Islesboro, Maine, Voters Approve First Round of Muni Funding

Islesboro residents voted on May 30th to move forward with their municipal network plan. According to the Islesboro Press Herald, approximately 75 percent of voters attending the annual town meeting approved a motion to spend $206,830 on an engineering study and contractor search. Approximately 200 residents attended.

As we reported in March, the community has been working since 2012 on a plan for a fiber network to improve connectivity for businesses and the almost 600 residents on the island. The infrastructure will belong to the Town of Isleboro; GWI will offer services via the network. The entire project estimate is $2.5 - $3 million to be funded with a municipal bond.

Many of the island's residents now obtain Internet access via DSL from Fairpoint, which has been described as spotty and unreliable, for $20 - $70 per month. GWI already operates on the island, offering wireless service.

This is the first in a several step approval process:

Town officials plan to hold a second public vote in the fall on 20-year municipal bond for up to $3 million that would fund the network’s construction, [Selectman Arch Gillies] said.

Completion is scheduled for the end of 2016.

“We’re a community intent on keeping up with the world, and maybe getting ahead of the world,” [Gilles] said.

Lessons Learned from Community Outreach in Gilberts, Illinois

Earlier this year, we reported on the Village of Gilberts, Illinois, where voters defeated a measure to approve general obligation bonds for a municipal network project. Our story got the attention of Bill Beith, Assistant Village Administrator from Gilberts who contacted us to talk about the project and provide detail on their efforts to educate the voters prior to the election.

The project would have raised property taxes 1.8 percent or approximately $150 per year on a property with a $250,000 market value. Even though the network would have been a publicly owned asset, Beith believes the idea of any new taxes defeated the measure. As the community considered the project, voters stated repeatedly that Comcast or one of the other incumbents should pay for deployment of infrastructure. Unfortunately, the Village had approached incumbents who had no interest in building in Gilberts. They felt the investment would not pay off in a community that is home to about 6,800 people.

The proposed project was to be deployed along side a private fiber network. When the developer of a new housing development learned that fiber significantly increases the value of real estate, he chose to include it to each new home. He also chose to bring the network to a nearby school along with several public safety and municipal facilities at no charge to the Village. 

The project on which voters denied funding would have extended fiber to the rest of the community. According to Beith, the developer still plans to continue his fiber build in an incremental fashion. In addition to the homes in the new housing development, he will focus on commercial connectivity in the Village of Gilberts.

Even though the measure failed in April, the Village will continue to explore ways to work with the developer. According to Beith, he and other advocates for improving connectivity in Gilberts walked away with some valuable lessons for the future.

Ultimately, timing played an important role. Because referendum rules precluded the Village from advocating a position on the project, Beith felt their ability to share the potential benefits was compromised. If the Village needs to ask a similar question to the voters in the future, they will begin educating the public long before the referendum question is determined.

Beith also believes that the citizen Facebook page could have played a more instrumental role if it had been developed earlier. He found that it became a place for online debate and felt that, if it had been up and running earlier, advocates could have used the forum as a way to address arguments or misinformation early in the process.

The Village created NetworkGilberts.com and Beith believes that branding the idea of the network was a good way to introduce the initiative to the public. They also posted some basic videos to provide basic information on connectivity. If they had offered videos earlier in the process, the Village could have presented a waider range of material. Beith noted that they were also restricted in what links the the Village could provide and could only offer factual resources that did not advocate for or against the project.

According to Beith, the Village held an open house where they provided live demonstrations of 300 Mbps Internet access via fiber, a pair of 4K big screen TVs and eight assorted devices streaming simultaneously. Approximately 50 or 60 people attended the open house but Bill described the atmosphere as skeptical. It is his belief that the people attending the open house were undecided while those that stayed away had already determined how they would vote.

The Village of Gilberts must wait two years until this issue can be presented to the voters again. Beith is hopeful that by that time word will spread that access to fiber is unsurpassed and demand will grow. Many things can happen in two years and, as we have seen in other communities, it often takes several attempts for referendums to pass.

