The good folks at Broadband Properties Magazine recently ran an article I wrote about Brigham City's use of a new financing model for FTTH networks. You can read it there in the nice layout and formatting, or here: The UTOPIA project, an ambitious fiber-to-the-home network developed by a consortium of 16 Utah cities, has encountered difficulties that delayed its original buildout schedule. However, it is now building out fiber in Brigham City, one of the original cities in the consortium. Brigham City found a local solution to UTOPIA’s slow deployment schedule and created a model to speed buildout in willing communities. Brigham City, a city of 18,000 in northern Utah, decided to form a voluntary assessment area – sometimes called a special assessment area – to finance the network buildout that will pass all homes and connect residents looking to subscribe. As with all wired networks, upfront costs are steep and typically require a heavy debt load. Brigham City’s unique approach may catch the interest of deployers unwilling or unable to shoulder that debt. For several months, a group of canvassers organized by UTOPIA went door to door in Brigham City to talk to residents about UTOPIA and ask if they were interested in subscribing to the network. Supporters organized some 30 block parties and invited UTOPIA to attend with a mobile home to demonstrate the superiority of full fiber optic networks. Residents who wanted service were requested to ask the city to create a voluntary assessment area. Creating this special district would allow participants to finance their connections themselves. Residents who wanted to subscribe could either pay the connection cost up front or agree to pay up to $25 per month (the exact amount would depend on how many joined the program) over the course of 20 years. This amount does not include the cost of services; rather, it is the cost of connecting to the network and having the option of subscribing to UTOPIA-based services (see sidebar for current services). Those uninterested are not levied. In other UTOPIA cities, when residents subscribe to services on the UTOPIA network the connection costs are included in the service fees.

Joe Abraham, from the University of Louisiana, recently addressed the LUS Fiber network in Lafayette. This is possibly the fastest and most affordable network in the entire country. Apparently, Joe has been asked by friends if they should switch to the new municipally owned network. His answer is an unequivocal yes - backed up by several points like it is a faster, cheaper service that strengthens the whole community. But really, I like this point:

Inherent in democracy, in the First Amendment, and in free markets, is a central concept: we have no idea what these things will produce. We only know that they are the means-- they are the how-- to produce an endless supply of very important & valuable things. The Internet has proven to be the same, it produces a continuous stream of innovative, valuable things. It should be obvious that building the most advanced community Intranet will attract a lot of innovative people to our city, and encourage our own people to be innovative, as well.

To the extent we require these networks to produce profits, they will not be the "how" of the new economy. Infrastructure rarely pays for itself directly, but pays for itself many times over indirectly. He also has a response to those who fear the public should not compete with the private:

But what if, instead of public vs. private fiberoptic lines early in the 21st century, you find yourself in the early 18th century, and the question is building state-owned roads and bridges that will decrease the profitability of privately-held services? What if you live in the early 19th century, and the question is building public libraries that will compete with for-profit bookstores? What if it is the early 20th century, and the question is creating public schools that will pull students from private institutions?

Well done, Joe! Another article from the same paper interviews Director of Utilities for Lafayette, Terry Huval. This is a guy that understands the value of publicly owned fiber networks:

In addition, we will launch a digital divide product that will provide Internet accessibility in homes where there are no computers, and no Internet services today. All of this is just the tip of the iceberg. There is much more to come, and much of those are things that I don't even envision myself.

Readers undoubtedly know that Google has proposed a limited fiber-to-the-home open access network rollout that will offer gigabit speeds. Communities are applying to be considered -- all we know at this point is that Google envisions ultimately serving some 50,000 - 500,000 subscribers. Parts of this announcement are very exciting for those of us working to create better networks that serve community interests. I think the long term impact of it being open access may well dwarf the impact of having gigabit speeds available to some at "competitive" rates (though one wonders how rates can be competitive when the service is unlike any other?). The idea of open access -- where the network is an infrastructure that supports independent service providers, creating a true market for broadband services -- is a game changer. Unfortunately, the number of people served by open access networks in the U.S. has been too small to prove the model (as I discussed here). If Google connects half a million people with an open access network, it could change the landscape of broadband networks, pushing us toward a non monopolistic world... but probably not in the first year or two. These changes take time. Beyond that, the gigabit test bed will be very interesting. Lafayette's LUS Fiber has been experimenting with the 100Mbps network and now Google will be upping the ante. Given the number of people who are excited and the number of communities announcing their application, it is clear that the telecom carriers are not meeting community needs. Though I think the experiment interesting, I hope it is limited. My fear, which I do believe is premature but has poked its head up nonetheless, is that Google may launch another round of Earthlink Wi-Fi free-lunch hopes from local governments. Those who once pinned their hopes on an outside company building the network they wanted have now recognized the folly. Even though Heinlein's TANSTAAFL warning came half a century ago, few seem to have internalized the lesson. There Ain't No Such Thing As A Free Lunch. 10 years ago, Google was a different company. In 10 years, we have no idea what Google's interest will be but we can be sure that communities will need connectivity that puts local citizens and businesses before profits. Will Google's network serve community interests then? Maybe.

In a recent issue, the Economist profiled BVU - the first municipally-owned triple-play fiber-to-the-home network in the U.S. Evidently, the Economist thinks Bristol an unlikely spot to find a full fiber-to-the-home network, but some of the best networks in the U.S. are in these unlikely spots because they are built by communities who have realized the private sector will not build the needed infrastructure. And this infrastructure has brought many jobs to the region:

And the fibre brought jobs. In 2007 both Northrop Grumman, a big American defence contractor, and CGI, an international IT consultancy, said they would hire between them 700 technicians, consultants and call-operators at offices in nearby Lebanon, Virginia, part of BVU’s fibre backbone. Both cited the area’s universities and low cost of living, but neither would have come without BVU’s investment, which Northrop calls absolutely critical.

