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.
Update on Baltimore's Municipal Fiber Plan
Kevin Litten, of the Baltimore Business Journal has published a good discussion of why Baltimore is considering a public investment to expand the City's fiber network.
Councilman William H. Cole IV still bristles when he talks about the absence of FiOS in the city, a decision industry observers say has played out in other urban areas where the suburbs outrank the city in wealth. “When you look at a map of Maryland and what counties they chose to skip, Baltimore stands out, and it stands out for all the wrong reasons,” Cole said. “We need to explore every option we have to remain competitive. You can’t talk about being a great city for biotech and trying to attract startups and continue to expand the [University of Maryland] BioPark and not continue to invest.”
Litten also explored how Comcast is damaging area businesses by abusing its position as the sole citywide provider of fast Internet access (Verizon does poor DSL):
At No Inc., a 10-employee tech firm that develops software for commercial real estate, Chief Technology Officer Alex Markson said that Comcast wanted to charge $20,000 to build infrastructure to the company’s small office building on Water Street downtown.
The company had to settle for an affordable, but vastly inferior wireless connection from Clear using WiMAX. Keep this in mind the next time you hear that wireless is providing an alternative to the cable and telephone monopolies.
But that setup, which includes a barbecue grill-like satellite dish pointed out the window of the company’s offices, isn’t ideal. Productivity plummets when employees have to wait for long downloads. When using technology such as GoToMeeting to make sales pitches, “you’re not crushing it because you look like you’re slow,” Markson said.
And finally, Litten quotes some guy named Christopher Mitchell that seems to know what he is talking about:
“What Baltimore wants to do is alter the equation by making it less expensive for either a private competitor to compete or build enough assets to compete on its own,” Mitchell said. “What they need to do is figure out how they can get more fiber into more places to lease to potential companies.”
A Baltimore blogger has also weighed in on the City's decision to evaluate the best means of expanding Internet access and real choices, even if it annoys massive cable companies that prefer not to deal with subscribers that could go elsewhere.
Big telecommunications firms send lobbyists to the legislative bodies of state government to block building such networks, mainly because they have their intended effect on broadband pricing, provided a city can clear the initial hurdle of finding the capital to build its own fiber network.
No one expects Baltimore to suddenly bond for and build a massive FTTH network. The most likely plan will involve Baltimore expanding its existing conduit and fiber assets in coordination with other projects (to keep costs low) in order to entice new providers in short term but more generally, to give the City more options and levarage in taking charge of its digital future.
But when a city owns its fiber resources, it can offer the bandwidth for lease to the lowest bidder — which could be Comcast, as Tonjes told the Baltimore Business Journal — while enjoying some happy externalities, among then increased property values and a 21st-century infrastructure, which might do more to attract companies to Baltimore than tax-increment financing just to abate this city’s high property tax rate.