Co-Mo Cooperative Facing Off With Subsidized CenturyLink in Missouri

Parts of rural central Missouri have some of the fastest Internet service available thanks to fiber service from Co-Mo Electric Cooperative and United Electric Cooperative. The two have worked together to bring gigabit FTTH to cooperative members in central Missouri. Now that they have proven that people and businesses want high capacity connectivity, CenturyLink is about to enter the scene. The company plans to use millions of dollars in Connect America Funds (CAF) to build in areas already served by the cooperatives.

After years of planning and hard work, Co-Mo and United are not taking the threat lightly. They have filed challenges with the Wireline Competition Bureau but CenturyLink's Inside-the-Beltway power has thus far served them well. The Wireline Competition Bureau denied a challenge by Co-Mo and United but the decision appears to contradict established policy. Co-Mo and United recently appealed to the FCC asking them to review the Bureau's Order allowing CenturyLink to use over $10 million in CAF. [Read the Application for Review here.]

CenturyLink argues that Co-Mo and United are not providing voice services because they are working with a third party, Big River Telephone Company, to bring VoIP to members. If this were true, it could disqualify them as providers and lend credence to the argument that there are census blocks in the area that are not served. Because Co-Mo and United install, take phone orders for subscribers, and service phone switches, they should qualify as a provider of land line voice services. 

CenturyLink also asserted that census block information showed areas unserved even though those areas now have access to fiber connectivity from Co-Mo and United. General Manager of Co-Mo Connect Randy Klindt told us that the timing of their build prevented Co-Mo from providing an active customer in each block, but that service is available to people who live there. Even though it is not a requirement, Co-Mo and United now have detailed information that prove people in those census blocks can, and do, take FTTH service.

Co-Mo and United waged successful challenges for similar CAF awards to AT&T and Windstream. CenturyLink appears determined to use tax subsidies to build what will likely be only a fraction of the speed and reliability of Co-Mo or United Cooperative networks infrastructure. Unfortunately, CenturyLink's usual modus operandi - offering cheap intro rates to lure customers away from local providers like Co-Mo and United - could harm new investment in high speed networks.

Klindt also summed up the larger policy concern in an email:

The commission’s directive was to ensure that CAF support should not be used to build broadband in areas already served by an unsubsidized competitor...This money should be used in legitimate unserved areas, not areas with gigabit residential service available.

Learn more about Co-Mo Cooperative and their fiber network, Co-Mo Connect, in episode #140 of the Community Broadband Bits podcast where Chris interviewed Randy Klindt.

Community Broadband Media Roundup - June 1

Colorado

Internet speed wars escalate in region by Joshua Lindenstein, BizWest

Editorial: Fort Collins needs municipal broadband, The Coloradoan Editorial Board

Other potential benefits, as we see it, include increased telecommuting (which will get cars off the road and ease the congestion issues as Fort Collins grows). Some people would also be able to cut ties with their satellite dishes and cable boxes — and the associated costs — because everything is available and, presumably, faster to access online.

Sure, being able to download and watch a movie online faster would be more convenient, but it's not life-changing. However, as innovations like telemedicine — communicating with care providers via a video conference online before stepping into a doctor's office — become more common, we need to have Internet speeds that can keep up with advancements.

 

Maine

Islesboro acts to become Maine’s most ‘wired’ island: Residents OK steps to bring fiber-optic 'gigabit' Internet service to the community in Penobscot Bay. by J. Craig Anderson, Portland Herald

 

Massachusetts

Broadband competition, Cajun style by Dante Ramos, Boston Globe

When communities aren’t being served — or, as in Lafayette’s case, they want better service than they’re getting — why should they wait for Comcast Corp., Cox Communications, or other broadband giants to come to their rescue?

 At least 500 communities have community-owned broadband networks, according to data from the Institute for Local Self-Reliance, an organization that promotes the idea. Except for a few newer details — you know, minor stuff like fiber optics and the Internet — the argument over such networks has been raging since the Roosevelt administration.

 

New York

Hoodlinked: Do-it-yourself Internet network reaches Ridge by Max Jaeger, The Brooklyn Paper

A group of techies aiming to build a citywide, community-owned wifi network is making inroads into Bay Ridge. Called NYC Mesh, the network links computers together using standard wifi routers — allowing users to share internet connections, set up openly accessible community message boards, and even communicate with one another when internet service is not available.

