo also contributed to this report. New America Foundation’s Open Technology Institute promotes affordable, universal and ubiquitous communications networks by providng in-depth, objective research, analysis and findings for policy decision makers and the general public. CTC Technology & Energy is an independent communications and IT engineering consulting firm.

A community with an institutional network can realize a modest revenue stream by leasing parts of the network and at the same time reduce its costs for communications services.




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Worst Practices In Community Broadband – Part TwoIf a community broadband network is to succeed and benefit the community, board members and managers must be prepared to run it like a business.

By Andrew M. Cohill / Design Nine

The notion of “worst practice” in community broadband projects started as a kind of joke. In my work

with communities that wanted to invest in broadband infrastructure, I was asked very frequently, “What is best practice from other communities?” I would often respond, “No, no, you should be asking me what ‘worst practice’ is.”

In the three years since my first “worst practice” article (published in the March-April 2011 issue of this magazine), I have had the opportunity to observe and learn from many other community-based projects in the U.S. Not all of them involve direct government ownership, so the lessons learned apply equally to municipal efforts and public-private partnerships.

I continue to see three types of problems. Business and management issues crop up in cities where there is a mistaken belief that a community-based broadband effort is some kind of charitable enterprise or that, like a sidewalk, it can be forgotten about once it is installed. Whether a community makes very modest investments in passive infrastructure, such as conduit and dark fiber, or adds network equipment and sells circuits, the enterprise has to be run as a business.

The second problem area has to do with managing growth. Many community efforts very appropriately start small, which reduces financial risk. However, I see some projects

lose energy and attention once that phase one infrastructure is built.

The last area is marketing. There is no natural monopoly for broadband infrastructure as there is for other types of infrastructure, such as water or sewer systems. Community-based projects need ongoing marketing and public awareness efforts to meet take-rate targets and to keep projects on a path to financial stability.

BUSINESS ISSUESNot running the network as a business. Telecom infrastructure has to generate revenue both to repay local government for any capital funds provided to build the network and to meet ongoing operating expenses. I see projects led by boards with little or no business experience and senior staff who also lack a solid record of success in the private sector. Any board of directors should have at least two members with substantial business experience; experience with startups is especially important.

Thinking it is a monopoly. There is an argument to be made that basic broadband infrastructure is a natural monopoly at some level. However, the philosophical argument for why communities should invest in broadband infrastructure shouldn’t be muddled up with the operational approach to the enterprise. In the late 1800s, New York City had 18 private water companies. In some parts of the city, residents could pick from three different water


providers. In other neighborhoods, they still had to get water in a bucket from a communal well. The same arguments used to create a publicly owned water infrastructure (everyone has better access, overall expenses are lower, the investment promotes economic development and growth) apply to broadband. However, community broadband systems, unlike community water systems, don’t necessarily replace the private systems. Thus, there is going to be some competitive tension between incumbent providers and any community-owned enterprise. Community broadband projects have to start with and maintain a business mindset.

Failing to budget. Some community projects do not manage their budgets well. Some do not even use formal budgets to help direct their enterprises. A bookkeeper or an accounting firm may provide periodic reports on revenue and expenses, but as in any startup business, those monthly or quarterly figures need to be plugged into a multiyear budget. That budget must show current and past financial data and must set targets for take rates and expansion so the board can determine whether the effort is stagnating or making progress.

GROWTH ISSUESNot planning for expansion. Most community-funded efforts start small. This minimizes financial risk and gives the board and senior leadership the opportunity to learn on the job. However, some projects stall after the first year instead of expanding to a sustainable size. The underlying problem is twofold: First, even small networks have fixed operational costs, and the network needs enough revenue to pay those expenses and make principal and interest payments on any loans. The second problem is that network infrastructure wears out and needs routine maintenance. Lack of funding to keep the network in good condition will degrade service over time. The solution is to have an expansion plan (even a modest one)

that contributes to revenue growth over time.

Not budgeting for drops. Adding new customers requires placing drops from the distribution fiber to the customer premises. Because of the high cost of customer drops, careful budgeting and adequate funding are necessary. The worst thing possible is for a business or resident to request connection to a network that lacks the funds to make that “last 100 feet” connection. Some networks bill customers (or try to get the service provider to pass that expense through to customers) for the cost of the drop. Some businesses are willing to pay for the drop because of the money they will save, but other businesses and many residential property owners continue to resist paying for construction. I believe that over time, as the benefits of fiber become more compelling, more customers will be willing to pay for their connections. However, in its first year or two of operation, a community-owned network needs funds to pay for new customer connections and thereby meet take-rate targets.

Poor costing of drops. The ongoing challenge of getting new customers connected is often aggravated by inflated costs for installing fiber drop cables. Some fiber construction contractors, used to working for deep-pocketed incumbents, specify construction techniques for drops that make them too expensive.

For example, a drop cable to a single business customer may not need to be installed in conduit buried 36 inches deep. Once it leaves the public right-of-way, it could be direct buried

just 12 to 18 inches deep or installed in a very shallow slot. Getting good prices from contractors is not difficult, but it usually involves sitting down with them, discussing the kinds of construction methods they can provide and negotiating prices for various construction techniques in advance. As an example, in one community where I was asked to help, the contractor doing drops wanted to use horizontal drilling for all drops even where direct bury with a much less expensive machine would have saved thousands of dollars. I recommended a change to a contractor who had a wider variety of equipment and was comfortable with simpler and less expensive installation techniques.

MARKETINGNot offering incentives for service providers. In multiservice, multiprovider networks (often called open access), I have found offering price incentives to providers is necessary to get them to sell their own services more consistently. These can take the form of short-term incentives (such as waiving the connection fee for all new customers in the next 60 days) or volume and term discounts for increasing the number of customers they have on the network. Without incentives, some providers tend to slack off on new customer attraction after making an initial flurry of sales efforts when the network opens for business.

Confusing marketing with sales. Board members and senior managers without enough business experience think that in a multiprovider network, the private sector providers will do all the marketing and sales. However, for

There is going to be some competitive tension between incumbent providers and any community-owned enterprise. Community broadband projects have to start with and maintain a business mindset.


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an open-access project, the community enterprise must have an ongoing marketing and public awareness effort. This effort may be modest, but if the network is to meet take-rate targets, businesses and residents have to know there is an alternative to the incumbent providers.

I have heard board members and managers say, “It is not our job to make sales for the providers.” I agree, but closing a sale and getting a signed contract for service is not the same as a general marketing effort to raise awareness of the new network.

Failing to market as an economic development incentive. Many communities initiate a community broadband enterprise to help attract and retain businesses. However, some communities get a network up and running and then fail to promote the availability of high-performance, affordable fiber. The community economic development website may not even mention the fiber network.

Chattanooga’s fiber effort succeeded in part because of brilliant marketing. Community leaders understood that hanging fiber on poles and installing

smart electric meters would not, by itself, stimulate economic growth and job creation. They developed a comprehensive and sustained marketing campaign that promoted Chattanooga as a technology leader – and it worked.

The good news about community broadband efforts is that, after two decades of experimentation, we now know what works. Best practice in management, in operations and in marketing is well understood, and that means communities that do their homework can succeed. v

Andrew M. Cohill is the president of Design Nine (www.designnine.com), which provides broadband network design and network buildout services. Specializing in open-access network design, Design Nine has been involved in such “best practice” projects as nDanville, The Wired Road and Palm Coast FiberNET.

Chattanooga’s fiber effort succeeded in part because of a brilliant marketing campaign that promoted Chattanooga as a technology leader.




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Creative Financing For Fiber NetworksMunicipalities that want to bring fiber networks to their residents must be willing to think outside the box.

By Doug Dawson / CCG Consulting

Traditional financing is not always the solution for financing a new fiber network. For example, many rural communities don’t have the borrowing capacity

to fund a fiber network strictly from bonds, and banks are still extremely cautious about lending to infrastructure projects or floating loans more than 12 years in length. Recently, I have seen several creative ideas in the market that are worth highlighting. These concepts could be used to fund municipal fiber projects or public-private partnerships.

TAX INCREMENT FINANCINGWabash County, Ind., wants to use tax increment financing (TIF) as a way to finance a new fiber network. TIF works by borrowing today against future increases in property taxes. TIF has been used for decades to finance infrastructure projects, but I don’t think I have ever seen it used to build fiber. This is very different from the normal way of financing municipal fiber projects, which involves issuing bonds that pledge customer revenues and the value of the network as collateral.

In this case, the county expects that the project will be able to pay its annual debt service and that property taxes will have to be increased only if the fiber network is unable to cover the whole cost of debt. Property taxes become the collateral for the project and assure a lender that it will be repaid for lending to the project.

Other counties and municipalities in the state are looking at TIF. Interestingly, the Indiana Association of Cities and Towns recently helped defeat proposed legislation, supported by incumbents, that would have stopped municipalities from using TIF for fiber projects. It is not unusual to see incumbents try to stop or ban any new financing ideas for municipal networks.

UTILITY FEESAnybody who watches the industry understands the troubles that have plagued UTOPIA, a municipal network in Utah. The company has been refinanced several times and has never raised sufficient capital to build to enough homes in the area to become solvent.

UTOPIA cities are working with Macquarie Capital, an Australian company, on a financing plan that would finance the construction of the rest of the network by means of a

monthly utility fee billed to each home within the network footprint for 30 years. This is similar to what was done in Provo. That city sold its fiber network to Google for a dollar, and customers are billed a monthly fee of about $6. For that small fee, customers can get 5 Mbps download Internet, or they can elect to pay more for Google’s gigabit speeds.

This plan differs from the Wabash plan in that customers begin paying the utility fee at the beginning of the project and will pay it for 30 years. Rather than serving as collateral for a loan, the utility fees help finance the project directly.

ECONOMIC DEVELOPMENT BONDS / LOCAL BANK CONSORTIUMRS Fiber Cooperative, a new cooperative in Sibley and Renville counties, Minn., is combining two different ideas to seek financing. First, it aims to finance a portion of the project with an economic development bond guaranteed by a number of municipal entities within a fairly large rural service area. These bonds, which would cover less than one-fourth the project cost, would act as seed equity in the project.

The remainder of the project will be financed through loans from a consortium of banks. The idea of bank consortiums is not new; it has been used to finance other infrastructure projects. Generally, a local bank solicits additional banks to carry part of the loans. Local banks often have significant cash to lend and a shortage of quality borrowers. Local banks are also constrained by the amount they are willing to lend to any one borrower. By combining the lending power of many banks, no one bank lends too much, and each gets to participate in a high-quality loan.

