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:
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.”
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."
What can you do with a gig? There is a residential customer in Clarksville, Tennessee, that knows. CDE Lightband, Clarksville's municipal provider, recently began offering 1 gig service for $349.95 per month. The Leaf Chroniclerecently reported that CDE Lightband also just signed on its first 1 gig residential customer.
CDE Lightband offers triple play and is part of the Clarksville Department of Electricity. Clarksville is a fast growing city with around 133,000 located along the northwestern border of the state. In addition to the 1 gig service, CDE Lightband offers speeds from 10 - 100 Mbpssymmetrical and a variety of smartly priced packages.
While 1 gig of service will make life faster for the residential customers who choose it, community leaders also see the possibilities for the community as a whole. From the article:
"Opportunities for education, health and industrial uses are unlimited with the 1 gigabit of Internet services that CDE Lightband now offers, and it helps to position our community for further economic growth,” Clarksville Mayor Kim McMillan said in the [press] release.
Congrats to CDE Lightband, its new 1 gig customer, and the Clarksville community!
Smart meters aren't just for electricity anymore. In Santa Clara, the city is now using the technology to bring free citywide outdoor Wi-Fi to the entire community. The Washington Post recently covered the story
New smart meters, now being installed on homes, are primarily for electricity and water metering. The meters send usage reports via the city's wireless network, but they also have a separate channel that provides outdoor Internet access. The more houses outfitted with the new meters, the larger the network.
Santa Clara re-launched the free service in early 2012 after its first attempt resulted in a limited coverage area. In addition to using its fiber for wi-fi, the city also leases dark fiber over its 57-mile network.
While expanding the Wi-Fi network with this new technology won't bring high capacity connections to all households in Santa Clara, it is a step in the right direction.
“This is just one of the major benefits our community will enjoy as a result of our advanced metering technology,” said John Roukema, director of Silicon Valley Power, the community’s utility provider. “Now our residents, visitors and local workforce can get Internet access while waiting for a train, shopping downtown, getting their car washed or relaxing in their yard.”
Benton PUD, located in south central Washington, recently expanded its fiber foot print through Richland and Rattlesnake Mountain. The move involved a collaborative effort between the City of Richland, the Benton PUD, and the Department of Energy.
According to Annette Cary of the Tri-City Herald, the expansion will bring better communications to the Hanford Nuclear Site. Schools, libraries, and businesses in Richland will take advantage of the additional fiber from downtown to north Richland.
Benton PUD offers fiber to businesses in Kennewick, Prosser, Benton City, and now Richland via an open access model. Residential wireless is also available in Prosser, Pesco and Kennewick with five retail providers on the network.
According to the article, Benton PUD will also use the fiber for its advanced metering system. From the article:
"This agreement allows Benton PUD to increase its capacity and redundancy, while also helping the Hanford project," Rick Dunn, PUD director of engineering, said in a statement.
The fiber also provides additional capacity for the Hanford Federal Cloud, a system that allows Hanford information to be stored at centralized and consolidated data centers rather than on individual worker's computers. The fiber serves several DOE facilities connected to Hanford.
"Having a fast, reliable communications infrastructure is critical in supporting Hanford's cleanup mission," Ben Ellison, DOE's Hanford chief information officer, said in a statement. "This project gives DOE the capacity it needs to further the mission and allows for future growth of both the community and Hanford cleanup activities."
While the DOE sees the fiber as an asset in the ongoing clean up of the decommissioned nuclear production complex, local leaders see it as an opportunity to bring more business to the area. Richalnd and southern Washington are also known for low power rates, another feature attractive to potential businesses. As clean-up winds down at Hanford, Richland is looking to the future and wisely using fiber as a way to reach out for commercial opportunities.
We have long been impressed with Cedar Falls Utilities (CFU) in Iowa. They built an incredibly successful municipal cable network that has now been upgraded to a FTTH network. CFU transfers $1.6 million into the town's general fund every year, reminding us that community owned networks often pay far more in taxes than the national cable and telephone companies.
Last week, Moody's Investor Service gave an investor-grade A-3 rating to revenue debt from CFU, another sign of its strong success.
Moody's rating report noted the utility's large market share, competitive pricing and product offerings, expansive fiber optic network, long-term financial planning and conservative budgeting practices as reasons for the continued strong rating of the utility's revenue debt.