 

North Carolina

Departing Raleigh CIO Gail Roper leaves high-speed legacy in Triangle, WRAL Techwire

 

Wisconsin

Madison municipal Internet projects fall behind due to mayoral election, disagreement by Bryna Godar, Capital Times

 

FCC

FCC Aims to Overhaul Phone Subsidy Program to Cover Broadband by Jim Puzzanghera, LA Times

About 12 million households participated last year in the Lifeline program, which began 30 years ago to ensure that all Americans had access to basic telecommunications services.

 

Charter/Time Warner Cable Merger

Charter Deal for Time Warner Cable Signals Shift in TV Industry by Michael J. de la Merced

Charter nears Time Warner Cable deal for $55 billion by Alex Sherman and Ed Hammond

Dealmaking is heating up in an industry facing waning demand for traditional pay-TV packages and competition from Netflix, Amazon and other online services.

5 reasons your Internet bill keeps climbing by Erik Sherman, MoneyWatch

What We Must Demand From Charter, Time Warner Cable by Sascha Sega, PC Mag

Upgrade Seattle on Need For Better Access - Community Broadband Bits Episode 153

We were excited to begin writing about the Upgrade Seattle campaign back in January and this week we are presenting a discussion with several people behind the campaign for episode 153 of the Community Broadband Bits podcast.

We are joined by Sabrina Roach, Devin Glaser, and Karen Toering to discuss what motivates the Upgrade Seattle campaign and the impact it hopes to have on the community.

We discuss their strategy for improving Internet access, how people are reacting, and how Upgrade Seattle is already working with, learning from, and sharing lessons to, people organizing in other communities for similar goals.

Read the transcript from our discussion here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below.

This show is 25 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to other episodes here or view all episodes in our index. You can can download this Mp3 file directly from here.

Thanks to Persson for the music, licensed using Creative Commons. The song is "Blues walk."

In NC, Bald Head Island Releases RFP for Gigabit Network

The Village of Bald Head Island, North Carolina, recently released a Request for Proposals (RFP), in its search for an FTTP network. The Village, home to about 160 year-round residents, is accessible only by ferry. Transportation on the island is limited to feet, bikes, and electric golf carts. While they may choose slower transportation methods, the people of the island want speed when it comes to Internet access.

Members of the community began working on the idea in the summer of 2013 as part of an initiative that involved several challenges facing this quiet community. They determined that the economic health of local businesses and quality of life depended on improving access, traditionally provided by AT&T and Tele-Media.

Real estate professionals on the island noted that lack of broadband interfered with the housing market. According to the RFP:

Adequate broadband service is at such a premium that current real estate transactions require conveyance of current Internet service. Otherwise, new installations can take a very long time. Inadequate broadband is a known and aggravating hindrance to daily operations of local businesses. There is very strong demand from prospective real estate buyers for high-speed broadband. Current services are of inadequate quality, and worsen in bad weather and during peak usage.

After reaching out to incumbents and potential new providers, Bald Head Island's Village Council chose to open up the possibilities and issue an RFP.

While the number of year round residents is small, part-time housing, vacation rentals, and local businesses catering to tourists are plentiful. As a result, a fiber network could reach approximately 2,500 premises. The population of the island varies based on holidays, with the number of people as high as 7,000. Community leaders expect it to increase significantly when fiber comes to the island.

We reached out to Calvin Peck, Village Manager:

"We are looking for a partner. We think fiber to the home is the way to do it. At this point there is no broadband on the island that fits the FCC's definition."

The community's main industries are real estate and tourism. While we often think of "getting away from it all" as a vacation gold standard, a number of visitors have told Peck they will vacation elsewhere until the island can get its connectivity up to speed. In addition to professionals who need to remain in touch electronically, children and grandchildren still want to stream Netflix or play games online while on vacation.

We saw similar problems in Cook County, Minnesota, where the community is engaged in a BTOP funded fiber deployment. The tourist industry in the woods also needed access to high-speed Internet to remain viable.