This project is a great example of a public-private partnership. It will be operated as a commercial entity – a cooperative – and will draw on both municipal and commercial funding.

All three of these ideas step outside normal financing channels. In today’s world, this kind of creativity is needed to get needed infrastructure built. v

Doug Dawson is the president and founder of CCG Consulting, a consulting firm that has helped more than 750 carriers in the last decade. Contact Doug at [email protected].




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Five Models For Community BroadbandCities and counties in Minnesota have followed several approaches to providing fiber broadband for their residents and businesses.

By Christopher Mitchell and Lisa Gonzalez / Institute for Local Self-Reliance

In 2010, Minnesota set ambitious statewide goals for universal Internet access: By 2015, everyone should have access to

download speeds of 10 Mbps to 20 Mbps and upload speeds of 5 Mbps to 10 Mbps. The state is not on track to meet those goals. Though most residents of the Twin Cities have access to at least the minimum standard of 10 Mbps down, fewer than half of households in Greater Minnesota [outside the Twin Cities metropolitan area] have such access. A significant number of Greater Minnesota households are still relegated to the horse-and-buggy days of dial-up, and many more have access only to slow DSL connections that do not meet the Federal Communications Commission goals for basic broadband (4 Mbps/1Mbps).

Aside from creating a task force and setting goals, the legislature and recent governors have taken a hands-off approach to expanding Internet access. Where broadband access has expanded in recent years, government has often been involved. Federal programs offer a variety of loans and ongoing subsidies for Internet access, mostly to private companies and cooperatives in rural areas.

Frustrated by the reluctance of incumbent phone and cable companies to significantly upgrade their networks, a growing number of

counties and towns have begun building their own networks. This article focuses on some of the strategies local governments have embraced to improve Internet access for local businesses and/or residents.

The counties of Lac qui Parle and Sibley entered into public-private partnerships with cooperative entities. Lac qui Parle partnered with an existing telephone cooperative and Sibley with a newly created broadband cooperative. Scott County first connected anchor institutions such as schools, municipal facilities and public safety communication towers and later expanded the network to drive economic development. Windom and Monticello, by contrast, built their own citywide FTTH networks.

Local governments have a continuum of options that range from enabling other providers to building and operating their own citywide networks. Because each community has different needs and preexisting assets, any decision about how to expand access must be made at the local level by those who will have to live with the consequences.

LAC QUI PARLE COUNTYHome to 7,000 Minnesotans, Lac qui Parle County borders South Dakota. Madison, the

Editor’s note: This article was adapted from a report published by the Institute for Local Self-Reliance. You can read the full report at www.ilsr.org/minnesota-local-governments-advance-super-fast-internet-networks/.


county seat and “Lutefisk Capital USA,” is one of eight towns and 22 townships. Agriculture and construction dominate the economy.

Prior to the partnership to expand high-speed access, much of the county was served by Frontier’s DSL system, whose connection speeds reached about 1.5 Mbps downstream and much less upstream. Slightly faster connections of 3 to 5 Mbps were available from Mediacom in two towns, and most residents outside the towns had to settle for slow dial-up or satellite connections. Understanding the crucial importance of high-speed Internet access, the county Economic Development Authority (EDA) asked Frontier to upgrade its network. Pamela Lehmann, the head of EDA, recounted her experience to Minnesota Public Radio:

“We had two meetings with some of the upper management. They said they didn’t have the funds available for a project like this. When they are looking at the big picture, a small county in west central Minnesota was not their priority at that time.”

The county issued a formal request for information, but Frontier did not respond. Meanwhile, Farmers Mutual Telephone (FMT), a cooperative serving some 40 percent of the county territory, already had plans to upgrade its subscribers to fiber optic service. FMT proposed a partnership with the county and agreed to share the costs of a feasibility study, with matching funds provided by the Blandin Foundation, to evaluate the idea of extending this upgrade further.

The study, completed in early 2010, found that a significant area of the county was unserved and desired better access.

FMT and Lac qui Parle shared the costs of a grant writer to submit an application in the second round of the federal broadband stimulus funding. Because the towns of Madison and Dawson were considered to be served by Mediacom cable, they were excluded from the project to upgrade the communications infrastructure.

In late 2010, the county-FMT partnership received an American Recovery and Reinvestment Act award of $9.6 million, of which half was a grant and the balance a loan. The stimulus award allowed FMT to connect most of the rest of the county with fiber, rather than just upgrading its existing subscriber base.

FMT and the county quickly discovered that costs were likely to exceed initial projections. The county agreed to pay half the shortfall and to lend FMT the other half at no interest for 10 years.

The new project will connect at least 1,738 residential and business premises in addition to two K–12 schools, a library, two medical facilities, three public safety facilities, two community support facilities and two government facilities. Ultimately, the network will cover 339 square miles.

The network will eventually offer standard triple-play services of telephone, Internet access, and television, but currently it delivers just telephone and Internet access. FMT is working on the necessary agreements to offer cable television, but small-scale providers are often at an extreme disadvantage in securing content.

The project began in early 2011. FMT began by expanding fiber it had already run to hospitals in Dawson, Madison and Appleton. The cooperative began offering services in 2013, and the project was nearly complete in early 2014. Because Madison was excluded from the project, it has slower service than the surrounding areas. Pamela Lehmann, who lives in Boyd but works in Madison, notes that her home

connection is faster and more reliable than her work connection. Over time, this may have the effect of hollowing out Madison as businesses find they are more competitive with access to FMT fiber than with slower cable and DSL.

Those who have been able to take service from FMT have been quite pleased. Most residential and business subscribers take 20 Mbps symmetrical Internet service along with telephone services for $68.45 (local service only) or $99.45 (unlimited long distance). However, Frontier began imposing early termination fees on customers who attempted to switch providers, something that the Minnesota Public Utilities Commission has been examining.

SCOTT COUNTYScott County had long watched as its neighbor Dakota County expanded a county-owned fiber network to improve access for schools and other community anchor institutions. Local leaders learned from those efforts, and the Scott County Board of Commissioners approved the $4 million budget for its 90-mile ring in January 2007. The savings from no longer having to lease expensive connections from existing carriers was estimated at $500,000 per year.

The county bonded for the project, spreading the cost of building it over many years. Combining the bond payments and operating expenses, the county saves $35,000 per year compared with its cost of leasing lines. The new fiber network also offers much higher-capacity connections, a much lower cost per bit delivered and greater reliability.

The network connected all county-owned facilities, including public

Lac qui Parle County and Farmers Mutual Telephone were jointly awarded broadband stimulus funding to build a fiber optic network that covers most of the county.


COMMUNITY BROADBAND

safety communication towers, libraries, city halls, police departments, school districts and the state of Minnesota’s high-capacity backbone. Ultimately, it also connected with the Dakota and Carver County networks and provided redundant paths out of the county, one to Mankato and the other to the 511 Building in Minneapolis, where hundreds of carriers interconnect. The connection to the 511 Building meant that any carrier in the building could offer services to Scott County, rather than the county’s being dependent on the small number of carriers with infrastructure in the county. The state Office of Enterprise Technology agreed to manage portions of the network in return for access to some of the connections, which lowered costs.

Even early in the network’s useful life, the results have been tremendous. The local school district, which had paid approximately $58 per Mbps, slashed its costs to less than $7 per Mbps. The schools now have almost unlimited capacity to upgrade to faster speeds that would have been cost-prohibitive to lease from a telephone or cable company.

The network is also responsible for bringing jobs to the region. When Emerson Process Management was selecting a site for a 500-job, $70 million investment, Scott County could offer it affordable access to the fiber network. Shakopee News reported: “Dependent on projected usage and other assumptions, over a 20-year period, it is estimated this would result in a net-present-value savings of between $1.1 million and $1.7 million for Emerson.” Emerson picked Scott County.

The recent decision from Shutterfly to locate in Scott also came with an agreement to use Scott County fiber to lower its costs of connectivity.

Ensuring that businesses will have an affordable – and, often more important today, reliable – Internet connection is increasingly essential to a healthy business environment. The Dakota and Scott County conduit and fiber investments position them to ensure that those connections are available.

WINDOMIn southwestern Minnesota, approximately 4,600 people call Windom home. The community is 135 miles southwest of the Twin Cities metro and is the county seat of Cottonwood County. Traditionally an agricultural community, Windom is home to several manufacturing plants. PM Beef, Toro, Fortune Trucking and Big Game Tree Stands are some of the biggest employers.

Windom Municipal Utilities (WMU) began providing electric services to the community in 1895, at a time when private electric companies often claimed that electric networks were too complicated for local governments to manage.

The city also provides water and wastewater services. WMU began offering cable services via its Windom Cable Communications (WCC) in the mid-1980s.

In the late 1990s, Windom residents were frustrated by the refusal of the private sector to provide high-speed Internet connections. Dial-up was available, but Qwest had not yet deployed DSL in town. Meanwhile, the municipally owned cable company was losing customers to satellite providers, part of a larger cable trend nationally. When it investigated upgrading the cable facility, WMU realized that upgrading to FTTH would benefit the community significantly by allowing the utility to also offer telephone and

Internet access. However, per state law, offering phone service would require passing a referendum by a 65 percent supermajority. Minnesota is the only state to have such a requirement.

In 1999, Windom put the measure on the ballot but did not meet the supermajority threshold, in part because Qwest announced prior to the vote that it would soon expand DSL to Windom. After the referendum lost, Qwest chose to delay the investment. Exasperated local citizens asked for another referendum. Local officials were skeptical, given the time and expense of another ballot initiative on which the city was legally prohibited from taking a position and whose opponents were much better financed. However, in 2000, more than 70 percent of the voters supported the new initiative.

In 2004, Windom issued $9.47 million in revenue bonds, using the financial tool most municipal fiber networks have used. The utility sold bonds to private investors to be repaid with the revenues of the system. Shortly after beginning to connect subscribers to the new network, the utility encountered a problem not uncommon among small networks: The demand was actually too high; more people were taking service than expected.

Though this may seem an odd problem, it results from the high up-front costs of connecting a home. At that time, connecting a home cost more than $1,500, an amount that is gradually paid off over a few years as the subscriber makes monthly payments for services. Adding too many subscribers too quickly requires an enormous up-front investment.

