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Chicago Alderman Advocates Public Fiber For Municipal Savings

At a Chicago City Council meeting this month, a newly elected alderman proposed the city stop relying on incumbent ISPs and start using its existing fiber network for connectivity.

Pointing to nearby cities like Aurora, where municipal government elimnated leased lines to reduce costs by $485,000 per year, Alderman Brian Hopkins suggested the switch could save the city “tens of millions of dollars” annually. He also advocated the change in order to provide more efficient services.

“We already have a robust infrastructure in place to build from. Fiber optic resources currently controlled and managed by [the Office of Emergency Management and Communications] for traffic, first-responder, and emergency services is an example,” Hopkins said. "Given the debt Chicago faces, we should follow other cities by switching all municipal government broadband access from private incumbent providers to a taxpayer-owned fiber network. The money saved can be reinvested into the expansion of the municipal network to finally reach those communities that need fast affordable access. Why would we not do this?”

Hopkins’s comments come on the heels of a resolution we reported on earlier this year from four powerful Chicago City Council members calling for hearings on how to use city buildings, light poles and high-speed fiber-optic lines for a wireless network that could raise the city millions.

The city is trying to find ways to generate revenue amidst a major $30 billion employee pension crisis that led Moody’s to downgrade the city’s bond rating to junk status in May.

One of the most obvious benefits to local government of self-provisioning is saving taxpayer dollars. In addition to direct savings from allowing municipalities to switch from expensive leased lines, the community at large benefits from ancillary savings. Municipal government, businesses, and residents can save from the need for fewer telephone lines, lower utility costs due to more efficient operations, and even lower rates from incumbents who sense possible competition.

Fibrant Rolls out 10 Gbps, A Look At Salisbury's Challenges in FTTH

Salisbury, North Carolina's Fibrant, now holds the distinction of offering the fastest Internet access in the country. The municipal network is making 10 Gbps symmetrical connectivity available for residents and businesses.

Fibrant's first 10 Gbps customer is Catawba College, a local school that will use the ultra-fast connections for its new Digital Media Creation and Collaboration labs. In a press release Joanna Jasper, Catawba CIO stated:

"By moving to Fibrant's 10 Gbps speeds, the College is in a better position to differentiate itself. We can bring world-class broadband services to our campus community to support the next generation of educational applications."

"The future is all about rich immersive digital media and being able to communicate and collaborate with others in real-time regardless of where people are in time and space."

The city of Salisbury hopes this new standard will set it apart from other North Carolina communities and entice more economic development. From a BizJournals article:

“It helps us differentiate ourselves” among cities and states seeking technology companies, [says Kent Winrich, Director of Broadband and Infrastructure Services]. “It will attract international companies. It’s not sniping businesses from Charlotte.”

Winrich sees Salisbury attracting technology companies that need the bandwidth for real-time connections to clients and suppliers — software developers and data centers, for example.

The network, which already offers gigabit connectivity to businesses and residents for around $100 per month, has attracted several businesses to a community that once struggled with job loss. Mayor Paul Woodson told WFAE that the investment in Fibrant grew out of necessity:

"All we were trying to do was differentiate ourselves from other cities. We lost our mills, we lost our furniture factories. We decided we need to do something to replace the manufacturing the whole country was losing, not just Salisbury, the whole country, so that’s how we got started."

Listen to the entire WFAE story below and check out episode #168 of the Community Broadband Bits podcast for a conversation between Chris and Kent Winrich, Salisbury Director of Broadband and Infrastructure.

Salisbury has had to deal with a variety of challenges, having built the network during the worst economic downturn in 70 years and seeing Time Warner Cable slash its prices to undermine the municipal network. We thought the following background would be helpful.

Salisbury is located in west central North Carolina and home to approximately 34,000 people. In the early 2000s, the community suffered from high unemployment and businesses could not get the connectivity they needed from incumbents. There were key commercial areas in town that had no Internet access at all. Local leaders hoped the network would spur economic development an area that had previously been known for textile and other manufacturing.

