Municipal networks will not wire U.S. for broadband

This past week, President Obama addressed an audience in Cedar Falls Iowa on the subject of broadband access.  President Obama said that “high-speed broadband isn’t a luxury, it’s a necessity.” High-speed broadband “is about helping local businesses grow, prosper and compete in a global economy.”

So true. But all too many Americans, 55 million, according to the FCC, can’t get next-generation broadband at 25 Mbps or faster speeds. And millions more have only one choice of broadband provider.

Cities on the wrong side of the digital divide are looking for ways to get truly high-speed Internet networks to their communities.

In Cedar Falls, with a population of 30,000 residents, President Obama highlighted one possible solution: municipally-owned fiber. Cedar Falls Utilities, a municipal electric utility, expanded its network to deliver broadband at speeds up to 1 gigabit per second. And, as President Obama noted, Cedar Falls residents have a choice of broadband providers, including CenturyLink and the local cable company.

Certainly, all communities need high-speed networks. What’s a city to do when the local provider refuses to invest in next-generation broadband? For example, Verizon has refused to deploy its all-fiber FiOS network in upstate New York, Boston, and Baltimore – even though the company has built FiOS in surrounding suburban communities.  Is muni fiber, then, the answer?

Our review of muni fiber projects finds that the few successful projects have unique characteristics that do not make them models for other communities. Most muni fiber networks were built by public utilities, and almost all are located in small municipalities. Some received federal Recovery Act subsidies that are no longer available. Almost half do not even serve residential customers. And it appears that few employ career, skilled employees with pay the good wages and benefits that union standards have set in the telecom industry.

Cedar Falls, as well as other muni broadband networks – such as the one in Chattanooga – are owned by public utilities. These utilities had unique circumstances that most cities cannot replicate: public utility-owned fiber networks available for expansion into retail broadband; experience and expertise running a capital-intensive, customer-oriented network; and existing customer relationships and customer service operations. In the case of Chattanooga, the utility’s broadband expansion was financed in part with a $111 million Recovery Act grant.

In fact, many once-highly publicized muni fiber projects have been a disaster, burdening taxpayers with high debt and lengthy legal battles. Two prime examples are the cases of Burlington Telecom in VT and Provo Utah. Provo spent $40 million on its network, never made a profit, and eventually sold the fiber network to Google for $1.

To be sure, competitive threat can drive investment and innovation. After Google Fiber built is its all-fiber network in Kansas City (with significant assistance from the city and permission to deploy only where consumers signed up in advance), AT&T announced plans to build fiber networks in 100 cities and CenturyLink announced its plans to build fiber in 13 cities.

In contrast to municipal ownership, there are models of public-private partnerships that are successful.

The North Carolina Next Generation Network (NCNGN) is a successful example of a regional initiative focused on stimulating the deployment of next generation broadband networks in North Carolina. Six North Carolina municipalities (Chapel Hill, Durham, Raleigh, Winston-Salem, Cary, and Carrboro) and four leading research universities (Duke, NC State, UNC Chapel Hill, and Wake Forest/Wake Forest Baptist Medical Center) are working with businesses and the local Chambers of Commerce in the Research Triangle and Piedmont regions to encourage private sector providers to deliver ultra-fast bandwidth at highly affordable prices.

Recently, the NCNGN negotiated a model agreement with AT&T for the elected officials in the individual municipalities to consider. Under terms of the agreement, AT&T will provide broadband connections with speeds up to 1 gigabit per second to local residents and businesses in areas where there is sufficient demand. The proposed agreements include initiatives designed to increase access to broadband, such as providing free service to certain public community sites. Similar to the streamlining encouraged by the Google Fiber check-list in Kansas City, NCNGN agreed to try to streamline processes around permitting and inspections, ensured nondiscriminatory treatment for broadband providers that offer similar services, and supported community education efforts about the benefits of gigabit networks.

Since signing the agreement, AT&T has launched its all-fiber, GigaPower network in parts of the participating North Carolina cities of Greensboro, Raleigh-Durham, Winston-Salem, Chapel Hill, Cary, and Carrboro.

It is clear that we need strategies to close the digital divide, as cable-dominance has left America behind in the world race for Internet speed.

There is certainly merit in some parts of the White House initiative, which, according to a White House fact sheet, includes:

•    Calling to End Laws that Harm Broadband Service Competition
•    Expanding the National Movement of Local Leaders for Better Broadband
•    Announcing a New Initiative to Support Community Broadband Projects
•    Unveiling New Grant and Loan Opportunities for Rural Providers
•    Removing Regulatory Barriers and Improving Investment Incentives

But, using local public ownership carries a high risk of failure. We must continue to insist that incumbent providers invest in high-speed networks serving all communities. And cities, policymakers, and concerned advocates can look to the North Carolina Next Generation Network for models of successful public-private partnerships that expand high-speed broadband and create jobs for skilled, union telecom employees.

Remarks by the President on Promoting Community Broadband (White House, Jan. 13, 2015)

Only 25Mbps and up will qualify as broadband under new FCC definition (Ars Technica, Jan. 7, 2015)

CWA FCC Filing: Verizon Wireless deal widens digital divide (Speed Matters, Jun. 3, 2012)

Number of Community FTTP Networks Reaches 143 (Community Broadband, Aug.-Sep. 2014)

Cedar Falls, Iowa, Now Offers 1 Gig Service (Community Broadband Networks, May 29, 2013)

AT&T Eyes 100 U.S. Cities and Municipalities for its Ultra-Fast Fiber Network (AT&T Newsroom, Apr. 21, 2014)

CenturyLink aiming for 1 Gbps in 13 new cities (Speed Matters, Aug. 7, 2014)

Welcome to North Carolina Next Generation Network (North Carolina Next Generation Network website)

U-verse® with AT&T GigaPower(SM) Launches Today in parts of the Research Triangle and Winston-Salem (PR Newswire, Dec. 8, 2014)

FACT SHEET: Broadband That Works: Promoting Competition& Local Choice In Next-Generation Connectivity (White House, Jan. 13, 2015)