The mix of services is also important. Those who subscribe to all three services – television, telephone, and Internet access – generate enough revenue to pay off the connection costs in a year or two, but a household taking only telephone services could take more than five years to recoup costs. Community-owned networks can face a tough decision in this situation, choosing between rapidly paying off

Ensuring that businesses will have an affordable and reliable Internet connection is increasingly essential to a healthy business environment.


network debt or keeping prices low to benefit the community.

WindomNet chose to keep prices low. The city decided to take out a $1 million line of credit from a local bank in 2005 to meet subscriber demand rather than putting new customers on a waiting list. In 2007, still needing to raise capital for new connections, the city issued $2.3 million in general obligation bonds that paid back the line of credit and paid back internal loans from other city departments.

Not all of those requesting access were even within town limits. Fortune Trucking, which employs 47 people, decided to engage in a major IT upgrade in 2008. It verified that the private company that supplied it with telecommunications services at the time could support the new system with better connectivity. After it bought the system, Fortune found the private company could not fulfill its connectivity promises. Fortune considered shutting down and moving those jobs to New Mexico, but first it called Dan Olsen, WindomNet general manager.

Though Fortune Trucking was located a mile outside Windom, Olsen quickly agreed to get a fiber line out to the facility. In a 2011 story on Minnesota Public Radio, Dale Rothstein of Fortune Trucking observed, “It’s a great relationship. When there is a problem, I call, and it’s taken care of. It’s great to have a local company to deal with.”

WindomNet benefits the city’s residents and businesses in many ways that don’t show up on an internal balance sheet. For example, it delivers free services to city buildings and the library, saving agencies tens of thousands of dollars each year that can be spent on direct public services. Windom has higher-capacity connections with better customer service for far lower prices than peer communities.

WindomNet has even benefited nearby, smaller towns. Eight surrounding towns that were stuck on dial-up received a federal broadband

stimulus award of $12.7 million, allowing them to build a 125-mile fiber network ring that uses WindomNet as a hub. In expanding its networks to nearby communities, WindomNet follows in the footsteps of municipal networks in Reedsburg, Wisc., and Cedar Falls, Iowa, each of which expanded fiber optic networks to what previously was dial-up country nearby.

Now, residents of nearby Jackson, Lakefield, Round Lake, Bingham Lake, Brewster, Wilder, Heron Lake and Okabena have fiber optic connections capable of a gigabit rather than dial-up or satellite. No private company was interested in serving those small towns, even with significant federal subsidies. Because Windom embarked on a path of local self-reliance, it built a foundation capable of being expanded to meet its neighbors’ needs.

Critics of WindomNet have long claimed WindomNet was a money-losing failure. However, Windom’s business model called for the network to break even in the seventh year, and in recent years, network expenses have been roughly in balance with revenues after depreciation.

ILSR estimates that Windom used about $1 million in tax dollars to support WindomNet over its first 10 years. Was this a wise use of taxpayer dollars? That $100,000 per year kept at least 47 jobs in the community; almost certainly, more were retained and yet more attracted. WindomNet brought gigabit service to some of the smallest towns in the world. In providing free services to the library and city buildings, it effectively reduced taxes that would have otherwise been spent on telecommunications. Property values are almost certainly higher, both in Windom and the surrounding communities, than they would be without fiber access.

SIBLEY COUNTYAfter unsuccessfully asking incumbent providers to expand and improve broadband access, the Winthrop City Council tasked town administrator Mark Erickson to work with other local governments in the region to develop a


COMMUNITY BROADBAND

solution. In 2010, the Renville-Sibley Fiber project (RS Fiber) was born.

RS Fiber was originally anticipated to be a joint project of the towns in Sibley County, the county government and a slice of eastern Renville County, including the Fairfax area. This area is farm country, with slow broadband access in many towns and dial-up/satellite access between towns.

The RS Fiber group held more than 100 public meetings to discuss the plan, often spending an entire day in each town and holding morning, afternoon and evening meetings to accommodate people’s schedules.

The feasibility study showed that covering only population centers would be less expensive and involve less risk, but the project’s leaders remained dedicated to universal access. They wanted to build fiber to the farm and not leave anyone behind because they reasoned that the fates of the farms and towns were woven together.

After hesitation by the Sibley County Board and some difficulty in arranging preliminary financing for approximately $67 million of debt, RS Fiber decided in July 2013 to form a new cooperative rather than owning the network via a joint powers board. The cooperative will be owned by all those who take service from it.

Historically, the challenge of creating a new Internet service cooperative was raising capital. Few will lend a new entity tens of millions of dollars, especially to finance a difficult venture. Recognizing that reality, RS Fiber developed an innovative public-private partnership. Local governments will use their bonding authority to provide initial financing to the co-op. Investors are far more likely to put their

money into a project after it already has attracted significant seed funding, particularly if the private investors are the first in line to be repaid in the event of any financial difficulty.

As of March 2014, the project comprised 10 cities and 21 townships that included 7,200 potential customers (households and businesses, the vast majority of them in Sibley County). The local governments will together sell $15 million in general obligation tax abatement bonds and make an economic development loan of that amount to the RS Fiber Cooperative. That initial financing should allow the co-op to unlock another $42 million from bank sources to build and operate the network. All the borrowing will be repaid by subscribers from the services sold. The $15 million economic development loan from local governments will be subordinated to loans from private investors.

If all goes as planned, the RS Fiber Cooperative will not only connect the 7,200 potential subscribers in the immediate area but could also begin expanding into nearby towns and townships that have no realistic expectation of private-sector investment.

Cooperatives, assisted by long-term, low-interest federal loans, were essential in spreading electricity to nearly every home in America. Now they may again fill an important void.

MONTICELLOHome to 12,000 people and located on the I-94 corridor 40 miles west of Minneapolis, Monticello is probably the only place on earth served by two competing citywide FTTH networks. One is owned by the city of Monticello; the other is owned by TDS, a private

telephone company. Still another company, Charter, offers cable services, making Monticello one of the most competitive telecommunications environments in the upper Midwest.

How did such vigorous competition come about? It began in 2006 when local citizens and businesses began complaining about the inadequate services they were receiving from TDS and Charter. One local businessman told Minnesota Public Radio, “The service we had in Monticello was horrible. ... My employees would sometimes take the data home, where they had a better Internet connection than we did, and do their uploads at night.”

When the incumbents refused to upgrade their networks, the city decided to build its own. A referendum held in 2007 resulted in a remarkable 74 percent support for the project. However, when Monticello began selling bonds to finance the network, TDS filed a lawsuit. The court dismissed the case with prejudice, but TDS appealed, delaying Monticello’s fiber network and eventually costing the city millions of dollars. During the delay, TDS, which had argued for years that Monticello did not need a fiber network, decided to build one.

Even during the lawsuit, Monticello offered to do joint trenching with TDS, which would have reduced the cost to both parties to build their respective networks, but TDS refused. Monticello considered ceasing to build its network, but decided that the only way to ensure the community would actually get modern services at a reasonable price was to build a network owned by the community. Monticello started building its network in 2009.

Hiawatha Broadband Communications, a well-respected Minnesota company located in Winona, agreed to offer services over the network. (This relationship is no longer in force.) However, the TDS delaying tactic succeeded in harming FiberNet Monticello. The network had to begin repaying its debt even before

Citizens in Renville and Sibley counties formed a new telecom cooperative; in a unique public-private partnership, local governments will provide seed funding for the cooperative.


revenues began coming in, creating a permanent cash-flow problem.

On top of the costs incurred because of the TDS lawsuit, Monticello had to deal with an extremely aggressive countermarketing campaign by Charter. Charter offered a package of its fastest Internet access and every cable channel for only $60 per month. It charges $145 for such a package in other communities where there is no real competition. Many who are familiar with channel contracts, which are subject to nondisclosure agreements, believe that Charter’s costs to deliver that package must exceed $60 per month, meaning that it loses money on every subscriber that takes the deal.

Between the delays resulting from the lawsuits by TDS and the price cutting by Charter, FiberNet Monticello failed to hit its financial targets and is in the midst of negotiating with bondholders to take a

significant haircut. Meanwhile, the network has borrowed funds from the municipal liquor store fund to continue operating as it changes strategies to become financially viable over the long term.

Though FiberNet’s internal balance sheet has been in the red, the citywide impact of FiberNet has clearly been positive. Lower prices by Charter and TDS have resulted in savings to local businesses and households of more than $1 million each year. FiberNet improved the business climate and put Monticello on the map as having some of the best connectivity in the country.

Prior to FiberNet, TDS charged more than $40 per month for telephone services, and calls to the Minneapolis/Saint Paul metro area were long distance. FiberNet began charging $21 and included the metro area in the local calling plan. TDS has since lowered its rates, ensuring that everyone is saving

money and seeing benefits from the newly competitive environment.

A recent GAO report noted that “following the construction of a fiber-to-the-home municipal network in Monticello, Minn., the two other broadband providers in the area made investments in their infrastructure to improve their broadband speeds. One of these providers stated that all of its networks undergo periodic upgrades to improve service, but upgrade schedules can change in order to stay competitive when there is a new service provider in a particular market.” v

Christopher Mitchell is the director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance, and Lisa Gonzalez is a research associate. Find out more about the institute at www.ilsr.org and www.muninetworks.org.

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COMMUNITY BROADBAND

Lessons From Fiber CommunitiesThere’s no one-size-fits-all strategy for building a fiber-connected community. Everything – from technology choices to the rollout strategy to the role of the community itself – depends on local needs, constraints and choices.

By Masha Zager / Broadband Communities

Like many Tennessee towns, Fayetteville has a municipal electric utility that distributes TVA-generated electricity to

its residents and those of several surrounding communities. In 2001, Fayetteville Public Utilities (FPU) became the first Tennessee municipal utility to expand its mandate and launch a broadband utility, delivering the triple play of TV, Internet and phone services – a move that many other municipal electric utilities would follow. Today, FPU provides about 3,300 homes with telecom services, better than half the 6,500 homes it passes.

Because FPU entered the broadband business so early, it built a hybrid fiber-coaxial network, then watched as other TVA distributors built FTTH networks over the next decade. In 2010, residents in an underserved rural area within FPU’s electric service territory requested cable service. FPU surveyed households there to make sure there was sufficient demand; when it made the decision to overbuild, it looked at the possibility of using fiber rather than coax.

