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Iowa Update — Pella Finances, Vinton Goes Live, Fort Dodge Studies, and More
Iowa is home to many community networks, from co-ops to muni cable, fiber, and other technologies. Three communities in the state have just recently made important announcements about their plans, and several others are moving forward with networks. There is so much happening in Iowa right now that shows potential for other states that don't limit competition.
There is a long history of local broadband excellence in Iowa for new networks to draw on. Cedar Falls Utilities was just recognized as the fastest ISP in the nation by PCMag. It has well over 20 years of success, but recent years have seen it sharing its expertise and facilities to lower the cost for other communities to build networks without reinventing the wheel. Local private Internet service provider ImOn is also a partner for these networks, offering voice services.
Many of these networks being built will be able to share services and lower their costs by being on the same ring to get some scale benefits despite being smaller communities. I remember many years ago when Eric Lampland of Lookout Point started pushing for this ring, and I am dumbfounded why we don't see more of this cooperation among munis and small providers in other states. Thanks to Eric and Curtis Dean of SmartSource Consulting who helped me with background for this Iowa update.
We have a brief mention of West Des Moines's recently announced partnership with Google Fiber in here, but we're finishing a longer post that solely examines their approach. Between this, that, and our Coon Rapids podcast this week, it is officially Iowa week on MuniNetworks.org!
Vinton's new municipal fiber network has just started connecting subscribers, leading to a memorable testimonial in the local paper, Vinton Today:
As a gal that uses the Internet every day, and as someone who had the chance to briefly use the speed that is arriving, I would guess that once you experience the new fiber, you'll probably say what I did, "What? THAT is fast!"
Vinton has an interesting approach to signing people up that we have not seen before. When munis build networks, the big incumbent monopolies often suddenly lower their prices and try to get as many families and businesses as possible into long term contracts to starve the new network. On Vinton's website, you can put in when your contract ends so they can plan your install ahead of time. Additionally, you can share your existing bill with them so they can help you compare your current services to what they are offering.
Like most munis and well-run networks, there are no monthly bandwidth caps on Vinton's network.
After approving their referendum with 92% support, Pella has wrapped up financing and is starting to build the outside plant of the network (the fiber and physical infrastructure needed to connect everyone).
The financing is interesting with part of it backed by revenues from the municipal electric utility and the rest secured from expected revenues from the telecom utility. These financing arrangements often reflect the important use of the fiber for other utility services, like advanced metering. The electric debt is $10 million over 20 years at 2.667%. We don't know how much of this debt is for the fiber project. It is a good time to make long term investments in essential infrastructure, and Pella and its municipal electric have a very good financial record.
The rest of the debt [pdf] — $11 million — involves taxable and tax exempt debt secured by the revenues of the network. This 15 year debt comes with an interest rate of 3.375% for the first 7 years and then reflects U.S. Treasury 5 year daily curve rate + 2.55%. Once again, we don't know whether this amount reflects the actual cost of the network because it is good practice to prepare to borrow more than you might anticipate in case costs run high. For instance, if the number of people that want to join the network in year 1 significantly outpaces the model estimate, the money to connect them has to come from somewhere.
New Hampton is building its outside plant and will finish the transport ring connecting it to Cedar Falls later this year. They are currently encouraging residents to sign up for a free site survey. Some customers could be connected this year, but most won't be able to get connected until 2022.
Charles City is one of the latest communities without a municipal electric utility to build a citywide broadband network. The city established the Charles City Telecommunication Utility in 2019 after successfully passing their referendum way back in 2005. After that referendum, the national companies took the hint and improved services though not enough over time to keep up with local needs.
The city has authorized debt up to $22 million and the current plan will likely be revenue bonds, though it is not certain yet if they will be backed by taxes.The network is finishing financing this summer while also moving forward with bids to begin construction. They will soon announce a general manager.
Fort Dodge citizens supported creating a muni telecommunications utility with nearly 72% of the vote in 2019. In June, they selected HR Green as a consultant to put together design and cost estimates for muni fiber models and are considering possible partnerships. Like the other cities in this roundup, they are well within distance of one of the larger rings that could allow them to use services from Cedar Falls to avoid reinventing the wheel.
Waterloo and Ames
Waterloo is working with Magellan Advisors for the latest in a series of studies they have done over the years. It cannot be easy living right next to the fastest network in America (Cedar Falls) when you are stuck with Mediacom and CenturyLink DSL. Many are doubtful Waterloo will do much, although we are curious to see what they consider after the Google Fiber and West Des Moines conduit announcement. Such an approach may be more attractive to Waterloo and could even offer Cedar Falls an opportunity to expand. That is a lot of conjecture, but places like Waterloo have to figure something out.
For years, we wondered whether Ames would move forward with any kind of municipal investment or partnership. It's a large city with a municipal electric utility that many thought could do far better than Mediacom and CenturyLink. Instead, Ames has taken a far easier and less rewarding path, simply encouraging MetroNet to come in and offer fiber where it wants to. Our understanding is that perhaps 70% of the community will get that option. We are pretty sure which neighborhoods will be left behind — those with lower incomes and more people of color. I don't think it is appropriate to attack companies for doing what is more profitable when the law allows it, but I sure think local leaders should have to answer for policies that enable or even encourage cherry-picking.