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Who Has Citywide Gigabit Internet Access for $100 or Less?

As Westminster begins serving customers with its new FTTH network and partner Ting, we were curious how many communities are there where a residential subscriber can obtain affordable gigabit access? We estimate the number of networks, large or small, where a majority of residents in a community can obtain gigabit service for $100 or less to be 12. Westminster will be there in a few years.

Update: Russellville, Kentucky and Salisbury, North Carolina, also offer a gigabit, bringing the total number of citywide gigabit networks to 14. On September 1, we added another network that we previously overlooked - CSpire in Quitman and Flora, Mississippi (and soon others).

Municipal citywide, sub $100 gigabit providers:

  • Leverett, Massachusetts
  • North Kansas City, Missouri
  • Chattanooga, Tennessee
  • Tullahoma, Tennessee
  • Sandy, Oregon
  • UTOPIA Cities, Utah
  • Russellville, Kentucky
  • Salisbury, North Carolina (Fibrant)


  • Paul Bunyan Communications, Minnesota
  • Farmer's Telecom, Alabama
  • Co-Mo Connect, Missouri

Private Companies:

  • Google - Kansas City, Provo
  • CSpire - Quitman and Flora, Mississippi
  • MetroNet - Crawfordsville, Indiana (formerly a muni)
  • Burlington, Vermont - (currently privately owned, formerly a muni with future in limbo)

We included municipal networks, cooperatives, and privately owned companies. When considering networks that cover multiple jurisdictions in a single area, we counted it as one (thus Google counts as 1 in KC, Chattanooga is 1 in TN). And we were looking for gigabit networks - not just gigabit download. While we prefer to see symmetrical connections, we accepted 500 Mbps up for our threshold.

We could not identify any cities served by AT&T, CenturyLink, Verizon, Comcast, Cox, or any other similar company where the majority of the community has access to a gig. Those providers tend to cherry pick and even then, their prices are over $100 typically. For example, CenturyLink advertises a gig at $80 but then requires other services and hidden fees that make the monthly bill closer to $150.

We found affordable residential gigabit service from networks in urban, suburban, or rural communities from 12 networks (some of which cover multiple communities). Trying to determine how much of the community has access to a service is challenging, so please contact us with any corrections. In a few years, munis like Longmont and private companies like Ting will join the list. 

While the number of providers are few, many of them do serve multiple communities. The coops, including Farmers Telecommunications Cooperative in Alabama and Missouri's Co-Mo Cooperative, provide the service to a long list of smaller communities within their service areas. There is also the open access network UTOPIA, with at least 7 providers that offer gigabit FTTH below our price point in nine communities currently served by the network (to various degrees, some cities have little coverage whereas others are almost entirely built out). 

Prices range from $0 to $99.95 per month with the highest concentration at $70 or higher. In North Kansas City, residents pay $300 for installation and receive gigabit Internet access for $0 per month for the next 10 years. This incredible offer is available due to the presence of LiNKCity, a network deployed by the city and now managed and operated by a private partner. 

AT&T has launched its $70 GigaPower in parts of 12 different metro areas, although the price requires users to submit to a special web based advertising program. Even when these big firms finally invest in high capacity connections, they find new ways to exploit their subscribers - a reminder that who deploys a technology can be as important as what that technology is.

Now that the gig barrier has been blasted away (primarily by municipal networks and smaller ISPs) we expect to see more networks and providers offering affordable gig service to residents. 

Gigabit Cat photo courtesy of Michael Himbeault and shared through a Creative Commons license.

Gigabit Networks and Utah: March 24th Luncheon and Webcast

On Friday, April 24th, make plans to attend the Utah and Broadband Breakfast Club Luncheon Event. If you can't make it in person, attend the webcast. The topic: Gigabit Networks in Utah.

From the announcement:

In announcing in late March that Google Fiber will expand to Salt Lake City (its eighth metropolitan area nationwide), the broadband world turned its envying eyes on Utah. With Google Fiber in Provo and now Salt Lake -- and with Gigabit Networks available in the 11 cities served by the Utah Telecommunications Open Infrastructure Agency, or UTOPIA -- Utah is poised to be the first state where a substantial portion of its residents have access to the fastest-possible broadband internet services.