Because replacing the existing coax in Fayetteville wasn’t an option – “We’re not taking out a system that works,” says Eric Reeves, FPU supervisor of telecom operations – FPU needed a fiber access network that would be compatible with its existing HFC network. To solve this problem, FPU turned to CommScope, with which it had worked since

1999 and which specializes in cable-friendly FTTH systems.

CABLE-FRIENDLY FTTH CommScope recommended its BrightPath Optical Solution (BOS), an end-to-end fiber solution that includes laser transmitters and receivers, optical taps and splitters, fiber cabling and RFoG micronodes needed for a complete fiber-to-the-home solution. BOS network topology is similar to that used for traditional HFC networks, but it offers many advantages over HFC – including the ability to simply hang a fiber drop to remote locations, some of which are as far as 3,000 feet from the grid. “It allows us to install main throughputs within an area and easily connect homes and businesses there,” Reeves explains.

He adds, “I can place taps on the main highway and … just have the installer run the drop cable and splice it in. In the traditional coax world, you would have to design and place the cable and amplifier, [but now we] build the main structure down the street, and even for homes located 400, 500 or 600 feet off the road, we don’t have to put coax or amplifiers. So it’s quite a bit cheaper to pick up customers with fiber than to hang all those other pieces. There’s a lot of farmland here, and people that live here can be quite a bit off the road. The traditional coax customer would have to pay for a connection, but with RFoG, it’s within design range.”

Fayetteville, Tenn.


The new fiber network costs much less to operate than the HFC network. Maintenance costs are lower (Reeves comments, “I can see just where the RFoG is by looking at the maintenance logs”), there is little or no powered equipment in the field, and the expensive cumulative leak index testing mandated for coaxial networks is not needed for fiber.

The RFoG micronodes that terminate the fiber at customer premises also fit comfortably into an HFC network. The cable modem termination system sees them as ordinary HFC nodes, and FPU can manage them along with the rest of the cable network using DOCSIS.

NO ADVERTISING NEEDEDThe response in the newly served area was immediate and overwhelming. Even though FPU didn’t advertise, about 30 percent of the 500 households signed up for services in the first eight weeks. “You do one hookup, and they tell all their neighbors,” Reeves says. Currently, the take rate is close to 60

percent. FPU is considering expanding its network – again using fiber – into additional parts of its electric utility footprint where residents have requested telecom services.

In June 2012, FPU decided to use fiber to serve some commercial enterprises within its existing HFC footprint. It chose CommScope’s BOS solution again, this time with EPON electronics rather than RFoG. EPON, unlike RFoG, isn’t subject to DOCSIS capacity constraints, but it can still be managed through DOCSIS, using a protocol called DOCSIS Provisioning of EPON, or DPoE.

FPU rolled out new commercial IP services beginning with one local hotel.

Less than a year later, it was serving 10 business customers with upstream and downstream data speeds of 20 Mbps. This added capability gives FPU a unique play with business customers.

Residential users are not yet demanding speeds higher than RFoG can deliver, but if they do, FPU has a simple option. “We can ride RFoG out for quite a bit longer,” Reeves says. “But if a customer demands additional upload speeds, we can put in a different optical network unit at the home and upgrade to EPON. We can even run EPON and RFoG together. There’s a local business in town where we use RFoG for TV and EPON for Internet across the same fiber.”

Even though FPU didn’t advertise, about 30 percent of households passed signed up for services in eight weeks. “You do one hookup, and they tell all their neighbors,” says Reeves.

Loma Linda, Calif.

Nearly a decade ago, Loma Linda gained national attention when it enacted

foresighted legislation requiring developers to outfit all new housing developments with fiber-to-the-home infrastructure and then turn that infrastructure over to the city. Eventually, the city began to look for ways to extend the network to existing housing and commercial properties.

Loma Linda, which covers 7.5 square miles in the San Bernardino Valley of Southern California, is a community of 21,000 people. Health care dominates its economy – it has five major hospitals and a health care–focused graduate university that has 15,000 medical, dental and other health care students. Up to 100,000 people visit the city every day to be treated.

The need to support these health care institutions drove Loma Linda to build fiber infrastructure. As

medical facilities became increasingly data driven, they required higher-capacity connections than they could obtain from incumbent carriers. The possibility of health care institutions’ relocating to other cities threatened the entire local economy.

THE LAST FEW HUNDRED FEETRolling out a backbone network was relatively straightforward, but the cost of running fiber over the last mile – or, more typically, the last few hundred feet – to the customer premises posed big challenges. The city considered using a combination of trenching and blown fiber, but, at an average cost of $50 per foot, this was too expensive. Trenching also threatened to create costly, disruptive road closures.

The solution Loma Linda eventually adopted was to use microtrenching, then to fill the trenches with m2fx’s

ruggedized TuffDuct microducts and its Miniflex pushable fiber cable. Microtrenching involves cutting a 1-inch-wide trench, installing microduct and rapidly restoring the roadway. Though many municipal officials once viewed microtrenching with suspicion, a “mentality change” is now occurring, according to Larry Malone, m2fx president for the Americas (the parent company is British).

The microtrenching process and the materials used have improved so much in recent years that many cities now welcome this option, Malone explains. For example, fill (SuperGrout in Loma Linda’s case) is more structurally stable, saws are more precise, the plastic used for ducts has a higher melting point and installers’ skills have improved. City engineers who once voiced concerns that microtrenching saws would cut into utility pipes or that ducts would melt are now convinced


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that the process works and is safe. Some cities even specifically request microtrenching solutions.

In addition to ease of installation, Malone points out, microtrenching offers much lower maintenance costs than traditional trenching. If a fiber is cut, workers can easily locate the cut, pull the fiber cable out, reconnect the duct with airtight connectors and push the fiber back through the reconnected duct. “That’s one truck roll instead of three,” Malone says.

M2fx’s TuffDuct is microduct designed to be placed in microtrenches

– it fits into the smallest trenches yet can tolerate tight bend radii and high crush forces and cope with the 270-degree temperatures it experiences when covered with road sealant.

Once microduct is installed, Miniflex pushable fiber can be pushed or pulled from the manhole to its destination without expensive blowing equipment or specialized skills. Municipal staff can complete the majority of deployments in Loma Linda, with the city electrician deploying fiber to the premises. Preconnectorized fiber cables and m2fx distribution patches further reduce the

time per deployment. Using m2fx products and

microtrenching cut Loma Linda’s last-mile costs from an anticipated $50 per foot to between $12 and $18 per foot – a savings of between 64 percent and 76 percent.

BENEFITSAll the medical facilities in Loma Linda are now connected and can share patient records digitally and carry out remote diagnoses. Staff can even review patient information from home.

In a tough business climate, Loma Linda has been able to attract investment and new employers – even beyond the health care industry – because of its network.

The network also supports city functions that range from fire and rescue to police, utilities and CCTV. Each traffic light has a wireless access point, enabling city employees to operate digitally and more efficiently.

Konrad Bolowich, Loma Linda’s assistant city manager and director of IS, says, “Our fiber network is at the heart of Loma Linda’s growth, attracting new businesses and increasing municipal efficiency. Without it, the recession would have been catastrophic for the city. … Without [m2fx] pushable fiber and microtrenching, our deployment would simply have been impossible economically.”

Microtrenching to lay fiber cable minimized the disruption to Loma Linda city streets.

Lake County, Minn.

A new municipal fiber network was just lit in Lake County, Minn., an area until now more

renowned for its natural beauty than its technology amenities. The county, located close to the Canadian border on the shore of Lake Superior, has fewer than 11,000 residents in more than 2,000 square miles. Until recently, its access to broadband was very poor. Even more important, there was only one backhaul artery, so the entire region could be, and periodically was, cut off from all communications.

What Lake County did have was a broadband champion – the late Paul

Bergman, then a member of the county Board of Commissioners. When the broadband stimulus program was announced, Bergman, who saw the lack of broadband as a barrier to economic development in Lake County, urged incumbent providers to apply for funding. When none did, he pushed the county government to take matters into its own hands.

Bergman used to say the county was noted for three T’s – timber, taconite (iron ore) and tourism – and it needed a fourth T, telecommunications. When he died in 2013, Lake County was well on its way to getting the fourth T.

CREATING A NETWORK The county government applied for broadband stimulus funding, and it received one of the largest stimulus awards: $66 million in federal loan and grant funding, which was supplemented by about $3.5 million from Lake County’s reserve fund. The resulting network, Lake Connections, will make broadband service available to nearly all households and businesses in Lake County and to a roughly equal number of premises in neighboring St. Louis County.

St. Louis County, whose county seat is Duluth, has a population of


200,000, but the communities that Lake Connections will serve there are small, remote and previously underserved. They were included in Lake Connections because they lay along the most plausible route for constructing a fiber ring that would ensure reliable, redundant communications service. Though St. Louis County participated in preparing the grant application, it is not an owner or operator of the network.

Lake County, because it had no municipal utility, had to create a network operating entity from the ground up. It brought in two experienced telecom executives – Jeff Roiland, now the general manager, and consultant Gene South – who hired customer service and technical staff. “We’re relying on outside contractors for engineering and so forth, but as we grow, we’ll become as self-sufficient as any other carrier,” Roiland says. He adds that he hasn’t had difficulty hiring staff in such a remote place. In addition to locals who were qualified, there were others who had grown up in the region, were forced to move away for lack of job opportunities and were thrilled to be able to move back.

Phase one of Lake Connections – the portion now completed – covers the lakeshore towns of Two Harbors (the county seat) and nearby Silver Bay. Between them, the two towns account for about half the Lake County population. Roiland explains that these towns were built out first not only because they contain so much of the population but also because the headend is in Two Harbors.

Phase two – the rural area between Two Harbors and Silver Bay – has been built but is still being tested and certified. The rest of the buildout, Roiland says, will follow the route of the fiber ring north through Lake County and back south again through St. Louis County. The economics of the project depend on the fact that most people live in small towns along the main highway routes; large areas of the two counties are essentially uninhabited. Construction of the entire project should be finished by fall 2015.

STRATEGIC DECISIONSRoiland and South made several strategic decisions early on. One was to use GPON for the bulk of the access network, supplementing it with active Ethernet connections to businesses for which GPON was insufficient.