Incumbent providers Time Warner Cable (TWC) and AT&T did not see enough profitability to justify upgrades, so community leaders had to take action without them.

seal-north-carolina_0.jpgIn 2005 the city began to investigate the idea of a municipal fiber network. An early survey suggested 30 percent of households would purchase at least one service from the city by the end of year three - TV, telephone, or Internet access. The local community expressed support for the project, including businesses, potential anchor institutions, and residents.

The city issued approximately $29 million in revenue bonds to finance its network deployment in November 2008. At the time of the issue, Moody's rated Salisbury at A-1 and Standard & Poor listed the city as A-plus which are equivalent ratings and considered "investment grade."

As plans moved forward, a series of setbacks delayed deployment and launch. Even though the city reached an agreement with AT&T to place city fiber on the incumbent's poles, preparing the poles took longer than expected. Synchronizing audio and video proved to be a challenge at first due to software glitches and there were also problems with remote controls accompanying set-top boxes. 

Incumbent Time Warner Cable, however, was able to take advantage of its substantial market share and cross subsidize to offer exceptionally low prices in the region. Certainly the stiff competitive prices negatively affected Fibrant's ability to reach its subscription goals.

In 2014, two bond rating agencies, Moody’s and Fitch, downgraded the bond rating for the city, citing financial struggles with the Fibrant network as a major factor in the decision. As Moody’s wrote, the city’s reduced bond rating from Aa2 to A3...

“...primarily incorporates the city's outsized enterprise risk associated with its broadband enterprise (Fibrant), with considerable operating pressure should the Fibrant continue to underperform.” 

Moody's also based its rating on the city's decision to redirect $7.6 million from its sewer and water enterprise fund to support the network. The investor service described the city's situation as "a narrowed but still acceptable cash position for the water & sewer fund."

Moody's decision to downgrade, we should note, came after a decision by Standard & Poor to upgrade, which sheds some light on the fragile and complicated bond rating process.

In 2011, North Carolina was also a battleground for TWC's intense lobbying efforts to block initiatives like Fibrant through state legislation. TWC managed to push through a restrictive bill that negatively impacted municipal networks, including Fibrant, by limiting its ability to expand.

Nevertheless, Fibrant has slowly and steadily added customers bringing subscribership to 3,000 in the summer of 2014 and in December reported that 3,200 customers took Fibrant service. By that time, Fibrant was already offering gigabit service for around $100 per month, having upgraded top tier customers to gigabit symmetrical speeds with no rate increase.

According to Winrich, the switch to even faster speeds was not as difficult as one might expect:

"We changed out our router and realized we could actually bump this up, and be the first city in the world to do it. And we were just scratching our heads going, ‘really, we’re going to be the first ones?’ And we kept checking with everyone we knew, and they said ‘we don’t know of anybody.’ So, we just jumped all over it and it was really very easy to do. Surprisingly easy to do."

Rates will vary but will cost around $400 per month, approximately $100 per month higher than the 2 Gbps residential service recently announced by Comcast. In other words, 25 percent higher for 5 times the speed with the added bonus of reliability from a local provider that cares about the welfare of its community.

An increasing number of communities are considering the benefits of municipal networks and places with 1 Gbps offerings have an even greater advantage. The ability to offer 10 Gbps lets businesses know that Fibrant has an entrepreneurial approach just as their business customers do; Salisbury is positioning itself and the region for the future:

“This whole area could be so vibrant, and Salisbury would be in the center of it,” [Winrich] says.

Owensboro, Kentucky, Developing Muni FTTH Pilot

Owensboro Municipal Utilities (OMU) is now expanding its Fibernet services with a pilot FTTH program to connect residents this fall. There are approximately 500 homes in the selected area where OMU will test out the new venture. People living in the project area can sign-up online.

Businesses in Owensboro have had access to OMUFibernet for data transport since 1999 and in 2014 the utility added VoIP to its commercial product line. The pilot will offer gigabit Internet access to residents, but OMUFibernet has only advertised speeds up to 100 Mbps to business customers thus far, according to the OMU website. Businesses are also able to lease dark fiber, which allows them to have more flexibility with data transport speeds.

