In the United States, local governments that have their own community networks often own, operate, AND provide services on those networks. In a number of cases, local governments prefer to offer services directly because they can ensure a high quality experience. But many communities would rather not directly provide services because they don’t want to have to compete against powerful entrenched firms like the cable and telephone companies. Though the big cable and telephone companies could allow others to use their networks, they prefer to operate as monopolies.

Open access tends to be more common in middle-mile networks, which can connect large enterprises, than in last mile networks, which connect residents. Many ISPs are used to using middle mile networks that they do not control to connect their various last mile networks. Even large companies like AT&T lease connections from other providers in some cases.

Some private companies own and operate open access networks, such as CityLink Fiber in Albuquerque. However, other companies like CenturyLink and AT&T have long undermined any effort to require network owners to share their network infrastructure (even when it was paid for by the public under a regulated monopoly). When it comes to private companies building open access networks, we are supportive but fear the company could change its mind or be bought by a larger company with a different agenda. CityLink has written open access into its franchise agreement to guard against these concerns.

Open access networks spur competition between service providers - lowering both the costs for subscribers and the barriers to new service providers entering the market. They facilitate economic development, as new firms look to relocate to areas with more choices for reliable, high-speed Internet access and existing businesses can be better served.

But perhaps most importantly, the benefits of publicly owned open access networks are that the community enables innovation, ensures real choices, and has a strong voice over its own future. Below, we discuss some of the key benefits and challenges of this model. Additionally, we list networks where the model is in practice today.

• Open access arrangements
• Financing open access networks
• Challenges for open access networks
• U.S. open access networks
• Planned open access networks
• Other resources

Open Access Arrangements

Unlike more common network arrangements (where one company, owns, operates, and provides services on the network), open access separates the physical network from the services. A community owns the network and may contract with a different firm to operate it; multiple ISPs will provide services on it. There are two main types of arrangements: two-layer and three-layer.

Two-layer: In a two-layer arrangement, the municipality owns and operates the network (constructs and maintains the network, making sure everything runs smoothly). Services are distributed by ISPs.

Three-layer: In the three-layer model, the municipality builds and owns the network, an independent party operates the network, and service providers bring fiber directly into homes and businesses.

Below is an example of an open access arrangement. The network owner funds the construction; the operator oversees construction and maintenance. The retailers provide the Internet service required by us, the end users, who likely just want to get online to get informed, play games, and do work.

Middle mile Open Access Network: The middle mile is the section of a network that connects local, last mile networks to the backbone of the Internet. Middle mile networks can cut across state boundaries and are able to transport large quantities of bandwidth between network endpoints. These networks may also connect towers (often for wireless services), community anchor institutions, and other large customers. Large firms like Verizon and Frontier have been known to sometimes lease middle mile circuits although they steadfastly refuse to use open access last mile networks.

Last mile Open Access Network: The last mile is the connection between the service provider and the home subscriber. On this type of network, home subscribers will have the option among multiple independent service providers delivering Internet access, telephone services, television, and potentially other services (burglar alarms, etc.). Many of these network in the United States start by serving businesses and then expand to residents incrementally.

Dark Fiber Open Access Network: Dark fiber is laid but not lit during fiber buildouts, and left as unused capacity until needed or desired. The act of attaching the fiber to the lasers that send bursts of information across it is called "lighting" it. This type of network is inherently open access, as any provider could lease it (often with an agreement called an IRU, Indefeasible Right to Use). However, only large firms, very technical firms, and ISPs tend to be interested in leasing dark fiber.

Financing Open Access Networks 

Like many community owned networks, building open access networks can be financed through several different mechanisms. 

Some, like Rio Blanco County have taken advantage of state grants to subsidize their network build-out. Rio Blanco received $2 million in matched funds from the Colorado Department of Local Affairs. It then committed another $7 million of its own funds to the project, made up of $2 million in federal mineral lease revenues and $5 million from the county's general fund.

With increasing federal emphasis on broadband, government funding for municipal projects might more often subsidize infrastructure investments in both lit and dark fiber networks. That said, communities have a number of tools at their disposal to fund these networks without federal money.

In New York, one community that was wary of relying on federal funding found another way to cover startup costs for its dark fiber open access network, Axcess Ontario. They tapped into a municipal economic development branch - the Ontario County Office of Economic Development/Industrial Development Agency. The network is now run as a non-profit, with a board of 12, but no paid employees. Revenues from businesses that want to use the network services pay the operation, maintenance, and debt costs. 