CFU also compiles the community savings resulting from each of its services by comparing its rates to nearby communities (see most recent comparison [pdf]). The benefits total $7.7 million each year, almost $500 per family. This includes a $200 difference in cable TV bills and a $130 difference in Internet service.
Glasgow was a true pioneer in community owned broadband networks, starting with its own cable plant in the 1980s. Billy Ray, CEO of Glasgow Electric Plant Board, has been an inspiration for municipal broadband networks -- one can't dig into the early history of LUS Fiber in Louisiana without running into something from Billy Ray, for instance. Glasgow's network has been a tremendous success, resulting in tens of millions of dollars of benefits to the community.
In our interview, we discuss the bitter legal fights of the early years as Glasgow built its own cable network and eventually began offering Internet access. Additionally, we discuss the important role of these information networks in creating more efficient (and less costly) electrical systems -- an incredibly important implication that does not get enough coverage.
Given the extraordinary history of Billy Ray and Glasgow EPB, we hope this will be the first of several conversations exploring that community. You can read more from Billy Ray on his blog.
We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.
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Franklin, Kentucky expects to see more positive economic growth when it launches its new fiber optic network. According to an article in the Bowling Green Daily News, the south central community is ready for the upgrade:
“We are super excited about it,” said James McCaslin, associate vice president of academic affairs and director of Franklin-Simpson Center. “It will be like going from 1970 to 2013 with the flip of a switch.”
We contacted Tammie Carey, Fiber Services Manager for Franklin Municipal FiberNET, and she was good enough to answer some questions. She told us that 32 miles of aerial fiber are strung in three loops around the city to ensure redundancy. She expects the network to launch near the end of January for local businesses, though the utility has already been serving one business as detailed below.
The decision was based solely on a desire to boost economic development, a sentiment echoed in the Daily News article:
It’s hard to recruit industry now if you don’t have (fiber optics),” said Dennis Griffin, industrial recruiter for Simpson County. “A lot of industries, particularly in this area, are satellite plants connected to their corporate offices, somewhere else in the United States. They all need to be connected by fiber.
“So if you don’t have that, it’s hard to compete with communities that do,” Griffin said. “Ten years ago, you could get by with T-1 lines – now most industries are just expecting that you have fiber."
Apparently, City officials contacted AT&T and Comcast several years ago and asked them to install fiber to the Franklin industrial parks. When they refused, City Leaders began pondering the possibility of a municipal fiber network. Tammie tells us about the decision in an email:
It was economic based. Our Industrial Authority was working with several industries regarding possibly locating in our community. A need they had was large amounts of reliable bandwidth. The existing companies would not build fiber to the industrial park locations. The city saw this as a major hindrance with our economic development recruitment and made the decision to invest in a system.
The decision is paying off even before the formal launch. Tractor Supply Company built a distribution center in Franklin in 2011. Tammie tells us that the retail farm and ranch supplier required a high capacity connection for basic business. Franklin Municipal FiberNET was able to meet the company's needs and is already servicing the facility. Tractor Supply Company brought 336 new jobs to the community. City leaders anticipate reproducing this success story as they offer services to more local businesses.
The City plans to connect all its facilities and departments. The local vocational college will also lease dark fiber from the city. Windstream is providing Internet access via Franklin Municipal FiberNET:
Previously we used internet service supplied by Comcast Cable. Comcast has a franchise agreement with the city. As part of the franchise agreement, all the government offices use their internet service for free. So this is actually an added expense for the city. However, we feel the reliability and consistency in speed will help employees work more efficiently.
The network is funded with a $1 million grant from the U.S. Department of Commerce Economic Development Administration that was awarded in 2005. The remaining $1.4 million is funded through municipal bonds.
There are currently no plans to bring fiber to any of the 8,400 residents but city leaders continue to mull over possible Wi-fi in parts of town. For now, Franklin is taking it slow. From the article:
“But no plans have been made,” Carey said. “We want to know how to crawl before we run the marathon. So we want to do one piece and make sure we are doing it well.”
Local governments do not favor themselves on taxes or right of ways or otherwise compete unfairly with incumbent telecommunications and incumbent cable companies. To the contrary, private incumbents enjoy a wealth of state and federal subsidies, guaranteed rates of return, regulated rates for pole attachments, etc. In addition, local telephone companies enjoyed years of regulated monopoly status to build positions of dominance they continue to enjoy. To pretend that these local incumbents, with their subsidies and regulated access, need to “level the playing field” to protect a “free market” against local government systems flies in the face of reality.
