Longmont, Colorado, will move ahead with plans to offer fiber connectivity to the entire community. After presenting this business plan to the City Council, members voted unanimously on May 14th to support the measure. Scott Rochat from the Times-Call attended the meeting.
Residents stepped forward to express their opinions and all but one urged the council to "get it done."
The plan projects a four-tier price structure. For residential rates, that's proposed to range from $39.95 a month for 10 megabit-per-second upload and download, to $99.95 for 100 mbps.
The study estimates that 35 percent of homes would choose to get their Internet service from the city, still leaving plenty of the field for the existing providers.
"Competition is good," Councilman Alex Sammoury said. "Just because we're a government entity doesn't mean the free market doesn't apply to us. If someone can do it better, more power to them."
The plan proposes to have the city provide Internet directly and work with a private partner for phone service.
Video service would not be provided, Roiniotis and the Uptown consultants said, because Internet video has eroded the market for traditional television.
Vince Jordan, LPC Manager, began the presentation and stressed economic development, education, and lifestyle.
Representatives from Uptown Services reviewed recommendations and the business plan. They answered about 3 hours of questions from council members, including skeptical members who want to avoid becoming the next Provo, Utah. Neil Shaw and Dave Stockton from Uptown Services provided some perspective between the two communities. They pointed out the large number of successful networks in states across the country.
Longmont had been prepared to incrementally expand the network using the cash on hand from the many years of dark fiber leasing. Such an expansion could be done without borrowing but would take a long time (more than ten years, likely) to get to everyone. This is the approach Danville, Virginia, has been using.
Instead, Longmont is now developing a plan to finance the rollout of the network to everyone over a few years, estimated to cost $41 million. A future discussion will examine whatever financing strategy is recommended and approve it before it can move forward.
To view the discussion, zoom ahead to about 14 minutes in to the video below.
In January, Longmont Power and Communications (LPC) announced they would begin connecting businesses located within 500 feet of the existing network. As we reported, local businesses were chomping at the bit to get hooked up and enjoy the high-speed next generation network. Even without efforts at marketing or advertising, more businesses have added themselves to the queue. LPC will present the formal business plan for expanding the network to the City Council on May 14th. Tony Kindelspire recently reported on the race to get on LPC's network in the Longmont Times-Call:
"We are bringing to council a business plan to build out all of Longmont," [Vince] Jordan, [Broadband Services Manager], said. "It's the whole enchilada."
The fact that there has so far been only limited rollout is due to economics. Currently, the installations are being paid for from a reserve fund that Longmont Power has built up over the years leasing portions of its fiber-optic loop to entities such as Longmont United Hospital and a third-party provider that services the school district. Those leases bring in about $250,000 annually, Jordan said.
For 2013, the Longmont City Council authorized LPC to use $375,000 of that reserve fund to begin connecting businesses and residents to the loop.
This model works, but does not connect everyone fast enough for their liking:
To expedite the build-out, extra up-front dollars will have to be allocated, but where those dollars will come from is yet to be determined, Jordan said, adding that ultimately, the decision will lie with City Council.
Right now, Longmont will cover the initial cost of connecting subscribers except in cases of extraordinarily high cost cases. If it would cost $10,000 to install but the payback to the utility in 2.5 years is only $6,000, a customer would have to cover the $4,000 difference presently. While there are over 1,300 businesses with in 500 feet of the network, connection costs vary depending on proximity to roads, structures, and geography.
Jordan notes LPC's first priority is to boost economic development:
"We're really focused on economic development, so the ones that will put the most dollars (they save on broadband costs) back into their business, those are the ones we're working with first."
Businesses and organizations that are on the network appreciate fast symmetrical service, affordability, and the fact that they get service from the city rather than a commercial provider:
"I emailed Vince asking when I could get on," said Michael Jurey, network/telecommunication specialist for Longmont Clinic. "Luckily, the loop ran right by Longmont Clinic. On our side of the street no less."
Jurey said the city's network is three times faster than the speeds the clinic got before at a cost savings of $1,600 a month.
…
"We use it for two reasons," said one of the other three owners [of the Pumphouse, a restaurant and brewpub in Longmont], Dave D'Epagnier. "No. 1 is our business functions -- we process credit cards with it ... just normal day-to-day business activities. Plus, it's a big place, and we could have 50 customers that are using the broadband all at once."
The other thing that attracted him and the other owners was that the business was finally able to tap into the city-owned network after so many years of having to buy high-speed service from a commercial provider. And that is all thanks to the voters, D'Epagnier said.
According to a Scott Rochat article in the Times-Call, the business plan for a FTTH network to anyone in town is possible within three years with a $41 million investment. That plan eliminates the usual $500 - $15,000 hook-up fee:
"We have to be competitive," said Tom Roiniotis, director of LPC. "None of the incumbents charge an install fee, so we won't as well."