Even though the FCC recently struck down North Carolina laws that prevent municipalities from investing in broadband networks (or engaging in certain types of partnerships), leaders in Bald Head Island choose to move forward carefully. They know that the state challenge to the FCC's Order could restore the state restrictions based on judicial interpretation. The original bill was pushed through by then Speaker of the House Thom Tillis (now in the U.S. Senate), who is hostile to municipal networks.

Peck and village officials in Bald Head Island expect Tillis to strongly defend his bill at the federal level. They also don't know if the state general assembly will simply pass another law that could create another barrier. As a result, says Peck, they are approaching the project from a "worst case scenario" perspective. 

They hope that by the time they are operating, there will be no question, allowing them to move forward without the onerous state law requirements that stifle broadband development.

It is unfortunate that industry dollars so control North Carolina leadership that a place like Bald Head Island, with less than 200 full time residents, must develop a contingency plan to protect itself from its own state government. If the Village of Bald Head Island is willing to take on the task themselves for its own future and its right to do so has been recognized at the federal level, state decision makers should step aside and let the community proceed.

Responses to the RFP are due by June 20, 2015. View a PDF of the entire document at the Village website.

Seattle Energy Committee Meets to Discuss Muni Fiber Possibilities: Video Available

As the talk of municipal broadband grows louder in Seattle, city leaders are gathering to learn more about what deploying at a fiber network may entail. On May 13th, the Seattle Energy Committee and leaders from citizen group Upgrade Seattle met to discuss the needs, challenges, and possibilities. Chris joined them via Skype to provide general information and answer questions. He was in Atlanta at the time of the meeting. Video of the entire meeting is now available via the Seattle Channel and embedded below.

King5 also covered the meeting (video below). 

"We're starting from a different place in terms of the infrastructure," said Karen Toering with Upgrade Seattle. "The city already has in place hundreds of miles of dark fiber that we're not even using right now that were already laid in the years previous to now."

Upgrade Seattle sees that dark fiber as the key to competition which will lead to better consumer prices and service from private providers. 

Businesses are also interested in reliability, argues Upgrade Seattle. Devin Glaser told the committee:

"It's important to have double redundancies – to have two wires connecting everything – so one accidental cut doesn't take out the entire grid," Glaser said. "So anything we have at the city level would value our productivity rather than their profits."

You can watch the discussion below. The conversation on a municipal fiber network lasts about about an hour. Chris begins his presentation around 11:00 into the video. As a warning, there is a significant amount of profane language at the beginning of the video from one of the public commentors.

EPB and Chattanooga Will Lower Price of Internet for Low Income Students

In an effort to extend the benefits of its gigabit network to lower income Chattanooga school kids, Mayor Andy Berke announced that the EPB will soon offer the "Netbridge Student Program." 

WDEF reports that children will qualify for the program if they are enrolled in Hamilton County schools and are currently enrolled in the free or reduced price lunch program. Comcast's Internet Essentials uses the same eligibility criteria. Households that qualify will be able to sign up for 100 Mbps service for $26.99 per month. Details are still being discussed.

Last year, Hamilton County schools replaced a number of textbooks with iPads in an attempt to take advantage of Chattanooga's fiber asset to improve student performance. The move revealed a grim reality - that many students' access to that incredible gigabit network (or any network) stopped when they walked out of the school. Educators found that children with Internet access at home made significant strides while those without fell behind. From a December 2014 article on Internet and Chattanooga students:

In the downtown area, for example, only 7 percent of potential customers subscribe to high-speed broadband Internet. In economically depressed areas such as Alton Park and East Lake, only 15 percent of residents have high-speed Internet, according to EPB.

We spoke with Danna Bailey, Vice President of Corporate Communications from EPB, to get some details on the plan and she confirmed that the program is still in its infancy; officials at EPB plan to have it ready for students by the fall. She told is that the rate of $26.99 is what EPB must pay to bring 100 Mbps to a customer when it is unbundled. The regular rate is $57.99. 

Note that the slowest speed anyone can get on the EPB Fiber network is 100 Mbps symmetrical. Unlike other providers, EPB is not offering a much slower tier to low income households. We haven't been able to verify, but we suspect that EPB is limited by state law on its pricing. State laws that prohibit municipalities from offering services below cost may be uniquely hurting low income households -- yet another reason that states should allow communities to make these decisions locally.

