Municipal Broadband That Works

An abundance of examples show that government-facilitated broadband networks can
pay their own way and contribute to the economic health of their communities.

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A message from the Rural Assembly

Networks Under Fire

The Nuenen story is worth keeping in mind today, as municipal networks come under fire. A Maryland state senator made some national news in August with an editorial in The Baltimore Sun.  State Sen. Catherine Pugh wrote that, “For the most part, municipally-built broadband networks have the economic chips stacked against them and, where tried, have saddled local taxpayers with a mountain of debt and half-built networks that are then sold at fire-sale prices to vulture investors.”

Sen. Pugh’s editorial praises Maryland’s own state-wide network project but is otherwise an exercise in blasting an entire movement based on the bone-headed mistakes of a few.  In Provo, Utah, she writes, taxpayers spent $40 million to build a network that the city, having grossly underestimated operation and upgrade costs, wound up unloading for just one dollar just to get it off the books.

There are other skeletons in the municipal network closet, each the product of some particular bone-headedness.  But in truth, despite the broad strokes of Sen. Pugh’s tar brush, there are far more examples of municipal networks paying their own way and delivering striking benefits than there are of failures. 

Chattanooga, Tennessee.  Its municipally-owned utility built a fiber-to-the-premises network – not for telecom but to enable advanced smart grid solutions.  The electricity business predates computers by almost a century, and utilities learned to manage the network without really knowing what was going on inside it, mostly by building in lots of excess capacity as a margin of safety.

The engineers in Chattanooga calculated that, if they had second-by-second data from throughout the grid, they could change the way they managed it, and could let go of 40% of the network’s excess capacity while still making service more reliable.  Fiber was the only way to get that much data, so they made plans to fiber the grid and started building.

By 2010, Chattanooga (a Top7 Intelligent Community in 2011) had a fiber network reaching all of the 170,000 businesses and homes in its service area and it was connected to smart meters and sensors throughout the grid.  And – what the heck – since the network was completely cost-justified by the savings on capacity, they threw in 1 Giga bit per second (Gbps) Internet service at a modest price to all.  Adoption has been as strong in poor neighborhoods as in prosperous ones.  In 2012, the city launched a business plan competition called Gig University; its aim is to create businesses whose services depend on having a gigabit of connection speed. 

Scaling It to the Rural Region

Chattanooga is a city of 340,000.  But the same strategy has worked in a place one-tenth the size: Stratford, Ontario, Canada.  Stratford also owns its own utility, and it installed optical fiber in the 1990s to help control the network, as well as providing an asset that large industrial customers could lease for communications. 

Using the company’s cash flow and asset base as collateral, Stratford expanded the fiber network by 50%, and introduced 1 Gbps connections to city facilities and schools, which saved significant amounts of money.  The utility also built a 300-hub WiFi network using the fiber network as its backbone, deployed a smart-meter program and expanded its leasing program to ISPs and co-op networks.  In 2012, the utility did a deal with Wightman Telecom, a regional provider that operates its own FTTP network passing 11,000 homes.  Through a revenue-sharing agreement, Wightman agreed to build out fiber into the rest of Stratford and deliver a 1 Gbps service. 

Stratford, a Top7 Intelligent Community of 2013, has put this digital infrastructure to good use.  In 2010, the prestigious University of Waterloo – from which such companies such as BlackBerry and Open Text sprang – agreed to open a Stratford campus focusing on digital media.  Through strategic alliances, Stratford has also attracted companies from Toshiba and Cisco to Inter-Op to conduct pilot projects in intelligent lighting, remote constituent services and interoperability for first-responder communications.  It is impossible to imagine any of this happening without the network.   

A city of 32,000 is hardly small by rural standards.  Yet rural communities may be the ones that can benefit most from municipal networks.  (See The Rural Imperative at www.ruralimperative.com.)   Just as electricity did not come to most rural places until they decided to create their own utilities, broadband tends to bypass low-density markets when left entirely to private-sector decision-makers. 

A little more than a thousand miles due west of Stratford lies Mitchell, a city of 15,000 on the plains of South Dakota.  With a willing local communications company and a federal broadband stimulus grant, Mitchell (a 2013 Smart21 Community) has developed a fiber-to-the-premises network serving every business and residence. 

Its university and technical school meanwhile have leveraged the network and city’s agricultural heritage into regional leadership in precision agriculture, in which farmers use satellite and remote sensing data to develop a highly detailed portrait of their land and apply that knowledge to boost yields.  Both also engage with city government, business, primary and secondary schools and a major hospital to promote digital literacy and supply the highly trained workforce in increasing demand by area businesses.  These include software companies, customer service centers and telecom consulting firms. 

economic impact study by Acreo Swedish pegged the value to Stockholm’s economy over 20 years at 16 billion Swedish Krona – US$2.5 billion – from business growth and job creation, capital investment, investments by property owners and cost savings to government. 

That’s a whole lot of Krona.  And unlike Nuenen, the Stokab network got its start with loans, grew on reinvested cash flow, and got where it is today without a penny of tax funding.  For all his genius, Vincent van Gogh hardly saw a penny from his world-changing achievements, but the people of Stockholm have gotten a pretty good deal from theirs.      

Robert Bell is co-founder of the Intelligent Community Forum, a think tank that studies and promotes the best practices of the world’s Intelligent Communities as they adapt to the demands and seize the opportunities presented by information and communications technology.  He can be reached through the ICF Web site www.intelligentcommunity.org

A message from the Rural Assembly

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