What does Google's investments say about the economic health and technology-savvy nature of Utah? What do cities and citizens get from Google Fiber that they haven't gotten from traditional telecom companies? And, for cities and states seeking to get a Gig, what are the best options to build and enhance Gigabit Networks?

A panel of experts will discuss what Google and Gig networks mean to Utah and its citizens. The webcast is free and the event is $25 for Nonmembers of the Utah Breakfast Club or $15 for Members. Lunch will be served at the Utah State Capitol at 11:30 a.m. MT and the panel discussion will and webcast will start at 2 p.m. ET/Noon MT.

As a bonus, you may now obtain a free three-month trial membership to the Utah Breakfast Club.

Panelists will be:

  • Devin Baer, Head of Fiber Business, Salt Lake, Google
  • Paul Cutler, Mayor, City of Centerville, Utah
  • Justin Jones, Vice President, Public Policy and Communications, Salt Lake Chamber
  • David Shaw, Shareholder, Kirton McConkie; Chair, Government and Utilities Practice Group
  • Moderated by Drew Clark, Of Counsel, Kirton McConkie; Founder, Utah Breakfast Club

Register online for the webcast or buy tickets for the live event.

Community Broadband Media Roundup - February 1

The mayors of 38 US cities came out this week to let the FCC know they want the authority to build high speed Internet networks. Jon Gold with Network World covered the story and reminded readers of the more heavy-handed tactics of our Comcast and TWC. 

Three U.S. senators introduced a Community Broadband Act this week. Mario Trujillo with The Hill reported that the bill would forbid state and local governments from “creating a ‘statute, regulation, or other legal requirement’ that bars communities from creating their own municipal broadband network.”

Kate Cox with the Consumerist broke it down:

“In other words, the Community Broadband Act makes it legal for a town to start a network and illegal for the state to stop them, but doesn’t provide any assistance for towns who want to build networks. It simply gives them the opportunity to pursue their own funding. To that end, the bill specifically encourages public-private partnerships.”

Henry Grabar with Salon wrote about the ideological debate that is “taking the country by storm.” 

Broadband Definition

Jon Brodkin with Ars Technica wrote about the FCC decision to raise the definition of broadband speed: “Tons of AT&T and Verizon customers will no longer have ‘broadband’ tomorrow.” This after the FCC upped the definition of broadband from 4 Mbps to 25 Mbps download speed. 

Under the proposed definition of 25Mbps down and 3Mbps up (which is opposed by Internet providers), 19.4 percent of US households would be in areas without any wired broadband providers. 55.3 percent would have just one provider of “broadband,” with the rest being able to choose from two or more. Rural areas are far less likely to have fast Internet service than urban ones.

In another article about the decision, Brodkin explains why the cable industry is opposed to the changes.

Alina Selykukh with Reuters covered the increase as well.  The new definition should force upgrades to fiber to the home, but it could also have a real impact for lower-income families. 

“The FCC could also press Comcast to commit to faster speeds in its Internet Essentials program, a discounted Internet service for low-income families, if they decide to use it as part of the merger review, analysts said.”


Muni Editorials

This week several prominent newspaper editorial boards have come out in favor of community broadband. 

The Boston Globe’s board wrote that Congress should let cities provide their own Internet

“A better approach would be for Congress to settle the issue itself, by preventing states from interfering with cities and towns that want to start their own Internet services. On Jan. 22, Democratic Senators Cory Booker of New Jersey, Claire McCaskill of Missouri, and Ed Markey of Massachusetts filed a bill that would invalidate the state laws, and prohibit states from enacting new ones. This effort will almost certainly face stiff resistance from Congressional Republicans. But this shouldn’t be a partisan issue, and it isn’t one on the local level. Red states like Georgia, Kentucky, Iowa, Oklahoma, and Utah all have successful municipal Internet programs. Politicians tempted by campaign contributions from the telecommunications lobby, or skeptical of any proposal backed by President Obama, should remember that consumer protection is an issue that voters of all stripes support.”

