In the city of Fullerton, California (pop. 140,000), privately owned infrastructure builder and operator SiFi Networks has turned on the first section of what will be a city-wide, open access Fiber-to-the-Home network. The project makes Fullerton SiFi’s first FiberCity — a privately built, financed, and operated open access network it plans to duplicate in more cities across the country in the future. When complete next fall, the Fullerton FiberCity network will pass every home and business in the city, with the company's subsidiary, SiFi Networks Operations, selling wholesaling capacity to as many Internet Service Providers (ISPs) as want to enter the market. 

A Different Approach

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SiFi’s FiberCity model remains somewhat unique in the United States, and is much more common in Europe and Asia. CEO Ben Bawtree-Johnson attributes their success to cracking the economic code for private investment in open access information infrastructure, which has seen more attention in recent years as investors and fund managers have seen opportunities. “[O]ur vision really is to create as many last-mile fiber optic networks as we can across the USA in a long term sustainable fashion,” Bawtree-Jobson remarked on an episode of the podcast last fall. “[W]e're all about long term, dry, low yielding, risk mitigated investments, so everything we do is based around 30-year plus type investments.”

That community networks act as a positive force in the broadband market is something we’ve covered for the better part of a decade, but a new study out in the journal Telecommunications Policy adds additional weight (along with lots of graphs and tables) which shows that states which enact barriers to entry for municipalities and cooperatives do their residents a serious disservice. 

“State Broadband Policy: Impacts on Availability” by Brian Whitacre (Oklahoma State University) and Robert Gallardo (Purdue University), out in the most recent issue of the journal, demonstrates that enacting effective state policies have a significant and undeniable impact on the pace of basic broadband expansion in both rural and urban areas, as well as speed investment in fiber across the United States. 

Digging into the Data

The research relies on the State Broadband Policy Explorer, released in July of 2019 by Pew Charitable Trusts, and focuses on broadband availability across the country from 2012-2018. Whitacre and Gallardo control for the other common factors which can affect whether an area has broadband or not (like household income, education, and the age of the development), and combine the FCC’s Form 477 census block-level data along with county-level data to explore expansion activities over the seven-year period. By making use of an analytical model called the Generalized Method of Moments, Whitacre and Gallardo are able to track all of these variables over a period of time to show that there is a statistically robust connection between specific state policies and their influence on the expansion of broadband Internet access all over the United States. 

A year ago we wrote about Illinois’ $420 million commitment to broadband expansion, and now the first round of grant winners has been released. Together they total $50 million in state funds matched by $65 million in additional money for 28 projects by 18 different Internet Service Providers (ISPs) that will, ultimately, connect 26,000 homes, farms, community institutions, and businesses in the state. It represents the first milestone in what is a significant commitment to closing Illinois' broadband gap.

Lots of Winners, Some Caveats

The Broadband Grant Program offers applicants up to $5 million in funding for projects with the stipulation that they match it with an equal or greater amount of other, nonstate funds. First-round winners consist of both middle- and last-mile builds touching at least 27 counties throughout the state. For example, Cook County received a little under $2 million to expand its Chicago Southland Fiber Network (CSFN). CSFN provides backhaul services to many, including the Illinois Century Network — which serves over 3,400 public K-12 schools, universities, and libraries. Their application committed to focusing “on fiber paths that will provide distribution and host last mile service platforms addressing those communities with the greatest need, municipalities with no fiber assets . . and key regional education campus facilities.” 

Less than two years after Mississippi lifted its ban on electric cooperative broadband networks, at least 15 of the 25 co-ops in the state have announced plans to provide Internet access to members, with more on the way.

“I would venture to say that there is a higher percentage of co-ops launching [broadband] projects in Mississippi at one time than anywhere else in the country,” said Randy Klindt, partner at Conexon, a consulting firm that is working with several co-ops in the state.

The months in between were marked by two major changes. First, in January of 2019, the Mississippi legislature passed a law that enabled co-ops to create broadband subsidiaries to connect their members. Then a year later, the pandemic hit, highlighting the urgent need for better connectivity and turning the steady stream of cooperative interest in broadband into a veritable flood.

In response to the global health crisis, the state leveraged federal CARES Act money to establish a grant program to fund electric co-op broadband deployment. Through the program, Mississippi awarded $65 million to 15 electric cooperatives to build high-quality Fiber-to-the-Home networks in some of the state’s most disconnected and rural communities, dramatically ramping up the pace of the co-ops’ broadband projects.

“When we started two years ago, I would’ve guessed that you would have had maybe five systems out of 25 in the state that would be to the level where we are now,” Coast Electric Power Association (EPA) President and CEO Ron Barnes said in an interview. “Most people would tell you they were surprised by the speed,” he added.

Opening the Floodgates

Internet access has been lagging in rural Mississippi for years. The state came in at 42 in BroadbandNow’s most recent connectivity rankings. According to the Federal Communications Commission (FCC), at least 35% of rural Mississippians do not have access to the Internet at broadband speeds.

