In the case of muni systems, which are not-for-profit enterprises, one measure of “success” is defined as the level of their “take rate” – that is, the percentage of potential subscribers who are offered the service that actually do subscribe. Nationwide, the take rates for retail municipal systems after one to four years of operation averages 54 percent. This is much higher than larger incumbent service provider take rates, and is also well above the typical FTTH business plan usually requiring a 30-40 percent take rate to “break even” with payback periods.
Global CIO: Consider the Benefits of Community Broadband Networks
Information Week has alerted Chief Information Officers (CIOs) that they need to pay attention to community broadband networks. Jonathan Feldman's column explains "What North Carolina's Broadband Battlefield Means to You."
The lessons have little to do with North Carolina and everything to do with the future of broadband Internet access. Community networks offer higher speed, more reliable, and more affordable connections to businesses and other entities than incumbent operators.
Feldman opens with a North Carolina business owner emailing him about wanting to duplicate Chattanooga's amazing broadband options and futuristic smart grid. Too bad North Carolina's Legislature just passed a bill to effectively prohibit NC towns from doing that.
MuniNetworks.org frequently decries the lack of choices among service providers, so it is gratifying to see Feldman make the same point:
Those of us who approve telecom budgets, whether in North Carolina or other states, know there really isn't a broadband marketplace. In contrast, we can choose among 50 providers of Web hosting services, and they're all trying to differentiate themselves based on quality and features. THAT'S a marketplace. What exists today in broadband telecom is essentially a choice between the telco and the region's cable operator.
And further on, a strong endorsement for communities that have made public broadband investments:
Unless you're a telecom carrier, you should be interested in doing business in a region where the government is building out next-generation broadband infrastructure. Whether you work for a large business that requires fiber optic capabilities (or "lambdas," which are virtual fiber pipes), or whether you simply need IP service, the lower price/performance levels of such regions are highly attractive.
Be aware of the telecom regulatory environment in any state your company is expanding into, especially as other states follow North Carolina's example. It may not be a make or break consideration, but it's one that you should bring up with your board when discussing site selection.
Feldman notes that these networks are not easy to build (a point that resonates with us - communities build these networks because they have to, not because they want to).
This is an excellent column, one we hope resonates with the many businesses that need faster, more reliable, and affordable access to the Internet. When massive companies like Time Warner Cable lobby state legislatures to preempt local authority to build networks, they are taking aim at all residents and local businesses. Businesses should recognize the benefits of breaking the duopoly that controls a key input for all commerce in the 21st century.
Remember Michael Tiemann's letter to Governor Perdue, begging her not to let Time Warner Cable's anti-muni broadband bill become law (she instead agreed with Time Warner Cable, CenturyLink, and AT&T that they should control the future of IT in North Carolina). In that letter, he described the difficulty of working with TWC:
On Sunday May 15th you may have read about our latest investment in North Carolina, Manifold Recording. This was the feature story in the Arts & Living section, and the top right-hand text box on the front page. One of the most difficult and expensive line-items in this multi-million dollar project was securing a broadband link to the site in rural Chatham County. I spent more than two years begging Time Warner to sell me a service that costs 50x more than it should, and that's after I agreed to pay 100% of the installation costs for more than a mile of fiber.
Community networks are pro-business and it is long past time businesses should recognize their advantages. Let's hope we can make some progress in this area.