The LA Times also weighed in: 

"Just as advances in microchip speed and hard drive capacity have led to more powerful software programs, faster broadband networks lead to more data-intensive applications and services. But the shortage of broadband competitors and the high cost of building networks in the United States have slowed the spread of the kind of ultra-high-speed services such as the ones found in much of Asia and northern Europe… Regardless, the decision about whether a local agency should get into the broadband business should be left to the people who bear the risk — local officials and the people who elect them." 

The Iowa State Daily praised Republican Governor Branstad’s “Connect Every Acre” proposal: 

“Bringing Internet access to all Iowans or Americans will only increase the number of educational and economic opportunities in our state. Cedar Falls is already a powerhouse in Iowan and national E-commerce, so expanding similar capabilities across the state will strengthen Iowa’s standing on the national economic stage."

More residents and op-ed writers have chosen to write about community broadband as well. Andrew Kocis wrote in the Eastern Echo that he wants to see faster speeds, more competition and better service.

Ansel Herz continues to bite at the heels of Seattle’s decision-makers.

“Seattle is a bustling, high-tech metropolis with a highly regarded public utility company. We're the fastest growing large city in the country, according to census data, and the city expects that over the next 10 years, 75 percent of the city's new residents will move here for jobs in the tech sector. So why, when it comes to the internet, are we so far behind cities like Cedar Falls and Chattanooga—or closer to home, for that matter, towns like Mount Vernon or Sandy, Oregon?”

David Amor wrote to keep his paper, the Galesburg Register-Mail, in check after a recent article only told half of the story about broadband in his Illinois community. 

The South Coast Today out of Massachusetts is introducing a series devoted to helping residents learn more about municipal networks:

The first question is "Why would Middleboro want to become an ISP (Internet Service Provider?".  The simple answer is:  To provide quality high speed Internet at the lowest possible price and to protect our citizens from the blood thirsty piranhas that they currently have to contend with.  A municipal ISP would have the effect of keeping the other providers honest.  Competition would force everybody to offer the best possible rates instead of what we have today - Internet superhighway men and corporate grifters who are charging as much as they can get away with after luring you in with temporarily low rates.


Community Broadband City Update

Paul Bunyan Communications in Bemidji, MN connected its first “gigazone” customer this week. Zach Kayser with the Forum News Service reported on the technological revolution that is happening in rural northern Minnesota. Once completed, the GigaZone will be one of the largest gigabit networks in the United States.

Bryan Lund with the Rochester Post Bulletin is reporting about his city taking steps toward community broadband. Rochester, MN city council member Mike Wojcik says he’s been bombarded with letters from residents disgusted with their Charter service, and that’s sparking them to look into other options. 

"Broadband is key for information for a lot of people, particularly younger generations, and going forward, it becomes more and more critical… Ultimately, if the city of Rochester, if the citizens of Rochester, are not willing to invest in broadband themselves, nobody else is going to invest in it for us. There are more than 30 cities around the country now that have jumped in and are positively cash-flowing broadband for their citizens. Typically, they have better service, better speeds and better pricing than Rochester gets."

Barbara Rodriguez with the Associated Press reported on Gov. Branstad’s broadband legislation. In the Quad City Times, Barb Ickes wrote that the Iowa city’s leaders have a responsibility to understand how broadband service can benefit their constituents. 

Allison Oligschlaeger with the Deseret News reports that the mayor of Murray, Utah has a plan to increase UTOPIA customers.

In Albany, New York, Chelsea Diana with Biz Journals wrote about how Albany businesses have fallen behind for competitive speeds. She found that 70 percent of upstate New Yorkers cannot get access to broadband at 100 Mbps, which many European cities enjoy. 

Richie Davis with GazetteNet in Massachusetts wrote about Leverett’s community broadband success, which was featured in the White House’s broadband report.

“President Obama’s call Tuesday for Internet expansion to “help folks build the fastest networks, so that the next generation of digital innovators and entrepreneurs have the platform to keep reshaping our world,” had a special ring for people in this town.