The United States Office of the Comptroller is hosting a webinar at the end of the month called “Banks Finance Broadband in Rural Areas & Indian Country” aimed at banks and local leaders looking to form partnerships to fund broadband projects for rural and tribal communities across the country. 

In addition to providing basic information on how community financial institutions can work with local governments, participants in a 2017 partnership which brought broadband to Fort Berthold Indian Reservation will be present to discuss their experience and answer questions.

Register for the event by clicking here.

New Rule, New Financing Options

Tribal communities face a host of ongoing connectivity obstacles, all of which have been exacerbated by the current public health crisis. Native student populations are much more likely to be affected by the homework gap, a problem that will remain as states and school districts struggle to put together a cohesive connectivity plan for the upcoming school year.

The program is one of the many that together come from the OCC's participation in the Community Reinvestment Act (CRA), passed in 1977. The CRA directs federal financial regulators (including the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation) to push FDIC-insured financial institutions to meet the credit needs of the communities they’re a part of, with emphasis on low- and moderate-income regions.

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

Vinton's new municipal fiber network has just started connecting subscribers, leading to a memorable testimonial in the local paper, Vinton Today:

Funding can seem like an insurmountable barrier to expanding Internet access and adoption. But for states, local communities, nonprofits, or other organizations looking for some help, the National Telecommunications and Information Administration (NTIA) has updated its federal funding search tool for 2020. 

Whether you’re looking to find money specific to your region, to pair a broadband project with transportation infrastructure, to expand access on tribal lands, or to connect your community’s anchor institutions, the NTIA can help. The funding search tool also lets users sort through options depending on what stage of the process they’re at, so whether you’re exploring your options via a feasibility study or looking to evaluate or expand adoption rates, the tool has you covered. It also, helpfully, provides funding sources for those looking to fund programs to expand digital literacy skills and training.

You can find, for instance, the USDA ReConnect program there, which helps fund projects in rural areas. We’ve written about how communities in Virginia, Maine, Iowa, and elsewhere have secured ReConnect funding to advance community broadband development in their states. Likewise, we recently wrote about how Cumberland County, Maine, used a U.S. Department of Housing and Urban Development Community Development Block Grant to fund a broadband plan that brought together several communities seeking better Internet connectivity in the region. 

See the USDA's complete Broadband Funding Guide [pdf] or dive into the online search tool.

More Resources

As states are considering whether and how to use federal CARES Act funding to improve Internet access, Idaho is poised to enact counter-productive limits on who can use that money by excluding community-owned solutions.

Though many states have been under pressure from big monopoly providers to only fund for-profit business models with broadband subsidies, those voices seem largely absent in this Idaho fight. Instead, it is some local monopoly providers that are threatened by a wave of new community networks that break the old monopoly approach to broadband networks.

Shock and Aww, Come on

As Idaho began considering how to spend its CARES Act funding, it took comments from a variety of stakeholders on how to achieve the state’s broadband goals. That process suggested an inclusive, open-ended approach that could help fund a variety of efforts that would improve resilience in a variety of ways — not just new connections to homes.But when the Department of Commerce stepped up to operationalize those goals into a matching grant program, something came off the rails. The state is taking comments this week from Idahoans on an approach it unveiled Tuesday evening. View the draft grant application and rules.

This draft grant application goes through contortions to give the CARES Act money to private companies. The only entities that can apply are governments, including sovereign tribes, local governments, or Idaho state agencies. But they are purely a pass-through — the money must go to a private company per rule IV of eligible projects: "Include only new broadband service, installed, owned, and operated by for-profit companies and not the applicant."

As part of its Lunch and Learn series, the Community Broadband Action Network (CBAN) is hosting a webinar next week on New Market Tax Credits. The webinar, scheduled for Tuesday, June 23 at 12 p.m. central, will explore how communities can use the tax credits to help fund and deploy broadband networks.

Registration is free and required. Sign up online.

Who’s Who

CBAN, based out of Iowa, advocates for community-based broadband solutions and assists communities in improving local connectivity. Members of CBAN include local governments, broadband providers, and community organizations.

Shawnna Silvius, director of the Montgomery County Development Corporation, will moderate the discussion. Speakers for the webinar are Myriam Simmons of tax services firm Ryan and Jonathan Klassen of Rural Development Partners.

Money, Money, Money

We’ve covered community broadband network financing options many times in the past.

While many local governments opt to issue bonds or search out state and federal grants to fund connectivity projects, some have taken different, innovative approaches. For example, Ammon, Idaho, is using Local Improvement Districts to build out its fiber network. And in Virginia, Nelson County took advantage of Community Development Block Grants to expand connectivity.

For more, check out our fact sheets on Financing Municipal Networks [pdf] and Creative Funding Sources For Fiber Infrastructure [pdf].