We were curious about how EPB plans to contend with the high incidence of mobility among lower income families, which often complicates their ability to qualify for Internet Essentials from Comcast. EPB acknowledges that this may become an issue, but because they are so entrenched in the community and serve so a large segment of housing, Danna does not believe it will be a difficult problem to overcome. 

They are also determined to avoid the enrollment pitfalls of Internet Essentials because, according to Danna, it defeats the purpose when people who need the program cannot enroll. It is also undecided at this point whether or not the program will be extended to other low-income households, such as the elderly or adults without children.

We applaud any community's attempt to provide fast, affordable, reliable Internet access to their less advantaged citizens. The program is new, but we hope that EPB will consider this sort of program for all those that need affordable access, rather than just a small segment. We want to see capable communities address the digital divide with force and conviction.

Local coverage from WDEF:

Santa Fe's Targeted Fiber Investment - Community Broadband Bits Podcast 152

After Santa Fe found its residents and businesses were often paying the same rates for connections at half the speed of peers in Albuquerque, the City began investigating the local broadband market. This week on Community Broadband Bits, Sean Moody joins us to discuss the situation and what Santa Fe is doing to spur more investment.

Sean works in the Economic Development Division of the City as a Special Projects Administrator. He explains the bottleneck in middle mile access that allowed CenturyLink to charge higher rates for backhaul than are common in similar communities.

The City decided to invest $1 million in a new fiber link that would bypass the choke point and allow various independent companies to have a better choice for access to the wider Internet. Along the way, the City partnered with the state for additional benefits.

Read the transcript from our discussion here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below.

This show is 25 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to other episodes here or view all episodes in our index. You can can download this Mp3 file directly from here.

Thanks to Persson for the music, licensed using Creative Commons. The song is "Blues walk."

Public Private Partnerships: A Reality Check

When Westminster, a community of 18,000 in rural Maryland, found itself with poor Internet access that incumbents refused to improve, it decided to join the ranks of a growing trend: public-private-partnerships between local governments and private companies to invest in next-generation Internet access. They are now working with Ting - one of a growing number of private sector firms seeking partnerships with cities – though how partnerships are structured varies significantly across communities.

In building an infrastructure intended to serve the community for decades, city leaders knew Westminster should retain ownership of the network to ensure it would remain locally accountable. Ting is leasing fiber on the network and providing Internet services to the community with plans to offer some type of video in the near future. The public-private-partnership (or “P3”) includes a temporary exclusivity arrangement for two years or when a minimum number of subscriptions are activated. Westminster will then have the ability to open up its network to other providers in an open access arrangement. 

Communities are realizing that if they want better connectivity, they need to take matters into their own hands. As local leaders wade through the complex process of planning, financing, and deploying Internet network infrastructure, P3s are becoming more common. Communities with little or no experience in managing fiber optic networks may assume that P3s are safer or easier. That may be true or not depending on the specific P3 approach; the data is only starting to come in. P3s have been relatively rare compared to the hundreds of local governments that have chosen to build their own networks in recent decades.

Partnerships will continue playing a larger role  when improving local connectivity but this area is still maturing – there are already a few examples of successful P3s though many will also recall the failed Gigabit Squared P3 approach

P3s are more established in municipal public works projects involving other areas of infrastructure. A November 2013 Governing article by Ryan Holeywell examined the pros and cons of transportation P3s. Many of the lessons apply to other areas of the economy, including efforts to improve Internet access. 

Considering Incentives

Different incentives motivate public and private entities, creating potential challenges implementing P3 projects. Maximizing public benefits is not necessarily counter to ensuring a profit for a partner, but the two goals can be in conflict. An observation from Joshua Schank of the Eno Center in the Governing article hit the mark regarding the incentive imbalance:

Urbana Champaign Logo

The problem, he says, is that the private sector comes to the negotiating table with less to lose than the government, and it is also more willing to walk away. 