Obama’s State of the Union shout-out to the 21st-century businesses’ need for “the fastest Internet,” and his visit to Cedar Falls, Iowa, last week to spotlight that city’s municipal gigabit-per-second broadband service, came as little surprise to Leverett Broadband Committee members, who are gearing up for 1-gigabit-per-second LeverettNet service — 100 times faster than the national average — to be turned on this spring for residents.”

Boulder, CO residents will soon be reaping the benefits from their recent Internet ballot initiative. Erica Meltzer with the Daily Camera writes that the city will launch free public wi-fi in downtown areas this Spring. 

And in Loveland, CO, Saja Hindi with the Reporter Herald reports on elected officials there are discussing how municipal broadband could improve the town’s economy. 

“[City councilor John] Fogle said it's not just large cities taking advantage of this idea but smaller ones as well because it's about being a catalyst for business and for education... A business developer at the retreat affirmed Fogle's comment, stating there's a possibility of a company looking to locate the manufacture of helicopters in Loveland at the airport next year and because the headquarters are in Switzerland, having a fiber optic line would be very beneficial.”

An Update on Utah's UTOPIA Open Access Network

For the facts on all things UTOPIA, we turn to Jesse Harris at In his latest post, he provides an excellent bullet list of the key factors in Macquarie's Milestone 2 proposal. An excerpt From his post:

  • The final cost per address is estimated at $22.60 per month. Macquarie estimates that re-working the deal to account for five cities bowing out trimmed the cost by $8.57 per month.
  • The revenue split is much more generous than I expected, allowing the cities to keep 75% of wholesale revenue after the first $2M per year. It’s expected to completely cover the debt service by 2021 with just a 24% take rate for premium services.
  • The basic level service has also been improved. Instead of 3M/3M service being included at no extra cost, it’s been bumped to 5M/5M. This matches Google Fiber speeds on the free tier. The data cap stays put at 20GB per month.
  • Almost all of the network revenues are being driven by Veracity, XMission, and SumoFiber. Other ISPs are very small by comparison.
  • The majority of currently connected users are in opt-out cities. This only reinforced that the votes there were “we got ours” selfishness.

Jesse has also managed to obtain a draft copy of the Milestone Two Report and has it posted for your review at his blog.

Recently, the network settled a long running dispute with the Rural Utility Service (RUS), reported the Standard Examiner. UTOPIA was awarded a $10 million settlement in a lawsuit filed in September 2011.

A November Salt Lake Tribune article reported that the RUS encouraged UTOPIA to seek federal loans in 2004 but took 19 months to approve the first payment, generating unanticipated expenses. Later, the agency withdrew promised funding with no formal reason. 

Community Broadband Media Roundup - December 12, 2014

This week in Community Broadband networks... partnerships, cooperatives, and going-it-alone. For a background in muni networks, check out this recent article from FiscalNote. The article highlights Kansas and Utah's fight for improving beyond the minimum speeds. 

Speaking of minimum, the FCC announced its new "rock bottom" for regulated broadband speeds. Ars Technica's Jon Brodkin reports that despite AT&T, Verizon, and the National Cable and Telecom Association's protests, ISPs that use government subsidies to build rural broadband networks must provide speeds of at least 10 Mbps for downloads.

Rural Americans should not be left behind those who live in big cities, the FCC announcement today said. "According to recent data, 99 percent of Americans living in urban areas have access to fixed broadband speeds of 10/1, which can accommodate more modern applications and uses. Moreover, the vast majority of urban households are able to subscribe to even faster service," the FCC said.

The FCC plans to offer nearly $1.8 billion a year to carriers willing to expand service to 5 million rural Americans. 

This is a step in the right direction, but we are alarmed to see a download:upload ratio of 10:1. People in rural areas need to upload as well as download - our comments to the FCC strongly recommended raising the upstream threshold as well and we are very disappointed to see that remain a pathetic 1 Mbps.