The article asks a common question but answers it exceedingly well:

Should cities be in the business of providing fast internet access? It depends on whether the internet is an investment or a product. BVU could not afford to maintain its fibre backbone without selling the internet to consumers. And it could not build a subscriber base without offering cable television and a telephone line as well; households these days expect a single price for all three services.

Most communities would rather not have to get involved with selling services like cable television, but such services are generally a necessity to cash-flow the network. So, as they did before with electricity, they do what they must to keep the community strong and competitive.

Good news out of Louisiana - the LUS Fiber deployment in Lafayette is running considerably ahead of schedule. This is especially important because Louisiana law makes requirements on publicly owned networks to break even within a relatively short time period, explicitly favoring private companies in law. The city should be fully passed this summer, allowing anyone to take one or more of the triple play services. Fortunately, many are taking the full triple-play:

Although LUS is not releasing the exact number of customers who have signed up for fiber services, Huval said it is "many thousands" and that a higher-than-expected number are signing up for all three services at once.

Networks succeed financially when they generate high amounts of revenue per user - ARPU in industry terms. Because the fixed costs are so high to connect users, the low revenues generated by only a single service (like telephone) may take many years to pay off the connection expense. The schools are also making use of the network:

Besides serving residences, LUS Fiber is also being offered to businesses throughout the city, and the wholesale numbers have been at or above expected, Huval said. All Lafayette Parish public schools also are connected to the system, and the technology was used for a partnership among Carencro High School, LITE, Louisiana Public Broadcasting and a San Francisco, Calif. school system, during which students were able to teleconference and collaborate with each other.

The Salisbury, North Carolina, municipal fiber-to-the-home network is set to start offering services this summer. This article in the Salisbury Post provides an update on the situation:

City officials have targeted May 31 as the completion date for fiber-optic cable installation, with the network going citywide by Aug. 1.

As with several other publicly owned networks, they will be promoting the network with a mobile trailer that will demonstrate the technology to people at block parties and other gatherings around the community.

The mobile trailer will feature computer stations and a living room setting featuring everything the city's fiber-optic cable service offers. "We can roll it into neighborhoods, have small block parties and have people see what a difference it provides," said Mike Crowell, the city's broadband services director.

Carol Wilson speaks with Jackson's Michael Johnston about JEA's triple-play network in Tennessee. As far as I can tell, this interview took place in September, 2009. Johnston reports that the publicly owned network passes 30,000 residences and about 5,000 businesses. Of those taking cable services locally, 60% subscribe to JEA and half of them are taking multiple services. Jackson started as a purely open access network but has transitioned to offering retail services. At that point, they were starting to use the network to create a smart-grid for the electrical side of the utility.

Dover, a city of over 12,000 in Eastern Ohio south of Canton, has been considering a publicly owned fiber to the home network for years to complement its water and electric muni utilities. The City Council is mulling the latest proposal, one that shows a lower cost to build (probably due to a combination of technology lowering prices and lower price for labor in a recession).

The summary indicated that total funding costs have decreased from $11,615,791 in December 2008 to $10,663,410 in December 2009. Shaw estimates that operating income would make the system financially feasible after the third year and could enable the city to pay off its debt in 15 years vs. 16 years as had been predicted two years ago.

A press release from Uptown Services, a broadband consulting company provided some history:

They originally hired Uptown in 2004 to complete a broadband feasibility study. The results of that study were promising, but the City chose to wait for the economics to improve as the technology matured and costs came down over time. Uptown completed a refresh of the original study in 2008. The case had improved, but the City wanted to fine tune the cost estimates through the completion of an actual system design prior to making any final decisions on a City wide deployment. Uptown was selected in 2009 through an RFP process from a slate of qualified proposals to complete this design.

Judging from the local site explaining the networks, they really understand the power of publicly owned broadband. The FAQ include this gem:

Remember this critical point: The incumbents look for a profit and answer to their shareholders, while the City of Dover looks for the betterment of the community and answers to its citizens.

They city has Verizon and Comcast as incumbents respectively. I suspect Dover is one the thousands of communities Verizon is trying to dump on Frontier Communications rather than invest in smaller communities. The stumbling block currently appears to be deciding how to finance the proposed network.

Terry Huvall, the head of Lafayette's municipally owned fiber to the home network, discusses the history and motivations behind the community fighting for four years to build their own network. Lafayette has a strong tradition of publicly owned utilities -- they were the first community in Louisiana to build a municipally-owned water and electricity utility, voting to tax themselves to fund it in 1896. That investment allowed Lafayette to prosper and surpass other communities in the following decades. This investment will have the same effects. This video is no longer available.

Catharine Rice gave a terrific presentation detailing the ways Time Warner has responded to the municipally-owned Greenlight fiber-to-the-home network: raising the rates on everyone around them and cutting great deals to Wilson residents. I saw the presentation on the Save NC Broadband blog which also has a link to her slides - make sure you follow along with the slides. She details how Time Warner has raised rates in towns around Wilson while lowering their prices and offering better broadband speeds in Wilson. Once again, we see that a community building their own network has a variety of benefits: a superior modern network that is community owned, lower prices on the last-generation network from the incumbent, and some investment from the incumbent. Now the question is whether Wilson's residents will be smart enough to support the publicly owned network in the face of Time Warner's low low prices - a recognizing that a few short years of low prices (for low quality) are not worth abandoning the publicly owned network and the benefits it has created in the community.

Cable pricing in the Raleigh-Durham-Cary NC Market from City of Wilson, NC on Vimeo.