Many communities, like Palm Coast, Florida, have opted for a phased approach to build their open-access infrastructure. Palm Coast FiberNET relies on a capital projects fund - a way of managing financial resources to complete large-scale infrastructure projects like highways. In building Palm Coast FiberNet, the City drafted a 5-year plan that split the $2.5 million infrastructure cost into five investments of $500,000. It connected community anchor institutions and government offices at the same time as it connected local businesses. The public savings from ending previous contracts with Comcast offset construction costs.

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Another approach is to use Tax Increment Financing (TIF), a tool that allows specified districts to borrow funds for redevelopment that are to be paid back in future taxes, to subsidize infrastructural costs. TIF has aided in Bozeman, Montana’s effort to bring next-generation technology to their community.   

Some networks place more of the financial responsibility on the network subscribers. In the utility fee model, subscribers (or all community members, depending on the arrangement) pay a monthly surcharge, which helps to fund the construction and maintenance of the network. A version of this approach is being used in Ammon, Idaho, which has two fees. The first is for the fixed cost of building it, and the second is for operation and maintenance. This last fee varies based on the total number of network subscribers: the more subscribers to the network, the less the individual cost.

Other networks use a wholesale model, selling bandwidth in bulk to ISPs, which can then be bundled, often in a triple-play (phone, TV, Internet) arrangement, and sold to customers. ISPs pay for the ability to provide services over the shared network. For example, Mount Vernon, Washington receives 15 percent of the gross income of each ISP that uses its network. In other cases, ISPs pay a one-time connectivity fee to be able to use wholesale services.

In some cases, communities have built their networks with the assistance of federal loans/grants along with community and private sector contributions. Fast Roads in New Hampshire is one example of this. Fed up with poor service in western New Hampshire, a coalition of municipalities built the Fast Roads network using a combination of stimulus funds from the American Recovery and Reinvestment Act (ARRA), community contributions, and private donations.

Even with these many options for financing, building a citywide network immediately is challenging. Many community networks start out incrementally. The revenue or savings from one section pays for the construction of the next section. Most begin by connecting community anchor institutions before moving on to connect businesses and residents. The public savings from ending contracts with incumbent ISPs enables communities to fund the expansion of the network, such as with Santa Monica, California’s City Net. Incremental financing works, especially in cities without a public power utility.

Challenges for Open Access Networks

While many municipal networks face challenges from incumbent providers and state laws, open access networks encounter a unique set of problems. The most obvious being, how to attract service providers to the network? After that, it then becomes a matter of maintaining the reputation of the network. In the long term, however, there may develop concern over price competition and consolidation. This section aims to provide solutions and advice for these open access problems.

Challenge 1: Getting Service Providers

There’s not much use in an open access network without service providers offering a variety of competitive services. In order to ensure the network’s success, there should be at least one core provider at the start. Some community networks begin with an operator who also acts as an ISP. For a set period of time, the operator will be the sole ISP before opening up the network to other ISPs. Westminster, Maryland, pioneered this model when they built a community network with the ISP Ting.

It may take time for ISPs to join the network. While incumbent ISPs do not often want to do business on the public open access infrastructure, other smaller, local ISPs may join. Some communities hire a specific person, such as the network director, to recruit service providers. Others wait for the reputation of the network’s speed and reliability to entice ISPS to the new market.

Challenge 2: Reputation

After securing service providers, the community faces a new challenge, building and maintaining the reputation of the open access network. In extreme cases where an ISP acts in bad faith, a network’s reputation will become so maligned that it struggles to rebuild its brand and attract new, better ISPs.

For example, Provo, Utah is often cited as proof of the failure of municipal networks. The network’s wholesale model (mandated by the state) relied on private ISPs that overpromised, under-delivered, and bowed out of the market too quickly. Provo’s network reputation was severely compromised.

Challenge 3: Price Competition and Consolidation

Some fear that in the long term ISPs will consolidate, leaving us once again with a duopoly or monopoly. These fears have yet to be realized, but it has become more of a topic in Sweden where open access networks have been in existence longer.

Over time, if the only differentiation between service providers is price, then eventually those profits will be competed away. Eventually people will choose the cheapest plan that suits their needs, and the ISPs will have to consolidate. This will diminish the number of options for the consumer – leading to the situation that open access meant to avoid all along. ISPs will have to take care to differentiate their services, preferably by competing for providing the most friendly customer support, in order to stay competitive and in business.

ILSR is currently tracking more than 30 open access networks across the United States.

Last Mile Networks:

Middle-Mile Networks: