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UTOPIA Reaches Milestone
Things have been looking up for the Utah Telecommunications Open Infrastructure Agency’s fiber optic network (UTOPIA) in recent years and in December network officials reported they’ve reached a significant financial milestone. For the first time since the open access network began operations in 2003, revenue will cover bond payments and will provide a 2 percent dividend to most of the member communities.
Despite The Limitations
In keeping with state restrictions, UTOPIA can only provide wholesale services via their fiber infrastructure. Ten ISPs offer residential services on the network, which establishes ample competition and all its benefits for subscribers, including lower prices, better customer service, and the ability to switch providers. Businesses can choose from 25 ISPs.
The wholesale-only model, however, significantly reduces the revenue communities can expect from their investment, which was the case with UTOPIA. The eleven member cities bonded approximately $185 million, but revenue limits due to the restriction, some early management decisions, and general apprehension from member communities, created political controversy. At one point, member communities considered selling out to Australian investment firm Macquarie.
Fortitude Paying Off
In 2011, eight of the member communities created the Utopia Infrastructure Agency (UIA) in order to spur more network expansion. UIA collaborates with UTOPIA as a separate entity; its purpose is to deploy the network in more locations and connect more premises and has issued the dividend to its member communities.
NoaNet Starts The Year Off Right In Washington
A new year promises a fresh slate for many people. For the folks at Washington’s NoaNet, it means starting out 2017 bond-free.
In his year-end message, Chief Executive Officer Greg L. Marney announced that the organization has paid off its start up debt. At the November Board of Directors meeting, Controller Paul Harding reported that revenues are positive and that, “Budget to actual figures are favorable, with revenues above Budget and expenses a little below Budget.” Things are looking good at NoaNet.
A Washington Staple
NoaNet has become a solid presence in the state of Washington. In 2000, Northwest Open Access Network (NoaNet) began connecting 170 communities across the state with approximately 2,000 fiber miles. The middle mile network provides connectivity in both urban and rural areas to schools, libraries, hospitals, and other government facilities. Sixty-one Internet Service Providers (ISPs) offer retail services vis the open access infrastructure. Recently, Anacortes and NoaNet decided to work together as the small community addresses its local connectivity problems.
Last year, we put together a list of 15 NoaNet accomplishments, but you can also listen to Chief Operating Officer Dave Spencer visit with Christopher for episodes #164 and #159. Congrats to NoaNet!
Linda Gott, President of the NoaNet Board of Directors, cuts a cake to celebrate the payoff of NoaNet's startup bonds this year.
(Photo courtesy of NoaNet)
Harlan Continues Bump Up To Fiber In Rural Iowa
With charming cornfields and bustling cities, Iowa is a Midwest hub of community networks. Harlan, the county seat of Shelby County, is located in west central Iowa. About 5,400 people live in the town, situated along the West Nishnabotna River. Back in the ‘90s, Harlan was one of several Iowa towns that built their own cable networks to deliver video and Internet services. In August, Harlan Municipal Utilities (HMU) announced it will continue upgrading to fiber, a project they started in 2012. Upon completion in early 2017, much of the town will have Internet access via fiber.
The Present: 2016-2017 Fiber Project
HMU announced the project on their website in early August. For more details, we spoke with Director of Marketing, Doug Hammer, previously a guest on our Community Broadband Bits podcast.
During the fiber expansion, HMU will build out to the southern half of town, which is bounded by Highway 44 to the north, Highway 59 to the west, and the river to the east. The utility also intends to build out slightly north, into the center of town. The project will take approximately six months to complete.
First, HMU will install conduit, the reinforced tubes which hold the fiber, to all their electric, gas, and water customers along major roads. Then, in the first quarter of 2017, they will bring fiber to homes and businesses. [Update: Those homes and businesses already receiving telecom services. Fiber to non-telecom customers will be connected if the property adds telecom services or when advanced metering applications are launched.]
The Past: Projects and Paperwork
By 1997, HMU was providing Internet service via a Hybrid Fiber-Coax (HFC) network. They financed the network with a grant from the Commerce Department and utility revenue bonds. Committed to affordable, high-quality service, the utility began to install fiber in certain areas in the north [Update: the northwest portion] of town in 2012.
Santa Clarita Leases Dark Fiber For Better Connectivity And Revenue
Santa Clarita, a community of 220,000 in Los Angeles County, California, recently signed a dark fiber lease agreement with Southern Californian telecommunications provider Wilcon. The city hopes to improve high-speed Internet access for local businesses; this ten-year contract allows Wilcon to provide services via publicly owned fiber-optic cable originally buried for traffic controls.
The New Agreement
From the City Council’s June 28th agenda, the new agreement includes the following:
- Initial anticipated annual revenues of $72,256 based on $840 per year per fiber mile.
- Annual fiber lease rate adjustment based on [Consumer Price Index] (CPI) for the Los Angeles area.