And, from TechDirt's own "who can you trust if you can't trust the phone company department," Karl Bode found that a study by the AT&T-funded Progressive Policy Institute concluded that if Title II regulations were passed, the nation would be "awash in $15 billion in various new Federal and State taxes and fees. Bode writes that the study cherry-picked and conflated data:

The reality the broadband industry doesn't want to acknowledge is that very little changes for it under Title II if carriers aren't engaged in bad behavior. The broadband industry is fighting Title II solely to protect potential revenues generated from abusing uncompetitive markets. That this self-serving behavior is being dressed up as concern about the size of your broadband bill is the industry's best comedic work to date.

Cities Pursuing Community Broadband

Nancy Scola reported on the growing collective of "Next Century Cities." 

[The group's] early expansion is a signal of what seems to be a shift in the way Americans are thinking about high-speed Internet access: the idea that cities will the battlegrounds for the playing out of the broadband debates. One effect of these cities working so closely with Google as it rolls out its fiber network in places like Kansas City and Austin is a realization that mayors can take broadband into their own hands -- whether that's through a municipal solution like Chattanooga's gigabit network or through partnering with traditional Internet service providers such as Comcast or Time Warner Cable.

Other partnerships are also moving muni networks forward

At the same time as the Next Century Cities announcement, the Department of Agriculture announced $190.5 million in grants and loans for rural broadband and telecommunications infrastructure.

"Modern telecommunications and broadband access is now as essential to the businesses and residents of rural America as electricity was in the 1930s," said Agriculture Secretary Tom Vilsack, in a USDA statement. The funding will go towards providing, “broadband in areas that lack it, help rural-serving public television stations begin using digital broadcasts and support other telecommunications infrastructure improvements."

Jason Meyers with LightReading explains why utility companies (like EPB in Chattanooga) are positioned so well to be home to gigabit networks.  

Several communities are considering local options for networks. Some are just in the earliest study phases: Medina County and Athens in Ohio and Walla Walla, Washington are among them. RS Fiber in Minnesota has approved its updated business plan and financial strategy, meaning it can move forward with its cooperative network, and several communities in Northeastern Oklahoma are pursuing a cooperative plan as well.

It looks like the push for local options in Colorado is having an affect on other communities. Aspen and Pitkin County have submitted requests for proposals-- perhaps inspired by Longmont, Boulder, and the rest of the communities we reported on after the November referenda.  

Meantime, Bruce Kushnick with the Huffington Post reported this week that communities all over the country have been paying for fiber infrastructure upgrades, but have seen almost none of the investment. 

Starting in 1991, the phone companies went state-to-state to get changes in state laws, known as "alternative regulations" to charge customers for the replacement of the copper wires that were part of the state-based utility, like Verizon New Jersey, with a fiber optic wire capable of 45 Mbps in both directions, the standard speed for broadband in 1992.

And though it varied by state, this fiber optic wiring was to be done everywhere -- urban, rural, and suburban, rich and poor communities and cities, and even the schools were to be wired in some states. All customers were paying for the upgrades of this future fiber optic broadband utility so they all deserved to be upgraded.

Check it out and see if your community is on the list. And if you think this isn't the first time you've heard about this Big Ripoff, you're right-- We interviewed him on Community Broadband Bits Episode 28

Net Neutrality

This week, New Jersey's Cory Booker and Maine's Angus King defended net neutrality on CNN. 

The Internet is one of the most powerful tools on the planet. Across the globe, millions of people connect every minute of every day to harness its wealth of information, exchange ideas in an open platform and foster the type of innovation and entrepreneurship that spurs economic growth.

And today, it's never been more at risk in the United States.

Washington Post's Brian Fung reported that there are hints that the telecom industry is preparing for a new Title II reclassification. Verizon's CFO Francis Shammo said, in a nutshell, that the company would do just fine if the FCC imposed the stricter regulations. 

"I mean to be real clear, I mean this does not influence the way we invest. I mean we're going to continue to invest in our networks and our platforms, both in Wireless and Wireline FiOS and where we need to. So nothing will influence that. I mean if you think about it, look, I mean we were born out of a highly regulated company, so we know how this operates.

Despite this very clear statement, we expect to see still more claims from groups like the AT&T puppet Progressive Policy Institute that Title II would somehow cause major carriers to invest even less in networks across the United States. Though, if the market were half as competitive as they claim, any firm that invested less would be in big trouble! How do we know when they are lying? Well, are their lips moving?