The city, home to approximately 58,000 people, is the county seat of Daviess County and sits on the south side of the Ohio River. The entire metropolitan population is over 116,000 people. OMU has offered electric and water service since 1900 and describes itself as the largest municipal electric and water system in the state.

OMU plans to offer three tiers for symmetrical Internet access in the city's Town & Country neighborhood. Gigabit service will be priced at $99.99 per month, 100 Mbps at $69.99 per month, and 50 Mbps at $49.99 per month. All subscriptions will require a $49.99 installation fee. 

New Michigan Bar Journal Article: "The Internet and Municipal Broadband Systems"

A recent Michigan Bar Journal article by attorney Michael J. Watza, The Internet and Municipal Broadband Systems, provides a quick look at the FCC's Open Internet Order [PDF], the recent ruling on state barriers to municipal networks, and how the two may intertwine in Michigan. Watza's three-pager is a great resource for community groups, legislators, and advocates who want to share necessary information without overwhelming the reader.

In addition to providing summaries of each order, Watza offers hope for places that lack the Internet access they need to prosper. He acknowledges Michigan's first gigabit municipal network in Sebewaing and mentions the possibility of public private partnerships. Having worked with Michigan municipalities on telecommunications issues, he knows that other communities in the Great Lakes State also have their eyes on the future:

However, many communities interested in building their own broadband systems have been stymied by state laws written by and for the influential provider industry that either barred such systems or imposed onerous conditions on them. Michigan is one of a couple dozen states with these laws. By striking down such laws, the FCC has authorized and encouraged a significant economic tool for these communities. And perhaps most importantly, by freeing these communities to build on their own or partner with high-speed, low-cost, Internet-friendly private partners like Google (which has been actively pursuing such systems when incumbent monopoly providers have not), it is clear that the FCC is aggressively supporting rate control by the best alternative option in a free market: competition!

Read the entire article [PDF] online and share it with your Michigan friends.

Albany, NY Proposes Feasibility Study for Municipal Broadband Service

In July, the city of Albany, NY released a Request for Proposals (RFP) seeking qualified consulting firms to conduct a feasibility study for a municipal broadband service. As the RFP states, the study will look to develop strategies, find gaps in service and adoption, and develop a business plan to explore partnerships between the city and private ISPs.

According to Broadband Communities magazine, a working group comprised of several important community organizations and business groups in Albany will help to steer plans for the possible municipal broadband initiative. Jeff Mirel, a technology professional in Albany and a member of the working group, explains the group’s goals for the feasibility study:

“The first step is asking the right questions, which is what we want this study to do. What are the real broadband needs and issues that both businesses and residents experience here? Is it infrastructure, technology, education, affordability? How do we address the gaps to not only keep and attract companies, but bring these employers and a connected local workforce together? By taking a deep, comprehensive look at broadband access and usability, along with best practices, we can move towards meaningful, actionable strategies.”

This news out of Albany, a city of about 100,000 people, comes as major gaps persist in high speed broadband access in many parts of the state. FreeNet, Albany’s free wireless network, received a $625K state grant in 2009 earmarked to expand its service. But neither FreeNet nor Time Warner Cable and Verizon, the two biggest providers of broadband service in Albany, provides the fast, affordable, reliable connectivity a municipal fiber-based network could provide

At recent hearings in front of the New York State Public Service Commission (PSC) in the New York cities of Poughkeepsie, Buffalo, and Bethlehem, political leaders and consumers expressed particular frustration with Verizon’s unwillingness to build its FIOS fiber service out to underserved parts of New York. In some cases they are asking the state’s Public Service Commission to strengthen regulations and require private companies to bring better Internet service statewide.

We warned in 2012 that Verizon would never bring FIOS to Albany and many other cities in the state. Then, as now, it’s clear that Albany’s feasibility study offers a way forward towards the only certain strategy for bringing the fast fiber-based broadband to Albany: taking matters into their own hands.