Uptown Services prepared the business plan and included residential fees from $39.95 for 10 Mbps to $99.95 for 100 Mbps for Internet. Residential Internet would be symmetrical. Business rates would range from $49.95 for 20 Mbps/5 Mbps to $499.95 for 250 Mbps symmetrical.
If LPC wants to pursue a triple play offering, Uptown estimates it would cost another $6 million. At this point, LPC does not consider triple play a good investment:
"The young generation that's active now, they don't watch TV in the conventional way," Jordan said. At a recent presentation, he said, when he asked a college student how often he watched traditional scheduled TV programming, the response was "Never."
…
According to a survey conducted for the business plan, about 68 percent of respondents said they would either definitely or probably switch to the city for Internet service if it were cheaper than existing services. Only about 20 percent said they had a "triple play" or wanted it.
Uptown's estimates were based on a take rate of 35% and the business plan estimates a broadband utility to be in the black within four years and to pay for itself in ten years.
Possible funding mechanisms include:
Certificates of participation, using city property as collateral
A bond issue backed by sales tax
A bond issue backed by electrical revenue
If the city council considers the plan favorable, it will go to the city finance department for more detailed review.
Here is a quick video from LPC, as technicians install connections at the Pumphouse:
Andrea Agardy, from the Tullahoma News, covered the story. Residential customers who now purchase the highest tier, 300 Mbps, will be automatically upgraded at the same $300 monthly rate. LighTUBe will provide 1 gig business connectivity on a case-by-case basis.
Brian Skelton, General Manager, said:
“It shows that we can provide anything they want,” he said. “The TUB board made the decision to build a fiber to the premise system for economic development reasons, and it is paying off for our community. We want to make Tullahoma a much more desirable location for technology companies to locate, due to our ultra-high speed Internet and our highly skilled workforce. Tullahoma is light years ahead of most cities in the United States with the ability to offer these incredibly fast Internet speeds, and we look forward to the benefits this will bring to our city.”
The city owned dark fiber network in Palo Alto is bringing in a steady stream of revenue that may lead to better connectivity for the entire community. According to a Gennady Sheyner Palo Alto Online article, the Utilities Department recently reported to the City Finance Committee that the city Fiber Fund yields $2.1 million per year. The revenue comes from dark fiber leases to approximately 80 commercial customers. From the article:
Viewed as a risky investment two decades ago, the fund has in recent years become a plump cash cow. According to a new report from the Utilities Department, its reserves stand at $14.6 million in the current fiscal year and are expected to nearly double by 2018. [emphasis ours]
Commissioners want to get back to the idea of a city-wide FTTP network to serve residents and spur economic development. The city is now working with the school district on a possible expansion to all local schools.
In his February March State of the City address, Mayor Greg Scharff declared 2013 as the "year of the future," describing fiber as "the key to assuring Palo Alto's long-term position as the Leading Digital City of the Future." This year the City Council made "technology and the connected city" a priority. Also from the article:
Commissioner Jonathan Foster noted that the idea of a citywide fiber network has been floating around Palo Alto for many years and said his views on the project have changed since last year, partly because of the council's new attitude about fiber. Before, when economics were the main driver of the conversation, he was more or less neutral, Foster said.
"Now, my approach is -- let's find a way to make this happen," Foster said. "I'm not sure we'll get there but let's come back with the best proposal we can," Foster said.
Commission Chair James Cook voiced a similar sentiment.
"I think this is probably a good idea whose time has finally come," Cook said. "Maybe now it's just gotten the right kind of momentum."
Dark fiber tends to be useful only to a minority of tech-savvy businesses but it can form the backbone of a future network and rarely encounters regulatory restrictions.
We spoke with Opelika Mayor Gary Fuller in episode 40 of the Community Broadband Bits podcast and learned all about the community's FTTH project. Local residents and businesses decided to go beyond the substandard services they received from Charter Cable and build their own municipal network. At the time of the interview, Opelika Power Services (OPS) was well into construction and is now testing the network, according to an article in the article in the Opelika-Auburn News.
Steve Harmon, director of OPS, said there are between seven to eight test sites in the city that are basic residences receiving these services. Throughout the trial run, OPS will monitor what services are working efficiently and which ones have problems that need to be fixed.
“We’re getting feedback from those people and we are working on fine-tuning the system’s channel configurations,” Harmon said.
As this stage, test sites do not have telephone capability, which will be part of triple-play service from OPS. Harmon noted that service will not be offered until all issues are resolved. That being said, OPS expects launch to be in late spring or early summer.
“This is a most exciting time in the life of our community. Opelika is about to become the first city in Alabama to have fiber to the user. Very soon we’ll fully deploy smart grid along with telecommunications that include video (cable TV), ultra-high speed internet and telephone service. The future is bright for Opelika.”