Often private partners hold a significant advantage and a willingness to walk away simply because local communities have a critical need with few options. They may feel compelled to make unnecessary sacrifices to expedite the project. For example, Princeton, Massachusetts, had entered into a Memorandum of Understanding with partner Matrix Design to deploy a fiber network. Matrix would have retained control of the network for 20 years if the plan had proceeded. The P3 fell apart when the town discovered relinquishing ownership of the infrastructure jeopardized their grant eligibility.

The P3 between UC2B and iTV3 in Illinois’ Urbana-Champaign region explicitly considers current and future control of the network. UC2B received stimulus funds as part of the American Recovery and Reinvestment Act to deploy fiber infrastructure. In 2014, it entered in to an agreement with the Illinois ISP to provide last-mile services over the network. As part of their agreement, UC2B will have the option to purchase any equipment and infrastructure deployed by iTV3 if the two agree to part ways in the future. This provision helps ensure a smooth transition if there is a new provider and gives UC2B the opportunity to control that transition or step back into the role of provider. In short, they have a say in the future of their network whereas other P3s may give sole discretion to the private partner over how the network is managed or who operates it in the future.

Risks in All Directions

Perhaps the greatest attraction for P3s, whether in transportation or broadband, is the desire for elected officials to avoid paying for a project or at least transfer some risk. 

“Politicians are at the point where people are crying out for enhancements to infrastructure, but they don’t want to hear any proposals for new public revenues,” says Phineas Baxandall, a senior budget policy analyst at the nonprofit U.S. PIRG. “So anything that makes it sound like the money’s coming out of thin air is a win-win.”

“It’s perceived as free money,” says [Robert] Puentes of the Brookings Institution. “That perception has to be dealt with,” largely because, Puentes and others say, the capital often comes at a cost that can exceed the expense of typical municipal borrowing.

As Robert Heinlein was fond of writing, there ain't no such thing as a free lunch. These projects require a lot of capital and the private sector will not incur risk without charging for it. A project that seems to good to be true probably is. 

Traditionally, the public sector designs and engineers a project that private sector firms then bid to complete parts of the project. (This is a needed reminder that even purely “public” projects have strong private sector involvement.) P3s come in a variety of flavors, including those in which a private partner handles all phases with little or no competitive bidding. Often that private entity contributes financially to the project as part of the agreement. This transfer of responsibility and potential transfer of risk seems attractive but:

Julie Roin, a University of Chicago law professor, also questions whether the “risk transfer” argument carries any weight. Ostensibly, for the private sector to turn a profit, a deal only makes sense if the government overestimates its risk and underestimates the project’s revenue potential. “It’s not as if any investor is going to accept risk without demanding compensation,” Roin says. “You’re just paying for the risk in a different way.”

The Congressional Budget Office, has determined that, when there is an improvement in cost or speed associated with a transportation project from a P3, the improvements are negligible [PDF of the 2012 report]. In short, some of the widely touted benefits from P3 approaches appear to be overstated or a manifestation of a preference for hiding risk rather than dealing honestly with it.

In many cases, powerful corporations lobby heavily in their own narrow interest against public projects whereas few have a strong direct interest in defending government. From the Governing article:

There’s a growing cadre of academics, activists, and state and federal auditors who question these public-private deals, but their voices aren’t always heard. At that Senate hearing, for instance, none of those dissenting views was represented on the panel. Nor did the hearing highlight what the governments’ own accountants say about P3s—namely that they are unlikely to solve the country’s infrastructure funding gap and, in some cases, may carry risks for state and local governments. “Whenever I see advocacy [for P3s], I look for real economic analysis that justifies privatization,” Cate Long, a municipal finance blogger for Reuters, recently wrote. “It’s never there.”

Congressional Budget Office

In Anoka County, Minnesota, a P3 arrangement limits the county's use of its own fibers on the network to only noncommercial uses. As a result, the County does not have the ability to fully use its own network, built largely with a broadband stimulus award, for economic development. It expected its partner to do more to encourage economic development, but the County apparently did not realize that its partner did not have expertise in that field. A company may be great at operating an advanced network but may not have any interest in the work of luring a potential future client to the county. A lesson from Anoka is that a P3 may require doing even more due diligence than building a municipal network. Read more about Anoka County's project in our 2014 report on 12 local government-led approaches in Minnesota.