A second decision was to put about three-quarters of the fiber underground. The original assumption was that the network would be about 60 percent aerial, but, as Roiland explains, “Not all pole owners appreciated having another entity on their poles, and certain municipalities and co-ops don’t have to abide by the pole order.” In the end, placing fiber underground was less expensive in many areas than hanging it from poles.

A third strategic decision was to build a video headend. The stimulus funding application was written to include triple-play services, but Lake County originally assumed it would partner with another entity and share its headend. When the cost of transporting video from a distant headend proved prohibitive, Lake Connections had to build its own headend to fulfill the promise of triple-play services. Fortunately, Roiland says, “The cost of building a headend has come down drastically.”

Internet speeds of up to 100 Mbps symmetrical speeds are offered, though if anyone wants higher speeds, Lake Connections is happy to accommodate. Roiland says, “We didn’t want to start off at the minimum – we wanted to exceed the state and federal goals.” So far, there are takers for the 100/100, 50/50 and 30/10 services. There is also residential demand for business connections, including active Ethernet, to accommodate telecommuting or home businesses.

For the last two years, Lake Connections has been receiving requests to bring fiber to cell towers to accommodate LTE services, and it is now able to begin filling those orders. Residents will soon have improved mobile connectivity in addition to great connectivity at their homes.

‘THEY JUST WANT IT’In the phase one territory, homeowners were given the chance to sign up for services while the fiber was being laid on their streets. More than three-quarters signed up then and there. Now, the numbers are rising even higher as new residents move into town. Roiland says, “There were a lot of

Even this remote lighthouse on the shore of Lake Superior now has access to broadband.

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COMMUNITY BROADBAND foreclosures and bank-owned properties [at the time the network was being built], but now more people are moving back in, and once they learn about the fiber, they just want it.”

So far, the response has been excellent. Residents are happy with the service, and there are “nothing but good comments,” Roiland says.

Lake Connections is already bolstering the county’s economy. One of the first businesses in Two Harbors to be connected was Granite Gear, which depends heavily on

communication with businesses in Chicago. Its broadband connection was so poor that staff had to do their work in the evenings when congestion was lower. The company was planning to move to Duluth, but in the end it waited for Lake Connections. Now, Roiland says, it is “able to easily stream catalogs in a matter of minutes.” Other businesses that depended on video streaming have also stayed because of the network.

On a larger scale, the county government secured land for a data

center and is now marketing it; it has already received expressions of interest from several potential users.

Another important economic development strategy for areas dependent on tourism is to keep vacationers in place for longer periods. Many second-home owners and vacationers now say they intend to spend more time in Lake County and work from their vacation homes.

Says Roiland, “If you can retain people who want to live here for the quality of life, it’s a huge bonus.”

Champaign-Urbana, Ill.

One of the most innovative and successful BTOP projects – and one of very

few to include a fiber-to-the-home component – was Urbana-Champaign Big Broadband (UC2B), a collaboration among the University of Illinois at Urbana-Champaign and the cities of Champaign and Urbana (known collectively by everyone except the university as Champaign-Urbana).

UC2B’s fiber ring runs through the two cities, connecting 250 community anchor institutions – defined broadly to include everything from shelters for battered women to nature centers in city parks – and supporting two small FTTH projects in low-income neighborhoods. Uptake in the FTTH neighborhoods has been very enthusiastic, and about 1,000 households and 75 businesses are now connected. In addition, a few service providers lease UC2B fiber strands to serve multifamily housing. For the most part, however, residents in Champaign-Urbana have had no direct access to UC2B’s fiber.

Recently, UC2B took two important steps toward making all of Champaign-Urbana a gigabit fiber community. First, the organization, which was formed as an intergovernmental consortium, restructured itself as a not-for-profit. The cities and the university nominate the organization’s directors, so UC2B remains in some sense a public entity. However, it now has the flexibility to operate a business without

having to get two cities and a state agency to approve its every move.

The second step is even more significant: In May, UC2B stepped back from hands-on management of the network and formed a partnership with iTV-3, a subsidiary of the Family Video chain of video stores. iTV-3 now operates the UC2B network, manages existing wholesale fiber leases and serves existing retail customers, both FTTH and anchor institutions.

A COMMUNITYWIDE GIGABIT NETWORK iTV-3, a competitive overbuilder that deployed three other FTTH systems in Illinois, will itself lease strands of the UC2B backbone and use them as a base to build out fiber to the home over several years. It plans to offer gigabit services throughout Champaign-Urbana. As many overbuilders now do, it will follow a fiberhood approach; it has committed to build FTTH in any neighborhood where 50 percent of potential customers subscribe, using a subscription process now available at theperfectupgrade.com. Current FTTH customers will have the option of keeping their existing plans or upgrading to one of iTV-3’s plans, which will include phone and video services in addition to Internet access.

Though iTV-3 will own the access network it builds, it agreed to operate that network on an open-access basis. After five years, if any neighborhoods are not connected, iTV-3 will make unused

ring fiber available for competing companies to offer service in them.

The UC2B nonprofit board, in addition to overseeing the contract with iTV-3, will now turn its attention to leveraging the network for the benefit of the community. iTV-3 has agreed to fund UC2B’s community benefit fund for five years, and UC2B will administer those funds to promote digital literacy and digital inclusion. UC2B will also work to find additional funding sources to continue the program after the end of the five-year period.

“We are currently in the visionary stages of planning how best to use the funds,” says Brandon Bowersox-Johnson, a tech executive who is the board chair of UC2B. One proposed project, he says, is to set up community labs – possibly in libraries – staffed by trainers who can teach digital literacy skills and help community members get low-cost computer equipment.

Based on UC2B’s success, Bowersox-Johnson encourages other communities to continue exploring their options for better broadband. He says, “Our incredibly complex collaboration never would have happened if so many of the entities hadn’t sat down, studied the options and tried to give the community the best chance they could. It’s shocking how far behind many communities in America are with regard to broadband speed and how many are missing out on fiber optic Internet. We’re happy to be a model.”


Gothenburg, Neb.

The fifth fiber community, unlike the others in this story, didn’t have to build its own network – in fact, because of Nebraska state laws, it didn’t even have the

option of doing so. Yet this overlooked community obtained adequate broadband service because of the perseverance of community leaders.

Gothenburg is a town of about 3,500 in central Nebraska, far from any major population center. It had DSL, it had cable, it even had fiber for business use, but broadband service was generally poor, and prices were extremely high. In recent years, the town’s mediocre broadband options made recruiting new businesses difficult, says Nate Wyatt, a local banker who chairs the technology committee of the Gothenburg Improvement Company (GIC), a civic organization dedicated to improving the town’s business climate and quality of life.

Wyatt explains, “We had great schools, hospitals and churches that we could use to recruit people to come to town, but now connectivity is right up there along with them for a business or a family looking to relocate to the community.” He knew communitywide fiber infrastructure would be the only permanent solution to the ever-growing demand for bandwidth.

Community leaders tried for about nine years to improve broadband in Gothenburg, and GIC was part of this effort for

the last five years. The incumbent providers were not willing to upgrade their infrastructure nor were other nearby providers interested in overbuilding. Wyatt says, “I myself talked to eight different providers, and through that process I started to learn and understand … that a successful business model for an overbuild requires at least 30 percent penetration.”

This key insight allowed Gothenburg to alter its approach to service providers. Even if the town couldn’t build a network, it could help create the business case for a private provider.

Pinpoint Networks and GIC held a community event to get residents to preregister for gfiber.

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COMMUNITY BROADBAND At a social event in the summer of 2013, Wyatt met Tom

Shoemaker, VP of Pinpoint Communications, an independent telco based in southwestern Nebraska. The two began discussing fiber infrastructure and found that they seemed to be perfectly matched. Pinpoint had successfully built an FTTH network in two towns in its ILEC territory and hoped to bring this technology to other communities. According to Chris Karn, the company’s chief operating officer, Pinpoint was looking for “a community that fully understood the benefits of FTTH, that would strongly back an effort to come in and be competitive with the incumbents and that was relatively close to our long-haul transport. … It was important to us to be able to carry our own traffic and to use our existing headend.”

Gothenburg was a community that needed a fiber network, and it was only about 30 miles distant from Pinpoint’s long-haul fiber. But could Gothenburg guarantee the magic 30 percent take rate?

SURVEYING THE COMMUNITYIn February 2014, Pinpoint and GIC developed a survey to determine whether Gothenburg would be able to support a new communications company. GIC partnered with the city

to distribute the survey; GIC paid for printing and postage, and the city inserted the survey into the electricity bill for every household and business.

Though the city’s participation was limited by law, city officials were enthusiastic about the project. “We have always been a community that takes challenges head on,” says Mike Bacon, the Gothenburg city attorney. “When we set a goal, we know the whole community will come together to achieve it.”

The community responded as Bacon knew it would. “Initially we hoped to receive around 500 surveys back,” says Karla Whipple, the sales and marketing manager for Pinpoint Communications. “The number of responses just blew us away.”

Community leaders spread the word about taking the surveys. They attended local organization meetings, spoke after church services, held lunch-and-learns at work, posted on Facebook, published letters to the editor and gave radio interviews. Angie Richeson, the tech integration specialist for Gothenburg Public Schools, even made a video explaining the need to take the surveys. Business leaders strongly supported the project; even a physical therapist helped senior citizens complete the survey as he traveled around town to in-home appointments. The result: More than 1,300 households and

ONECOMMUNITY ISSUES A CHALLENGE GRANT

Cleveland-based OneCommunity is the nonprofit operator of a middle-mile fiber network that connects anchor institutions in Northeast Ohio. It was in many ways the inspiration for the BTOP broadband stimulus program. Recently it spun off a for-profit service provider to serve area businesses, and in August it launched a new initiative that – with luck – will also inspire others.

OneCommunity announced that it is offering up to $2 million to municipalities in its territory as grants for municipally led, communitywide fiber construction projects based on the OneCommunity network. It invited communities to be creative in imagining how they would best put its infrastructure to use by connecting “community anchor institutions, government facilities and business districts in an effort to attract and retain the innovative and entrepreneurial businesses of the 21st century.” Applications are due by October 3, 2014.

Funding will be provided through a public-private partnership approach, with the grant funding accounting for up to 25 percent of the total project costs.