Layton Resident Breaks Down the Numbers on UTOPIA Service: Letter to the Editor

Thane Packer, a Layton resident, attended a community meeting this fall to learn what he could about UTOPIA. Packer is like many others who consider his costs for Internet, TV, and phone as an important factor in whether or not to support UTOPIA. After attending the meeting, he considered the presentation and what he described as "some very heated, and some very biased opinions."

He then examined his existing triple play costs and shared his findings in a letter to the Standard Examiner. The rest of his letter is reproduced below (emphasis ours):

The total bundled bill for home phone, Internet, and a TV package was $273.63. That is $93.25 per month for the internet and home phone plus $180 for TV. The telephone service is fine but the Internet is frustrating. The signal fluctuates, is spotty and unreliable.

In Provo, because there is competition from a fiber optic network, this exact same package, which includes, total Internet, home phone and the TV package is available from a provider for only $99.94 a month.

This means that even if I didn’t use a fiber network like the one in Provo the competition price from the provider would save me $178.69 a month. That means that without the competition from a fiber system like UTOPIA, the provider stands to make, (from me) a total of $2,144.28 a year and in 25 years (the pay-off time for the current bond, for which we receive nothing) is over $53,000

If I were able to switch to fiber system here in Layton a much better service would cost even less and I can certainly find a better place to use my $53,000.

So ask yourself this question. What is your current service costing you, how much extra are you paying, and what are you getting for it? For me the advantage of saving at least $178.69 a month and getting better service for it is obvious.

So please Layton, find a way to make this or something like it work for us. A very vocal minority should not be able deprive the rest of us from better cheaper service.

Utopia at a Crossroads: Part 3

This is the final installment of a three part series, in which we examine the current state of the UTOPIA network, how it got there, and the choices it faces going forward. Part I can be read here and Part II here

In Part I of this story, we laid out the difficult situation the open access UTOPIA network finds itself in and how it got there. Part II gave the broad outlines of Macquarie’s preliminary proposal for a public-private partnership to complete and operate the network. The numbers we deal with here are mostly from the Milestone One report, and assumed the participation of all 11 cities. It should be noted that since five of eleven UTOPIA cities opted out of proceeding to Milestone Two negotiations, the scope and scale of the project is subject to change. The basic structure of the potential deal is mostly set, however, allowing us to draw some reasonable conclusions about whether or not this deal is good for the citizens of the UTOPIA cities.

Let’s first turn to why Macquarie wants to make this investment.  This would be the firm’s first large scale broadband network investment in the U.S., allowing it to get a foothold in a massive market that has a relatively underdeveloped fiber infrastructure. To offset network build and operation costs, it will also be guaranteed the revenue from the monthly utility fee, which my very rough calculations put between $18 and $20 million for the six cities opting in to Milestone Two (or between $30 and $33 million per year for all 11 cities) depending on whether the final fee ends up closer to $18 or $20 per month.

Jesse Harris of FreeUTOPIA puts Macquarie’s base rate of return between 3.7% and 4.7%, which is slim enough that they should have the incentive to make the network successful and truly universal, boosting their share of the revenue from transport fees in the process.

The monthly utility fee is a difficult pill for UTOPIA cities to swallow politically, and has allowed opponents to paint it as a massive new tax.  But this claim ignores the costs of the existing $500 million debt (including interest), which will have to be paid regardless of whether the network is ever completed or any more revenue is generated.

The existing debt adds up to about $8.50 per month per address over 30 years, without accounting for ongoing operating losses (or bond prepayment penalties if the network goes dark) or necessary network maintenance and upgrades. Without completing the network, there is no hope that it could return to self-sufficiency, meaning it would likely require operating subsidies in perpetuity.

Again, Jesse Harris has paved the way by doing an analysis of what is in the best interest of taxpayers from a purely self-interested perspective (ignoring indirect benefits of the network) here and here. As he sees it, it all depends on the take rate: if Macquarie can reach a 38% take rate in the newly expanded network coverage area, the entire deal will cost the same for taxpayers as simply selling off the network. A higher take rate would mean the cities actually spend less to get a completed network than they would to sell it off. But that’s only a narrow look at the balance sheet.