- Initial anticipated lease of 86.02 total fiber miles.
- City maintains control and ownership of all fiber at all times.
- Lease of dark fiber is not exclusive to Wilcon.
- City may opt out of the contract without cause after ten (10) years.
Santa Clarita and Wilcon can extend their agreement on identical terms for three consecutive periods of five years following the original ten-year term, leading to a potential contract length of twenty-five years.
Using Existing Assets To Promote Business Connectivity
The third largest city in Los Angeles County is home to the Six Flags Magic Mountain amusement park, a handful of aerospace engineering firms, several medical equipment manufacturers, and a strong business community. Yet, local industry groups like Santa Clarita Business Journal (SCBJ) identified unaffordable Internet access as a major barrier for local businesses, as highlighted by its May 2015 publication.
The City Council recently published its 2020 Goals, which include two Internet-specific objectives:
PILOTing Positive in Tennessee
As the Sixth Circuit Court of Appeals reviews the FCC's February decision to scale back state anti-muni laws in Tennessee, at least two munis in the Volunteer State are giving back by saving dollars. Networks are also contributing substantially to public coffers via Payment in Lieu of Taxes.
Clarksville, Tennessee, Network Becomes Revenue Positive in 2015
As of June 2015, the city’s utility provider CDE Lightband paid off all outstanding expenses related to their fiber optic network. General manager Brian Taylor described how the network has improved the city’s utility services and overall economic picture:
Our fiber project has proven to be an investment that benefits the electric system, the customers and the community. It has allowed us to enhance our distribution system and improve our system reliability; provide customer choice in video, Internet and telephone services and offer another tool in economic development. Every year access to high speed Internet becomes more critical in the recruitment of new business. We are proud to be an integral part of the growth and development of our community.
In a recent press release, CDE Lightband said their 1,200 mile fiber optic network saves the City of Clarksville a total of $4.5 million annually through technological upgrades that have improved the overall safety, reliability, and speed of electrical maintenance and service. The city has also seen 27% growth in broadband service customers over the past year. The network’s cost savings, along with direct revenues from electrical and broadband services, spell major dividends for CDE Lightband coupled with continued optimism for future growth.
Dark Fiber Network Saving Money, Generating Revenue in Burbank
ONE Burbank, the dark fiber network that has provided connectivity for studios since 1997, is bringing a number of benefits to Burbank schools and taxpayers, reports the Burbank Leader. The network is saving public dollars, generating revenue, and providing better connectivity to schools and public facilities.
Five years ago, we reported on Burbank's asset and its primary customers - Hollywood studios. That trend has continued but now the network generates even more revenue. As a result, all electric customers served by Burbank Water and Power save with lower utility bills:
Last year, ONE Burbank generated $3.4 million in revenues for the utility, [General Manager Ron] Davis said in May. That’s compared to roughly $205,000 in 1997 and about $1.5 million five years ago, according to data Davis presented to the City Council.
“The bulk of that [$3.4 million] is all margin and helps keep electric rates down,” Davis said. “[We do] basically zero marketing and collect that margin.”
By connecting city facilities rather than leasing from a private provider, Burbank has all but eliminated past telecommunications expenses, lowering costs by 95% and saving, $480,000 in total thusfar. The school district has saved $330,000 since connecting to ONE Burbank.
ONE Burbank is also providing four times as much bandwidth to the school at a much lower rate that it once paid to the private sector, cutting its costs from $18,000 per year to $9,000 per year.
In August, Burbank Water and Power began using the dark fiber network as backhaul for free Wi-Fi service available throughout the city. There is no service level guarantee but it is open to any device:
“It’s just out there if you can get it,” Ron Davis, the utility’s general manager, told the City Council last week.
The dark fiber has helped retain and attract business, reports city leaders, and they want to continue the current trajectory to bring in high-tech companies and turn Burbank into a "Silicon Beach."
NYSBA Building (Economic) Bridges with Dark Fiber
The New York State Bridge Authority (NYSBA) expects to bring in over $900,000 over the course of the next ten years in revenue from dark fiber leases. The agreements, which allow private companies to access publicly owned dark fiber spanning the bridges, will also help maintain low tolls and allow regional telecom operators to expand their data transmission networks. The NYSBA announced on August 4 that it would be leasing dark fiber on two new bridges - the Bear Mountain and Rip Van Winkle bridges in upstate New York. These will be the third and fourth NYSBA bridges that generate revenue from fiber leasing.
The NYSBA dark fiber leasing program is now in its fifth year. Since the Authority does not receive any state or federal tax money for the operation and maintenance of its bridges, it has sought creative solutions to finance the upkeep of its infrastructure. It has now leased dark fiber on four of five intended bridges, with plans to lease more on a fifth - the Kingston-Rhinecliff Bridge - in the near future.