Dark Fiber Network Saving Money, Generating Revenue in Burbank

ONE Burbank, the dark fiber network that has provided connectivity for studios since 1997, is bringing a number of benefits to Burbank schools and taxpayers, reports the Burbank Leader. The network is saving public dollars, generating revenue, and providing better connectivity to schools and public facilities.

Five years ago, we reported on Burbank's asset and its primary customers - Hollywood studios. That trend has continued but now the network generates even more revenue. As a result, all electric customers served by Burbank Water and Power save with lower utility bills:

Last year, ONE Burbank generated $3.4 million in revenues for the utility, [General Manager Ron] Davis said in May. That’s compared to roughly $205,000 in 1997 and about $1.5 million five years ago, according to data Davis presented to the City Council.

“The bulk of that [$3.4 million] is all margin and helps keep electric rates down,” Davis said. “[We do] basically zero marketing and collect that margin.”

By connecting city facilities rather than leasing from a private provider, Burbank has all but eliminated past telecommunications expenses, lowering costs by 95% and saving, $480,000 in total thusfar. The school district has saved $330,000 since connecting to ONE Burbank.

ONE Burbank is also providing four times as much bandwidth to the school at a much lower rate that it once paid to the private sector, cutting its costs from $18,000 per year to $9,000 per year.

In August, Burbank Water and Power began using the dark fiber network as backhaul for free Wi-Fi service available throughout the city. There is no service level guarantee but it is open to any device:

“It’s just out there if you can get it,” Ron Davis, the utility’s general manager, told the City Council last week.

The dark fiber has helped retain and attract business, reports city leaders, and they want to continue the current trajectory to bring in high-tech companies and turn Burbank into a "Silicon Beach."

Louis Talamantes, president of Buddy’s All Stars, said his business has been using the service for about 18 months. While it’s more expensive than the prior service provider, he said, it makes up for it in reliability. The Internet would go down three or four times a month, sometimes for half a day, with his previous provider.

Though he was skeptical at first, Talamantes said the service “delivered” and he’s had no downtime with ONE Burbank, allowing him to keep his 24 employees productive, and it’s helped keep up morale.

Westminster Homes Now Receiving Gig Internet Access From Ting

After several years of planning, deployment, and the formation of a partnership with Ting, Westminster's fiber network is now serving its citizens. In August, local CPA Tim Redmond and his wife Allison were the first to get gigabit Internet access, according to a Ting press release.

Apparently, Redmond has been waiting for some time to be able to access such speeds online:

Redmond has followed along with Westminster’s efforts to get the gig for city residents. He first learned of gigabit fiber Internet coming to town in a pretty low-tech way. “We got our water bill and there was an enclosure. It described that fiber optic Internet was coming to Westminster” and introduced Ting Internet as the service provider for Westminster.

It was welcome news; Redmond has been following fiber since his college days when Verizon started to push FiOS in Baltimore. When it became clear that big providers aren’t willing to go anywhere but a major metro, he became despondent. OK, despondent might be a slight overstatement. “I was bummed,” is what he actually said.

Redmond first used his new gig Internet access to fire up his computer and telecommute to his office. Like many residents in Westminster, he will use the network to do more of the same - something he could only wish for prior to the city's initiative to bring publicly owned infrastructure to town.

Listen to Chris interview Dr. Robert Wack, the man who spearheaded the initiative, in episode #100, and Tucows CEO Elliot Noss, parent company of Ting, in episode #134 of the Community Broadband Bits podcast.

Spanish Fork Upgrading to Fiber in Utah

Spanish Fork Community Network (SFCN) recently announced it is upgrading its cable network to a fiber optic network. The network has already started improving services by increasing speeds for the highest tiers at no extra cost reports the Herald Extra.

Residents and businesses in the town of approximately 37,000 have relied on the municipal cable network since 2001. Over the past 14 years, the network has come to provide triple-play to 80 percent of Spanish Fork homes.