SEEKING CREATIVE PROPOSALS“We are excited to have the opportunity to engage with cities and municipalities across Northeast Ohio. We anticipate that the Challenge Grant will inspire and educate cities about the limitless possibilities available to them through OneCommunity’s network,”

says OneCommunity CEO Lev Gonick. “The challenge is for them to get creative and explore and articulate the potential opportunities and relationships that are available utilizing our gigabit connectivity.”

Interested parties must submit a letter of interest detailing project goals, desired economic development outcomes and potential community anchor institutions involved to Liz Forester at [email protected]. Videos and visual addendum items that cannot be emailed should be addressed to Liz Forester, OneCommunity, 800 West St. Clair Avenue, Second Floor, Cleveland, Ohio 44113.

“At its best, this challenge should inspire creativity,” Gonick adds. “We are hoping that the cities have fun developing their concepts. We are looking for responses that extend beyond a written proposal, perhaps including video or other more unconventional means.”

A review committee of OneCommunity staff and a select group of industry partners will evaluate the final entries. Municipalities with proposals that advance beyond the first round of the challenge will be invited to a one-day workshop to engage with OneCommunity’s in-house design and engineering team. The team will provide technical assistance in the development of a vibrant, competitive and catalytic digital infrastructure proposal.

Information and applications are available at www.onecommunity.org/big-gig-challenge.


businesses – out of a total of about 1,600 – returned surveys over the course of a month.

Although the number of returned surveys was impressive, the data helped seal the deal. According to Wyatt, about 50 percent of respondents said they were willing to consider a new telecom provider. They were very interested in fast Internet, and they were willing to buy bundled services.

CLOSING THE DEALPinpoint said that if 500 customers in Gothenburg signed up for service and put down $10, it would build a fiber network there. It also offered each presubscriber a 30 percent discount for the first year of service and waived the $300 installation fee. To emphasize that it was building a hometown network, Pinpoint even branded the service as gfiber. “That makes us feel it’s our community telecom provider,” says Wyatt. “It really worked.” Pinpoint also agreed to open a local office for customer service and technical support, which residents greatly appreciated.

About 275 people attended a community “We Need to Get Up to Speed” event; by the end of the week, 500 had signed up for service. “It was such a positive experience for our community,” Wyatt says, “and I don’t think we would have had that if we hadn’t spent the time educating people and helping them understand why it was important. One of our senior citizens told me, ‘This might not really affect my

husband and me, but we understand that it’s good for the community, so we’re going to sign up.’”

Karn adds, “In 25 years, I’ve never been involved in a community that showed the excitement and support that Gothenburg has.”

Pinpoint is now building an active Ethernet network to connect more than 1,400 homes and 150 businesses in Gothenburg with direct fiber connections. It hopes to have the underground work completed before the ground freezes and to have the first customers turned up in November. Gfiber will offer speeds up to 1 Gbps, along with full HD video and home phone services. The distributor KGP Logistics is doing most of planning and logistics for the build and will supply most of the equipment.

Those who haven’t signed up for service will benefit, too, because the incumbent cable provider decided to double its advertised speeds.

“Now we’re on a path for success,” Wyatt says. “It’s a game-changer. When we try to recruit individuals and businesses to come here, we can say we’re a gigabit community. That’s a big deal.” v

Masha Zager is the editor of BroadBand Communities. You can reach her at [email protected].

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FTTH Conference & Expo: Hardware, Software, Gigabit Business Cases Optimism, neat product tweaks and many innovations in mapping and management software were on display at the FTTH Council’s annual conference in Fort Lauderdale.

By Steven S. Ross / Broadband Communities

Policy discussions, deployment game-savers and clever new products punctuated the FTTH Council annual

meeting in Fort Lauderdale in late June. There was plenty of talk about gigabit deployments, of course, but announcements mainly concerned new inside-plant technologies that make updating an in-home or in-office network easier and better able to take advantage of gigabit to the premises.

Construction, design and consulting firms on the Expo floor were almost universally optimistic, saying that business is up in most parts of the country and the economic recovery seems solid. Deployers are increasingly turning to fiber projects – fiber to the home, to small and medium businesses and to the cell tower. Data center construction is especially strong.

THE BUSINESS CASE FOR FIBERChristopher Levendos, Verizon VP for national operations, confirmed that Verizon will “fiberize everything in the 20 million homes we pass in our [planned FiOS] footprint, whether or not they buy FiOS or other fiber products.” He suggested that other areas will be switched from copper to fiber as service needs increase and as the copper ages. The transition will take a decade or more.

Part of the reason Verizon is building fiber –reliability and lower maintenance cost – became evident after a recent disaster. In the aftermath of Hurricane Sandy in 2012, Verizon spent more than a year rebuilding its flooded cable infrastructure in lower Manhattan, replacing old copper and copper-associated switchgear with fiber.

For the first half of 2014, after the infrastructure was upgraded, the number of trouble calls in lower Manhattan dropped to 0.27 per 100 lines per month. The average for all of New York state was 2 per 100 during the same period, which included an exceptionally cold and stormy winter.

Verizon would not reveal how much new cable it put in, but the total project cost, which included a total conversion of the electronics, was $1 billion. Verizon has about 90 million feet of fiber strand in New York City. As many in the industry are well aware, Verizon’s needs for Sandy remediation severely stressed electronics suppliers worldwide.

Mike Weston of Verizon Enhanced Communities said opportunities are great for marketing fiber services to multiple-dwelling-unit (MDU) properties. Though he noted that today’s economic climate favors building rental units and that certain groups, such as “newly


formed households that are financially strapped, seniors, and millennials,” are overrepresented in MDUs, he said the profit potential is still large.

The trick to marketing in MDUs, Weston said, is to help the traditional MDU gatekeepers – property managers and owners – fulfill their mission of having more renters and fewer complaints. He said that cooperative marketing agreements and access for service provider marketing efforts are “worth considering and paying for, but don’t just stop there. Why not ongoing engagement, such as a rewards program for leasing agents?”

Because MDU properties even in the same ZIP code are often vastly different, Weston said, credit and deposit policies must be flexible as well.

Google has its fiberhoods. GVTC has an algorithm.

George O’Neal, VP for network services at telephone cooperative GVTC, described his company’s methodology for prioritizing areas that will get fiber first in a way that is defensible to regulators and to the public (see box on next page). The company already has a substantial investment in fiber to the home in its footprint, which extends into rural areas north of San Antonio.

James Feger, senior VP for network strategy and deployment at CenturyLink, made a strong case for building fiber to the home even in his company’s sparsely populated footprint. His reason: Bandwidth needs are just too great for copper. The company’s strategy assumes that

• By 2020, 50 percent of mobile Internet access will go through residential Wi-Fi and thus place demands on the fixed wireline network.

• Software-defined networking (SDN) will not stop at layer 3 in the network stack (the computers that control routers). It will start to appear in layer 2 (switches) in the next few years and even in layer 1 (the physical layer) in the next three years or so. “One of the early trials we did was a dense-wave-

division multiplexing long-haul system, and that is layer 1,” Feger noted. However, the replacement cycle for routers and switches is faster than the replacement cycle for optical components, so SDN is implemented there first.

• The virtual set-top box is the future for all network operators. “Click-download-install is a powerful thing, and the on-demand folks like Netflix are already doing it,” Feger pointed out.

• Security is an issue, and it can be solved. However, gigabit service to the home does vastly increase the potency of denial-of-service attacks in which “bad guys” marshal computers they have gotten control of to attack websites at will. One issue on the table now: Wi-Fi security schemes are poor, but at least a single gateway, even in a residence, can be set up to support multiple, separate networks.

• 4K ultra-high-definition TV “crushes bandwidth, demanding streams of 12 to 30 Mbps,” he said. “Sports is definitely a big driver for 4K.”

INSIDE PLANTSuppliers of fiber, connectors and electronics showed themselves ever more mindful of the demands that wireless communications are putting on fixed networks. At home, cellphones and tablets want to use Wi-Fi.

Corning Optical Communications continues to refine its distributed antenna system offerings for MDUs and businesses with new, smaller, rack-mounted electronics and easier-to-deploy antennas. These allow owners of residential and commercial buildings to satisfy occupants’ desire for better

The trick to marketing fiber services in multifamily housing is to help property managers and owners fulfill their mission of having more renters and fewer complaints.

Verizon’s customer trouble rate for all of New York state was eight times higher than for newly installed fiber in lower Manhattan for the first five months of 2014, despite the fact that crowded Manhattan is a more challenging environment for maintaining lines. The state totals include both copper and fiber.

0

0.5

1

1.5

2

2.5

Jan Feb Mar Apr May

Verizon Monthly Trouble Report Rate Per 100 Customer Lines

Fiber, Broad St. CO

New York State


FTTH CONFERENCE COVERAGEwireless reception, particularly for cellular devices such as phones and tablets, as they add fiber to the home in MDUs or optical LANs in business environments.

Corning also showed its new, cassette-based Centrix high-density fiber management system, which can support up to 4320 LC or 2880 SC connectors in a 7-foot-high rack. The cassettes come empty or preloaded; each has 36 LC or 24 SC connectors. Jumper routing is easy, almost intuitive, and all jumper cables in the rack are the same length.

Clearfield, a cassette pioneer, isn’t standing still either. It showed its new SmartRoute panel, which stores two spools of fiber with popular SC, LC or MPO connectors. Up to 200 feet of 3 mm, 12-strand fiber or 125 feet of 4 mm, 24-strand FieldShield cable can be stored and pulled out as needed in a panel that is only one rack unit high. The company promises more iterations of the basic design.

Suttle showed its FutureLink pole-, cable- or wall-mounted stackable

terminals for indoor or outdoor use. The basic design can handle fiber storage, as well as interconnects and routing, inside the same basic box.

IN THE CORRIDORSCove molding is no longer a dirty term for owners and managers of high-end MDUs and MTUs. Crownduit went big, announcing attractive and easily deployed molding that complements any luxury decor (see image).

At the other end of the scale, 3M – which pioneered the art of taping fiber to walls and making it almost disappear – continued to refine its deployment tools. It now packages connectors with disposable, 120-use wire cleavers. The device itself (see image) tells the technician when the cutter has to be replaced.