I just left the Broadband Communities Summit in Dallas, where I ran into many people doing great work to ensure everyone has access to affordable, reliable, and fast Internet networks.
Also while there, Google announced it had reached an agreement to offer Google Fiber in Provo by purchasing the municipal FTTH network. Provo has long been cited as a failure by critics of community-owned networks (even as it continued to attract jobs to the region).
Though Provo originally wanted to offer television, telephone, and Internet services directly using its trusted reputation in the community, the state legislature bowed to pressure from Comcast and CenturyLink (then Qwest) to limit local authority and tilt the playing field in favor of two distant corporations (that have still largely failed to invest in the networks needed by Utah communities). Provo was forced to use a wholesale-only business model.
That approach is rarely used today by communities that seek to build out the entire community at once because it is very difficult to generate enough revenue to pay the full costs of the network.
Despite Provo's struggles, Google recognized a community it wanted to work with. From Google's blog post:
Provo started building their own municipal network in 2004 because they decided that providing access to high speed connectivity was important to their community’s future. In 2011, they started looking for a partner that could acquire their network and deliver an affordable service for Provoans. We’re committed to keeping their vision alive, and, if the deal is approved and the acquisition closes, we’d offer our Free Internet service (5 Mbps speeds) to every home along the existing Provo network, for a $30 activation fee and no monthly charge for at least seven years. We would also offer Google Fiber Gigabit Internet—up to 100x faster Internet than today’s average broadband speeds—and the option for Google Fiber TV service with hundreds of your favorite channels. We’d also provide free Gigabit Internet service to 25 local public institutions like schools, hospitals and libraries.
At the Institute for Local Self-Reliance, we strongly encourage communities to own the essential infrastructure upon which they depend and we are dismayed to see such investments fail to meet their own goals or be privatized as has now happened in Provo.
But we also recognize the authority of communities to decide for themselves what the best path is and we believe that in these two isolated cases, Google Fiber will be a boon to the communities over the short term and resolve ongoing problems.
We have concerns over the longer term, but understand how difficult this business can be, particularly when state laws undermine the capacity of local governments to use the business models that give them the greatest opportunity to succeed.
As long as the Utah Legislature continues to kowtow to Comcast and CenturyLink demands, there would not have been an opportunity of Provo to fix the problems iProvo developed as a direct result of the initial crippling legislation.
I had an opportunity to speak with Milo Medin, head of Google Fiber, after his lunch keynote (which I hope to comment further on shortly) and he once again reiterated his (and Google's) opposition to states that restrict local authority to build these essential networks. He and we are on the same page - communities should be free to choose between building their own networks or partnering with others... or even doing nothing, though both Google and ILSR counsel strongly against that option.
One of the reasons Google chose Austin was because it was ready to work with them. In fact, we have long believed that if AT&T hadn't convinced the Texas Legislature to revoke local authority from communities, Austin Utilities probably would have already made network investments to benefit the community. As Google continues to look for partners, it will ignore entreaties from local governments that have had their heads in the sand, hoping they could avoid taking responsibility for ensuring great Internet networks.
We continue to be excited that Google's investments in fiber access networks have changed the paradigm regarding access to the Internet. Those efforts have awakened the media to the pioneering work already being done in communities like Chattanooga, Lafayette, Bristol, Morristown, and many others (including Clarksville now). And we will continue to advocate for communities safeguarding their self-determination by having a measure of ownership over the networks on which they depend.
There is no doubt that communities are foolish to depend on distant national cable and DSL companies to build the next generation of Internet networks.
And don't be fooled by these two quick annoucements -- Google takes many months to negotiate agreements with local governments like Austin, Kansas City, and Provo. I would not be surprised to see another announcement or two in 2013, but would be surprised to see more than a handful more. Communities need to make their own plans, not hope for an outside entity to rescue them.
Google Fiber is leasing fiber for transport from a small municipal FTTH network in North Kansas City. A recent Kansas City Business Journal article reports that Google finalized a deal with City Council for a 20-year agreement worth $3.2 million to lease fiber from liNKCity. This was more convenient for Google than laying (or attaching) its own fiber to get between areas it is building out.
Earlier this year, liNKCity made news by providing free gigabit service to North Kansas City Schools. The service was estimated to save the school district $500,000 over the next five years.
The home of the first web browser (Mosiac) is now building an exciting open access network - the twin cities of Urbana-Champaign received a stimulus award for UC2B (2B = Big Broadband). Episode #42 of Community Broadband Bits features Carol Ammons of the U-C Indepedent Media Center and Brandon Bowersox-Johnson, who is on the policy committee for the network and an Urbana City Council member.
In our interview, we discuss how Urbana-Champaign received a unique stimulus award - the only urban FTTH network and what they are doing with it. It came after many years of organizing and working toward a broadband solution for the community. Now the Independent Media Center is helping to teach people how to take full advantage of the network.