Officials kicked off construction on September 3rd:

“We’re excited this is the next step for the SFCN network," [SFCN Director John] Bowcut said. "We’ve always planned on doing fiber to the home, and now we’re in the fiscal position where we can go ahead and install that for our customers."

Customers who choose to remain with the lowest tier - 12 Mbps / 3 Mbps - will remain on the coax infrastructure, says Bowcut, but will be switched to fiber if they choose to upgrade to a higher tier.

The city made its last bond payment for the existing system this year and will use newly available funds from retiring the debt to fund the upgrade. Assistant City Manager Seth Perrins describes the early deployment as "soft" so officials can obtain a better understanding of cost demands, construction management, and how long the project will take. They estimate the project will be complete by 2020.

According to Bowcut, Premium service that is now 120 Mbps / 15 Mbps will transition into symmetrical gigabit service for around $68 per month. PLUS service, currently 60 Mbps / 10 Mbps, will be upgraded to 100 Mbps symmetrical for approximately $45 per month. The Starter tier at 12 Mbps / 3 Mbps will remain $35 per month. All three tiers offer discounts when purchased with TV service.

Read more about Spanish Fork, one of the early municipal networks, and listen to Chris interview John Bowcut during Episode #60 of the Community Broadband Bits podcast. We have an updated interview with John ready for an upcoming podcast.

Gigi Sohn Celebrates Self-Reliance Among NATOA Members

In a September 9th speech to the National Association of Telecommunications Officers and Advisors (NATOA), Gigi Sohn, Counselor to the Chairman at the FCC, encouraged government officials to build their own networks. She told attendees at the annual conference in San Diego:

Without question, the landscape is changing for local governments, but in a good way. Most significantly, the future is not in cable, but in broadband. Even the cable operators acknowledge this.

Rather than wait for incumbent ISPs to build the network your cities want and need, you can take control of your own broadband futures. Rather than thinking of yourselves as taxers and regulators, which has been the traditional role, you can think of yourselves as facilitators of the kind of services you’ve been begging the incumbents to provide for years.

This is incredibly exciting, and I’m sure somewhat frightening. But the new model for local governments looks to benefit their citizens through externalities, not direct revenues. 

Sohn referred to networks in Sandy, Oregon, where gigabit connectivity is available for approximately $60 per month. She also mentioned the increasing role of partnerships like the one between Westminster, Maryland and Ting. Sohn commented on the changing approach at the FCC:

We are making changes of our own at the FCC to reflect the shifting broadband landscape and make sure that we seize the new opportunities and mitigate the challenges. For example, we pre-empted restrictions on community broadband in response to petitions from community broadband providers in Tennessee and North Carolina.

Read more of Sohn's speech online at the FCC website.

Fiber Sailing into the Port of Lewiston, Idaho

The Port of Lewiston, the most inland seaport of the West Coast, will soon be deploying a dark fiber network, according to a July city media release. The network will serve several of the community's largest businesses, the medical center, the state college, and the airport. Although the plan calls for $950,000 to construct the network, port officials intend to have it operational by year’s end.

“This is what ports do, we develop infrastructure to support, attract and grow businesses in order to build a stronger economy,” said Port Manager David Doeringsfeld. “In today’s world, businesses must have adequate bandwidth and redundancy to remain competitive.”

The project has been highly supported by the nearby Port of Whitman County which already has maintained their own open access fiber network for over 10 years. Connecting a fiber line through the Port of Lewiston would create a loop, improving redundancy on the Port of Whitman County’s network. Better redundancy could prevent outages and ensure the ongoing reliability of the network.

The Port of Whitman’s network is fairly successful - just one section of the network near Pullman, Idaho makes $250,000 annually. The Port of Lewiston plans to follow the same open access model in designing and constructing its network which will run throughout the 32,000-person City of Lewiston.

The two ports are already collaborating on a different fiber line through North Lewiston. The Port of Lewiston is paying $30,00 for construction costs, and the Port of Whitman County will build and administer the network. This fiber line will later connect to the planned Port of Lewiston's open access network.