DUCTSMaxCell, a pioneer in flexible fabric ductwork (a technology that is not easy to master), offered a new trick for placing fiber in crowded ducts and conduit. Its MaxSpace can strip innerduct from existing cable at up to

10 feet per minute without interrupting service. The old fiber falls to the bottom of the duct or conduit, leaving

Each 3M Easy Cleaver provides approximately 120 precise flat cuts. The disposable tool has an innovative fiber-clamping design and a diamond-wire cleaving edge instead of a blade. There is no maintenance or blade rotation. The tool is included with select packages of 3M’s No Polish Connectors, Crimplok+ Connectors and Fibrlok II Splices. It is suitable for indoor and outdoor fiber as it is compatible with buffered, jacketed and drop cables. It includes strip and cleave length markings that are appropriate for 3M’s connectors and splices. After 120 uses, the tool can be disposed of.

Quality architectural crown molding from Crownduit made its official launch at the show. Rather than hide fiber on a wall surface, this product creates magnificent decorative gateways in apartments and along MDU corridors. Composite wood molding, available in a range of styles from modern to Federal, snaps into easy-to-deploy tracks to create versatile gateways. Corner pieces, as in the picture above, and seam covers give quick access to the cable. Even long sections can be pulled away and replaced with ease.

HOW GVTC DEPLOYS FIBER

GVTC, a large cooperative north of San Antonio, has been deploying FTTH since 2004 and now passes 39,000 buildings (each of which may have multiple tenants) with fiber. It also still has HFC and DSL infrastructure.

How does GVTC decide where to deploy fiber to the premises? The company looked at key data from its customers and mapping system:

• All area buildings• Buildings served• Broadband availability• Trouble tickets for existing plant• Billed revenue• Square mileage of the area

It also estimated fiber construction costs and right-

of-way issues to end up with a weighted scoring system that includes these factors:

• Customer penetration • 12 Mbps broadband availability• DSL availability• Trouble ticket index • Average revenue per customer • Outside-plant cost to premises• Construction difficulty score• OLT requirements at the central

office• Age of existing plant• Premises density• Existing competition

GVTC validated the system by working up a complete business case for one of the top 20 areas identified by the criteria.

Shawn GeaganDirector MDU [email protected]

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room for new fiber to be placed in MaxCell fabric innerducts. To help locate nonmetallic, hard-to-trace fiber underground, MaxCell added a traceable fabric duct with a conductor to its MaxSpace product. NEPTCO continued to expand its Muletape and Trace-Safe lines of pulling and tracing tapes as well.

GM Plast, Teraspan, Dura-Line and other vendors of plastic and fabric ducts continue to expand their product lines, offering products for risers as well as horizontal conduit. As more MDU and MTU premises are served by fiber laterals from metro rings and middle-mile trunks, ducts for grooved

(microtrenched) pavement continue to evolve (see images).

SOFTWAREMany vendors showed improved management tools for both customer provisioning and network monitoring – and many software vendors are more tightly integrating their offerings.

ETI Software demonstrated its new Overture suite, which extends its proven and popular Triad B/OSS with modules for mapping, extensive data for customer service reps, and quick-reaction network management tools.

GLDS, another popular vendor of network management, billing and customer-facing software, combined its WinCable with Fleetmatics’ REVEAL to more easily track service personnel in the field. The Fleetmatics solution can be used by network providers whether they have their own service trucks or rely on contracted service companies. Aside from enabling faster customer service, this approach makes it easier for network providers to use service calls as sales opportunities.

Calix talked up improvements to its network management software – improvements it says have helped the company win two dozen gigabit deployment contracts. v

Corporate editor Steve Ross can be reached at [email protected].

Is your duct already full of cable? MaxSpace from MaxCell slices conventional hard plastic or rubberized innerduct into ribbons while the cable continues in service. The extra room in the main ductway can then be used to insert more cable in flexible fabric MaxCell ducts.

VENDOR SPOTLIGHT

3M www.3M.com/telecomCalix www.calix.comClearfield www.clearfieldconnection.comCorning Optical Communications www.corning.com/opcommCrownduit www.crownduit.comDura-Line www.duraline.comETI Software Solutions www.etisoftware.comGLDS www.glds.comGM Plast www.gm-plast.dk/MaxCell www.maxcellinnerduct.comNEPTCO www.netpco.comSuttle www.suttleonline.comTeraspan www.teraspan.com

Custom ducts for pushed, pulled and blown fiber are a specialty at GM Plast, a European company looking for American partners. Note the sheetlike, customizable array of small ducts connected into one pathway.

Need to tap a cable already in a microtrenched duct? Easy for Teraspan. The tap can be positioned anyplace on the main pathway.


http://www.calix.com

http://www.crownduit.com

http://www.etisoftware.com

http://www.glds.com

http://www.maxcellinnerduct.com

http://www.suttleonline.com

http://www.teraspan.com


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BROADBAND POLICY

City Planners Need Broadband EducationCity planners develop the documents that guide cities’ growth and infrastructure upgrades – yet few of them are familiar with broadband issues. More education is in order.

By Kathleen McMahon / Applied Communications

City planners can play key roles in helping facilitate the deployment of broadband infrastructure. They are

responsible for drafting planning documents that chart the needs for community growth, they communicate with public officials to help set local priorities, they administer regulations for subdivisions and they coordinate with other departments on issues regarding rights-of-way and investments in capital improvements. Additionally, planners are rapidly adopting new technology applications that require robust broadband networks.

However, a nationwide 2013 survey of almost 300 planners conducted by this author as a follow-up to the American Planning Association research report Planning and Broadband: Infrastructure, Policy, and Sustainability (PAS Report #569) indicates that planners generally lack familiarity with basic broadband concepts. Given their key roles in the potential deployment and use of broadband infrastructure, it is time to begin engaging city planners in discussions on broadband.

The broadband and planning survey was conducted online in 2013. A total of 282 planners from 26 states responded. The majority of respondents (63.8 percent) worked for city or county planning departments, 13.6 percent worked for private consulting firms, 5.4 percent worked for state or federal agencies and the remainder worked for other types of employers.

Respondents represented small towns, midsize jurisdictions and large metro areas.

PLANNERS ARE UNFAMILIAR WITH BROADBAND CONCEPTS The first part of the survey was designed to assess city planners’ familiarity with basic broadband topics and concepts. Given the prominence of the FCC National Broadband Plan and the NTIA broadband mapping project, survey respondents were first asked to indicate their familiarity with these initiatives. Approximately one-third of planners were familiar with the Broadband Plan, but only a dismal 15 percent had viewed or used the broadband maps.

Planning for any type of infrastructure requires familiarity with the basic components of the system. At the very least, planners should be able to respond to questions about the availability of broadband services to prospective businesses and should be knowledgeable enough to coordinate with broadband providers on issues such as use of rights-of-way and provision of service in new developments.

Most respondents indicated that they were familiar with the last-mile technologies of DSL, cable and 3G or 4G wireless services. When asked about middle-mile networks, however, 84 percent of the planners didn’t know about the availability of this service in their communities. About 50 percent were unable to answer whether there was fixed wireless service


in their planning area. A significant number of planners were also unaware of whether fiber to the home or free downtown Wi-Fi services were available in their communities.

One reason planners may lack basic knowledge about broadband infrastructure is that, unlike other infrastructure, such as roads, water, sewer and stormwater systems, telecommunications services are most likely to be owned and operated by private-sector enterprises. More than 95 percent of respondents indicated that private, for-profit companies were the providers for DSL, cable and wireless services in their communities. Local government, however, was more likely to be involved in providing downtown Wi-Fi service (42.5 percent of downtown Wi-Fi was provided by local government, compared with 46 percent by the private sector). Although private utilities may be the primary providers of

services, planners must still be actively involved in broadband planning to advocate for community interests and coordinate broadband deployment with other capital improvements.

INTEGRATING BROADBAND PLANNING INTO LOCAL PLANSThe second part of the survey was designed to assess whether and how planners were integrating broadband strategies into community plans. As part of the ARRA funding for broadband mapping, each state was allocated planning funds to promote

broadband deployment and adoption. The most common use of these funds was to conduct regional broadband planning meetings and establish regional broadband task force groups. In addition to these planning efforts, some local economic development agencies have also undertaken broadband planning efforts.

When planners were asked about such task force initiatives, only 22 percent were aware of an existing task force in the community; 47 percent said they didn’t know whether a task force even existed. Of those who were aware of a community or regional task

Planners responding to a recent survey were largely unfamiliar with the broadband infrastructure in their communities.


BROADBAND POLICY

force, 43 percent indicated that the planning staff was participating in the effort.

Just 4 percent of respondents indicated that the community had developed a broadband strategic plan for the community, and 28 percent answered “Don’t know” to this question. Although only a small number of communities actually have stand-alone broadband plans, most communities have comprehensive plans, and infrastructure is an important element of these plans. When asked whether broadband infrastructure was addressed in the comprehensive plan, however, only 15 percent responded “Yes,” and 20 percent did not know the answer.

At a minimum, a comprehensive plan should include maps that are now readily available from the national broadband mapping effort and should cross-reference broadband strategic planning initiatives. Additionally, there should be policies to address the myriad issues related to broadband deployment and adoption.

Respondents who indicated that the comprehensive plan addressed broadband issues identified promotion of telecommuting as the most common policy, followed by a general goal of working with telecommunications providers to improve networks. Amending the zoning ordinance to address issues with wireless towers and promoting co-location of wireless facilities were also commonly noted. Policies that addressed broadband deployment and digital divide issues were least likely to be included.

RECOMMENDATIONSThe survey indicates that planners have a low level of awareness regarding the basic components of broadband

infrastructure and existing broadband planning initiatives. Not surprisingly, this lack of awareness results in comprehensive plans that neglect to address this critical infrastructure. Planners should be engaged in decisions regarding broadband investments to promote community interests such as economic development, neighborhood revitalization, coordination with capital improvements and meeting the needs of low-income households.

In 2010, the American Planning Association issued an infrastructure white paper titled Rebuilding America: APA National Infrastructure Investment Task Force Report. The chapter on telecommunications infrastructure contained a number of recommendations for planners to become more involved in broadband planning. These recommendations included the following:

1 Broadband needs to be part of a suite of services that build community and should be addressed in comprehensive plans.

2 Planners should coordinate with public agencies and private industries to cost-effectively deploy telecommunications and broadband infrastructure.

3 Cities should consider providing incentives, if necessary, to construct broadband infrastructure in certain locations.

4 Planners should support the use of a community planning process to identify the appropriate model for providing advanced telecommunications and broadband infrastructure.

5 Planners, public officials and communities need to become educated about the benefits of broadband infrastructure and issues related to its deployment.