In March, the Authority leased the Newburgh-Beacon Bridge to QCSTelecom, Inc. for $535,000. While such dark fiber leases are one-time fees, and usually last for at least ten years, the immediate benefit to the community takes the form of lower tolls for everyone who crosses the bridge. One editorial, posted in the Daily Mail, considered the locally-scaled benefits of the project:
Locally, we don’t have much to worry about from another toll hike in the immediate future. Although the lease won’t replace tolls as a principal source of revenue, it will help the bottom line and help keep tolls at current level. It’s clear that getting to the other side of the Hudson River can be costly over time and, as energy and transportation costs rise, we are not prepared for another toll hike. But with the success of the dark fiber leasing program, now in its fifth year, we can believe with some certainty that the drive to Columbia County won’t cost more.
Growing Interest in Dark Fiber and Pricing Details
Dark fiber is a growing business for both private and publicly owned networks. Data transport, data centers, ILECs, and CLECs are some of the most common users. Increasingly, wireless providers are turning to dark fiber for backhaul.
A May Fierce Telecom article reports that 14 percent of Zayo's wireless backhaul services are dark fiber solutions:
"We're seeing a shift with wireless backhaul contracts to dark fiber to the tower and we're starting to see that show up as the trend over the last couple of quarters," [Chairman and CEO Dan] Caruso said … "And you see it more pronounced in the current quarter where 14 percent of our product mix for fiber to the tower is dark fiber to the tower and you see that's grown and taken on a bigger piece of the pie."
Dark fiber leases have played an important role in developing revenue for municipalities that have invested in fiber infrastructure. Dark fiber leasing can be the only option in places where state barriers limit local options.
Santa Monica, Columbia in Missouri, and Maryland's Howard County, are only a few communities that lease dark fiber to ISPs and other commercial customers. A few networks, including Metronet Zing in Indiana, offer only dark fiber services. It is worth noting that, as Santa Monica discovered, the vast majority of businesses and residents prefer and easy, affordable, and reliable lit service rather than dark fiber. But the dark fiber niche is growing.
As more customers look for the service, negotiating leases and pricing models can be challenging. Municipal networks seeking guidance can start with a 2012 report from CTC Technology & Energy, Dark Fiber Lease Considerations [PDF].
Waverly: The Next Gigabit Community in Iowa
Remember Waverly, Iowa? We introduced you to the town of 10,000 back in 2013 when they revived the community choice to develop a telecommunications utility. Recently in February, the Waverly Light and Power Board of Trustees approved a long awaited gigabit project reported American Public Power.
According to a WLP press release, the $12 million project will be financed with revenue bonds which have already been secured. As we note in our Financing Municipal Networks fact sheet [PDF], this is one of the most common ways of funding deployment. Revenue from subscribers pays the private investors that buy the bonds used to finance the deployment.
Construction is scheduled to begin in May and WLP expects to begin serving customers in 2016. WLP serves approximately 4,800 customers in town and in the rural areas around Waverly. Early plans include incentives for early sign-ups such as a free first month of service and a reduced installation fee. The fiber network will also be used for smart metering.
From the WLP press release:
“It may have taken 15 years of planning and hard work to finally come together, but knowing what’s to come, it’s worth the wait,” explains Ael Suhr, Waverly Light and Power Chairman of the Board. “This approval opens the door for new alternatives for high-speed internet, cable and phone services in Waverly for both residents and businesses.”
SpringNet Continues Driving Jobs and Revenue for Local Community
A year has passed since we covered SpringNet in Springfield, Missouri, and its remarkable impact on local businesses and economic development. We recently spoke with SpringNet Director, Todd Murren, and Network Architecture Manager, Todd Christell, to get an update on how the network is progressing.
Demand for SpringNet’s high-speed data services continues to grow steadily. Financial statements for City Utilities of Springfield show the network generated $16.4-million in operating revenue last year against costs of $13.2-million. Better yet, revenues have increased around 3% per year while cost increases are closer to 0.5%. The end result is close to $3 million in annual net income for SpringNet. And all of this comes from a network that only serves commercial and public sector clients because Missouri state law restricts municipal network provision to only “Internet service,” meaning SpringNet cannot offer triple-play packages to compete with incumbent providers.
One of the highlights of SpringNet’s economic development success has been the attraction and retention of travel giant Expedia. After a large national provider failed to deliver on negotiations with the company, SpringNet stepped in to make sure Expedia brought its call center to Springfield. That effort has paid off handsomely for SpringNet and the local community. Expedia now employs close to 900 in the area after announcing in July that it was hiring another 100 employees in Springfield.
Up next for SpringNet is an effort to leverage its fiber infrastructure to create even more jobs. Believing that future job growth will revolve around the advancements enabled by gigabit networks, SpringNet is working with the Mid-America Technology Alliance (MATA) to host a hackathon with partners in Kansas City to explore what is possible between gigabit cities.