Governing touched on a similar, albeit more extreme, situation in its reporting of a P3 transportation project in California:

When the government wanted to expand parts of the roadway to alleviate congestion, it was blocked by a “non-compete” clause in the 35-year contract. Following litigation, the government ultimately bought out the private partner. Just seven years after the express lanes opened, the county’s transportation authority paid $207.5 million for the $130 million project. That’s a worst-case scenario, of course. Those who study P3s say governments have learned their lesson about non-compete clauses. But “compensation” or “stabilization” clauses—in which governments owe the contractor money for taking actions that could reduce toll revenue—continue.

None of these criticisms are meant to suggest that P3s are unwarranted or inherently bad. Rather, we remain concerned that P3s are sometimes elevated as the ideal solution to all investment needs merely because the term public-private-partnership suggests that everyone is working together in harmony. Harmony isn’t easy. However, we firmly believe we will continue learning from previous efforts and improving on the P3 model. In the meantime, no one should assume that P3s are easier or less risky than a municipal network.

P3s and Opposition

Even though the FCC has begun to chip away at state barriers in Tennessee and North Carolina, these barriers persist in many states. Some of those restrictions prevent a local government from working with a private partner or at the very least, restrict the type of partnership available.

Unlike roads, community broadband projects are often the target of threatened incumbents or their lobbyist organizations. If a local community and a private firm work together, they may soften the ire of the mega corporate providers who cry foul at the prospect of a municipal broadband network. Communities working with a private sector firm may be more resistant to claims that the investment plan is somehow anti-business or anti-private-sector.

Conclusion

Some communities are too intimidated to take on the challenge of offering a service directly in competition with big providers like Comcast. They would greatly prefer to focus on the infrastructure side of the equation while a trusted partner focused on advertising and provisioning the services (which tend to evolve more rapidly).  If P3s allow local governments to achieve their goals without directly competing against a big cable company (as Westminster – Ting seems to), we will see many more of these approaches. However, that also depends on having a trusted partner working with the community.

Carl Junction
When Internet access is poor in a town of 7,500, it is not easy to get the attention of AT&T or Mediacom. It is also not easy to fund an estimated $5 million fiber project in a fiscally conservative community, even when the majority of residents need better connectivity. In Carl Junction, Missouri, local leaders are partnering with a local private ISP to offer high capacity LTE wireless Internet access for residents and businesses if enough people pre-subscribe. The town will purchase the equipment and provide locations for installation. In exchange, their partner will perform all installation and management of the network; the town will also share in revenue beyond a 10 percent take rate and will also receive free public Wi-Fi.  Carl Junction’s partnership is one of many approaches that show how these partnerships have varying levels of risk and reward.

P3s may be the best solution for some communities, but they are not a guaranteed superior approach to a project owned and operated by local governments. Some of the most celebrated networks in this country, including Wilson, Lafayette, and Chattanooga, are not structured as P3s. The Governing article ends on this reminder:

“It’s a tool that can be valuable but needs to be used very carefully and with a complete understanding,” says Bob Ward, New York’s deputy comptroller for budget and policy analysis. He notes that public-private partnerships aren’t the only way to do big projects. “We went to the moon without a P3.”

P3s will continue to evolve and improve. We truly hope to see more ISPs emerging as viable and trusted partners for cities that want to focus only on infrastructure without having to get involved in service provision. Not as a replacement for other municipal approaches but as yet another group of models that communities can evaluate for their unique situation.

Update: A June 3rd Governing article on Virginia's P3 environment caught our attention. Faced with a number of setbacks in P3 projects and the negative publicity associated with them, the state is starting to initiate more transparency on public-private partnership projects with legislation.

In the past, Virginia had enthusiastically embraced P3s, but several poor outcomes in transportation are encouraging reassessment:

“The state is obviously taking a hard look at this P3 model,” [said Jonathan Gifford, director of a George Mason University program studying P3 transportation projects]. “That’s what states are supposed to do. This is not designed to be a giveaway to private concessionaires. The only time you want to go forward with these is when they are going to add value to what the state would be able to do on its own.”