6 Planners should promote the creation of state, regional and local task forces to address issues with deploying broadband and promote broadband applications, especially as related to planning practice.

To provide education for planners, the American Planning Association – Technology Division is cohosting a seminar for planners on September 16, 2014, at the BroadBand Communities economic development conference in Springfield, Mass. This day-long summit can be a model to begin giving planners the tools they need to be broadband champions.

Service providers and economic development professionals can work with local planning boards, staffs and local officials to improve familiarity with broadband issues. Ask for time on the planning board agenda to make a presentation on the importance of planning for broadband. If the community is updating its comprehensive plan, ask that it add policies to promote broadband deployment, such as “dig once” policies and support for gigabit networks. Regularly monitor city council and planning board websites to identify when items regarding right-of-way issues or future street improvements are being discussed. Attend meetings and ask that the city budget for broadband improvements, such as conduit, be included as part of capital improvements plans. Cities that have been proactive in planning for broadband are generally prompted by advocates in the community who have brought this issue to their attention. A combination of educating and advocating before planning boards will result in positive outcomes for the broadband community. v

Kathleen McMahon is a founding partner of Applied Communications, a Montana-based consulting firm that provides land-use planning, broadband planning and strategic planning for towns and community organizations. You can contact her at [email protected].

Many planners who responded to the survey were also unfamiliar with broadband planning efforts in their communities.



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Registration Now OpenThe Leading Conference on Broadband Technologies and Services

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Find out if FiOS is available for your multifamily community.

Contact Verizon Enhanced Communities866.638.6066

www.verizon.com/communities

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ADVERTISER INDEX / CALENDAR

SEPTEMBER16 –18Community Fiber NetworksBBC Magazine Economic Development Conference SeriesSheraton Springfield Monarch Place Hotel • Springfield, MA866-588-1649www.TownsAndTech.com

22 – 24 ECOC Exhibition JulyPalais des Festivals • Cannes, France+ 33 (0) 169 81 6574www.ecocJuly.org

OCTOBERSep 30 – Oct 2NMHC Student Housing Conference & ExpositionPalmer House Hilton • Chicago, IL202-974-2300 • www.nmhc.org

6 – 7IMCC Broadband for MDU ConferenceOmni Dallas Hotel at Park WestDallas, TX949-274-3434www.imcc2014conference.com

NOVEMBER17 – 19 NMHC OpTechHilton Orlando Bonnet CreekOrlando, FL202-974-2300 • www.nmhc.org

APRIL 201514 – 16BroadBand Communities SummitRenaissance Hotel Austin, TX877-588-1649www.bbcmag.com

JULY 2015June 29 – July 15FTTH ConferenceAnaheim Convention CenterAnaheim, CA202-367-1173www.ftthconference.com

Broadband Communities (ISSN 0745-8711) (USPS 679-050) (Publication Mail Agreement #1271091) is published 7 times a year at a rate of $24 per year by Broadband Properties LLC, 1909 Avenue G, Rosenberg, TX 77471. Periodical postage paid at Rosenberg, TX, and additional mailing offices. POSTMASTER: Please send address changes to Broadband Communities, PO Box 303, Congers, NY 10920-9852. CANADA POST: Publications Mail Agreement #40612608. Canada Returns to be sent to Bleuchip International, PO Box 25542, London, ON N6C 6B2. Copyright © 2014 Broadband Properties LLC. All rights reserved.

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Advanced Media Technologies 32 www.amt.com

AT&T 58 www.att.com/communities

BroadBand Communities Magazine 45, 57 www.bbcmag.com

BroadBand Communities Summit Inside Front Cover – 1, 58 www.bbcmag.com

Broadband Enterprise 23 www.broadbandent.com

Calix 3 www.calix.com/gigabit

Clearfield 9,58 www.Clearfield Connection.com

Corning Back Cover http://cablesystems. corning.com/CentrixBuzz

COS Systems 47 www.cossystems.com/ service-zone

Cox Communication 51 www.cox.com

Crownduit 5 www.crownduit.com

DrayTek 37 www.draytek.com

ETI Software 39 www.etisoftware.com

Fujitsu 53 www.fujitsu.com

Great Lakes Data 45 www.glds.com

Multicom, Inc 58 www.mulicominc.com

Multilink Inside Back Cover www.gomultilink.com

Power & Tel Supply 58 www.ptsupply.com

Springfield Economic Development Conference Inside Cover Flap, 55 www.TownsAndTech.com

TE Connectivity 7 www.te.com/bns

Verizon Enhanced Communities 58 www.verizon.com/ communities


THE LAST PAGE

Bridging the Digital DivideLearning to use computers and the Internet helped these students take positive steps to improve their lives.

By Michael Liimatta / Connecting for Good

In the first five months of 2014, Connecting for Good taught 459 students in its free digital literacy classes in Kansas City – even though many training sessions had to

be canceled because of harsh winter weather. Many students attended multiple sessions. Attending at least one three-hour class session is required to purchase a $50 refurbished computer from Connecting for Good.

The basic Internet and computer skills program reaches a group that has had little opportunity to participate in the digital revolution. Twenty-five percent have never used a computer, and 75 percent are older than 50. Eighty percent are minorities, predominantly African American, and 75 percent have incomes of less than $20,000 a year. Two-thirds of the participants are women; half of the women older than 60 have a child under 18 in the house.

One measure of success is that 90 percent of students purchased a computer from us after their taking the class, but there are other measures as well. Here are a few stories of people whose lives were touched in significant ways through these efforts. (Names of participants were changed to protect their privacy.)

Annette is 68 years old, lives in low-income housing and once felt very alone. All her family members had moved to Texas or California. Because of her limited budget, she needed three months after completing the classes to pay for a computer on our layaway plan. In the meantime, we taught her how to use Facebook and its chat feature. Previously, she had very limited contact with her children and grandchildren and just received a few pictures at holidays.

Using Facebook, Annette now sets times to chat with her daughter and grandchildren. She is able to see photos of them participating in sports, school functions and family activities. She also chats online with her son every week. This is important for her because the only cell phone plan she can afford has limited minutes.

Because she is now “digital,” she no longer feels unwanted, abandoned or old and unnecessary. By staying in touch with her family, she now feels loved, wanted and needed, and she has more fun. Getting a computer, learning how to use it and being a part of the world and connected changed Annette’s life dramatically.

Sarah, a 23-year-old single mother with two children, was living on public assistance when we first met her. Knowing she wasn’t providing for her children, she, too, experienced struggles with self-esteem and hopelessness. With minimal education, no marketable job skills and no computer knowledge, she was going nowhere fast. Over a period of several months, she attended our basic classes and learned how to use a computer.

Because of her limited income, it took Sarah four months to pay for her $50 refurbished computer. She did it by taking on odd jobs to earn the money. During this time, we provided her with one-on-one assistance to learn how to apply for jobs and to develop a top-notch résumé. She also asked for our help in developing interviewing skills and choosing appropriate attire.

Sarah got an office job and then a promotion within six months of being hired. In addition to moving from public assistance to a career, she completed her GED and is taking college courses online. All this happened within just nine months!

Liza, an unemployed 38-year-old woman, could neither read nor write, but she learned how to use a computer and the Internet. We also introduced her to educational word games. Using them, she taught herself how to read, write and spell. Because we made it fun for her, she came in every day for several months.

Once she started learning, Liza’s thirst for education was fueled. She couldn’t get enough. She felt she just had to have a computer that she could use at home. Like the other two women, because of her limited income, the only way she could purchase a refurbished PC was to take on odd jobs, such as scrubbing floors. Before long, Liza was able to get a part-time job, and her self-esteem and confidence have blossomed. v

Michael Liimatta is president of Connecting for Good (www.connectingforgood.org), a Kansas City nonprofit that has been bridging the digital divide since 2011. You can reach him at [email protected]. Connecting for Good welcomes donations, volunteer help and used computers.

To submit a story for BroadBand Communities’ Last Page column, contact [email protected].


http://www.connectingforgood.org

http://www.connectingforgood.org


APRIL 14 – 16, 2015Renaissance Hotel – Austin

KNOWLEDGEABLE AND INFORMATIVE“Good clarification of options and recommendations for future considerations when planning infrastructures. All [panels] were good – information valuable! Speakers were very knowledgeable and informative.”

– Christine Taylor, Manager, Ancillary Services Forest City Residential Management

SUBSTANTIAL INFORMATION TO HELP OUR STRATEGY“Well planned and good updated information … substantial contact and information to help our strategy.”

– Rick Mervine, Vice President, Strategic Planning OnlIght Aurora

KEYNOTES WERE EXCELLENT“I appreciate the visionary forecasts of experts in the field of broadband. Keynotes were excellent. Lots of insights and great stories.”

– David Moore, Director Louisiana Broadband Initiative

PERSONAL EXPERIENCE BASED EVENT“Very useful, hands on, anecdotal, personal experience based event.”

– Michael Anderson, CIO Spiral Internet

VALUABLE INSIGHT“Summit always provides valuable insight into market trends.”

– Brian Pagnella, Senior Consultant Broadband Realty Advisors

PERTINENT TO COMMUNITIES“Very important, useful and impactful information pertinent to communities building and supporting networks.”

– Allen Meyer, Business Development Manager BHC Rhodes

CALENDARS

Here’s what attendees are saying about the 2014 Summit! Make plans to attend the 2015 Summit now.April 14–16, 2015 • Renaissance Hotel - Austin • www.bbcmag.com • To sponsor or exhibit: email [email protected] or call 505-867-3299

twitter.com/bbcmag

www.bbcmag.com

TO SPONSOR OR EXHIBIT:email: [email protected]

505-867-3299

APRIL 14-16, 2015 • AUSTIN SUMMIT MARK YOUR

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combines extreme flexibility and simplicity with the ultimate in density.

With superior jumper management and an innovative fiber routing

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© 2014 Corning Optical Communications. CRR-308-AEN / May 2014

Visit Corning at the FTTH Conference Expo ‘14 to learn more about Centrix Solutions.

June 23-25, 2014Greater Fort Lauderdale Convention Center Fort Lauderdale, FLCorning Booth #501

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Documents

Jim Baller, Baller Herbst Law Group APA – Tech Division ... · Optimism, innovation and gigabits were the themes of this year’s FTTH Conference in Fort Lauderdale. BROADBAND POLICY