The network also received funds from the state, as Broadband Illinois has taken an active role in pushing for better broadband access and usage across the state.
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Bartow, Florida, located in Polk County near the center of the state, is considering a FTTH network for the community's 17,000 residents. At a recent City Commission meeting, members decided to put city administrators on task and develop a plan to eventually offer triple play services to residents.
Suzie Schottelkotte reported on the initiative for The Ledger.com, quoting Mayor Leo Longworth, who commented, "I think the residents are ready for it and it's something that's needed."
The City has an existing 100 mile fiber network and offers connections to some local businesses. Government and schools also use the network. At the meeting, city commissioners heard from a fiber optic consulting firm that estimated an expansion to households at $3.3 million for capital costs and $2.5 million to run the network during the startup years until the network breaks even.
Comcast now serves the community through its cable television franchise agreement and is a source of constituent discontent:
"Without discrediting anybody, we just don't have the quality," [Mayor Longworth] said.
The Polk County Democrat also covered the discussion. Steve Steiner referred to the Mayor's comments about the private sector:
[Mayor] Long reminded commissioners that they as well as city staffers and the general public present, are familiar with the problems experienced with the current broadband provider. Long also expressed the doubt another provider would be willing to come to Bartow to install and upgrade the current system in place. The number of businesses and the size of the population does not provide any true incentive.
The Florida Cable Telecommunications Association (lobbyists for the cable industry) responded to the initiative in a predictable fashion. From the Ledger article:
"Before the city fathers take the taxpayers' money and move in this direction, they had better understand what they're getting into," he said. "It's going to be a long time before they're making money. How long do they want to lose money? — that's the real question."
The network generated about $155,000 in revenue for the city in 2012 and both stories indicate the desire to generate revenue as the main impetus. Currently, net income from the city electric department account for about half of Bartow's general fund. Community leaders hope entering the telecommunications industry will diversify the revenue source.
While potential revenue can be a factor, communities tend to primarily focus on expanding connectivity for quality of life, affordability, educational, and economic development.
Bartow has an advantage because it already possesses an existing network that contributes to local economic development. Students are already connected with city resources, and local government is taking advantage of the network. The leaders and staff at Bartow have a higher level of expertise than communities who start from scratch.
While the commission seemed positive about the plan, both reporters describe a healthy dose of caution when moving forward. From the Ledger article:
"This can be done," [City Manager George Long] told commissioners during Wednesday's workshop. "There are very few negatives here. We can do it, but it has to be done properly."
Flash back to May 5, 1998 and the community of Emmetsburg, Iowa. This town of just under 4,000 people voted to establish a municipal cable communications or television system. It has taken fifteen years, but Emmetsburg is on the verge of joining the many other Iowa communities with municipal networks. Jane Whitmore of the Emmetsburg News reported on April 2 that the City Council adopted Ordinance #577, establishing the Board of Trustees of the Emmetsburg Municipal Communications Utility.
Emmetsburg will be joining four other local communities as part of The Community Agency (TCA), a coalition of cities in northwest Iowa that collectively own a hybrid fiber coaxial cable network. TCA began as a cable television system in 2000 and now offers Internet, telephone, and limited wireless Internet in O'Brien County. Emmetsburg will build a FTTH network as part of TCA.
Talks to join TCA began last summer; City Administrator John Bird commented for the article:
"It's important for our readers to know that when the Board (of Trustees) started talking about this late last summer, their reasons for wanting to get into this (communications utility) are noble. Their goals, their objectives are noble from an industrial and economic development standpoint," Bird noted.
He continued, "They believe that we're at a gross disadvantage, considering today's global economy. In the global market, people can work from their home in Emmetsburg, Iowa, for a corporation located anywhere in the world, or higher tech industries who really need quality, high speed broadband. We're at a disadvantage."
DJ Weber, General Manager of TCA, noted the lack of interest from the incumbents to invest in the area. He also commented on how the existence of municipal networks often lower rates and improve service for all customers due to increased competition.
Emmetsburg currently provides sewer, water, and gas to residents. The network will be financed with municipal revenue bonds, but the other utilities will also contribute some revenue toward it as each will benefit from benefits such as remote meter reading.
A 1998 study on a potential communications system priced the network at $10 million. According to Bird, today's estimate is less than $7 million. From the article:
"It comes back to the commitment of the community," added Weber. "We've said this all along to John [Bird], the council and the utility board and the staff, it really comes back, ultimately, to the citizens of this community."
I’m very familiar with many government owned telecom operations throughout the world, over many years, and across many different forms of government, and I can tell you that governments generally do not subsidize publicly owned telecommunications. They milk telecommunications - these systems generate a lot of revenue.