Even at the point where the deal is a wash financially, cities still get a completed network with an included basic level of service for every resident. Comcast and CenturyLink will slash their prices substantially in response to the competition (at least 50% in Provo) so that every citizen benefits regardless of if they use the network. Even for someone with a very basic Internet connection that wouldn’t use the network, they would be paying no more than $11.48 to potentially save at least $15, a net gain. The cities also get a $100M annual revenue stream at the end of the 30-year contract, effectively making the worst case scenario break even after less than seven years of ownership.

Opponents, especially those from the CenturyLink-funded Utah Taxpayer Association (UTA), have focused on the extra cost from the new utility fee to the small segment of the population that neither has nor wants a telecommunications connection. However, some studies have also shown that a fiber connection increases the value of a property, so there really may be some gain for everyone under this deal.

As it stands today, 2,100 miles of fiber have already been built, 70% of it underground. 40% of UTOPIA addresses are passed by the network (meaning they are able to purchase a connection upfront or on a payment plan), but only 10% are actually connected. Some cities are almost completely covered, others less than 20%. Some neighborhoods have one side of a street where connections are offered and the other where services are unavailable. The result of constant funding constraints, frivolous incumbent lawsuits, and poor planning, these pieces of stranded infrastructure can still be reclaimed and capitalized on with additional investment. 

Essentially, UTOPIA city taxpayers are on the hook either way. They can either get something for their troubles with the Macquarie deal (and maybe even end up paying less), or they can call it quits and pay to shut it down. They‘ve taken out a mortgage and built most of the house, but run out of money before they put a roof on. They can either restructure the debt and get on a payment plan to finish the roof, or they can watch the house rot and pay the mortgage for 30 years anyway. 

It is important to note that UTOPIA has a unique dynamic because the network has struggled financially (unlike the vast majority of community networks, most of which use a different business model and learned from the early mistakes of UTOPIA). We have not yet seen any communities proposing to establish a utility fee from the start, but it is an interesting proposition and we will explore it at length in a paper later this summer.

Utopia at a Crossroads: Part 2

This is the second of a three part series, in which we examine the current state of the UTOPIA network, how it got there, and the choices it faces going forward. Part I can be read here and Part III here.

With the status quo untenable, no easy exit strategy, and political opposition mounting, UTOPIA appeared besieged in early 2013. Then along came Macquarie, which started studying the network and putting together a proposal for a partnership. The full Milestone 1 report from Macquarie is here,  but in case you aren’t prepared to read 100 pages the broad outlines are as follows:

  • Macquarie will invest $300 million of its own capital to aggressively finish the network build out in 30 months, finally reaching every address in every participating city without a connection fee (UTOPIA had been charging residents in some areas who wanted service around $3,000 to make the expensive last mile connections to individual addresses).
  • Macquarie would be responsible for network maintenance and periodic upgrades, as well as meeting performance benchmarks. Cost overruns in any of these areas would be paid by Macquarie.
  • Sharing of network revenue (from charging ISPs for transport) between Macquarie and UTOPIA, which could be used to pay down the existing bond debt.
  • At the end of a 30 year period of operations run by the public-private partnership, the network would revert fully to public ownership.
  • All homes would be eligible to receive "free" basic service, with 3 mbps download/upload speeds and a 20GB monthly data cap. For all other services, businesses and homes could choose from any of the 8 ISPs currently operating on UTOPIA, all of which offer affordable gigabit speeds. With a larger, complete network, it is likely that UTOPIA would attract new service providers as well.
  • Imposition of a monthly $18-20 utility fee, assessed to every address in the UTOPIA area over the next 30 years, regardless of whether or not they are network customers. This is why we put the "free" basic service in quotations. The utility fee would be structured with a 50% discount for apartments or other multiple-unit addresses, a 100% premium for businesses, and an option for each city to offer a hardship waiver for the indigent or discount for seniors.

In sum, this is a huge infusion of capital from a private company that could remove the risks associated with running, maintaining, and upgrading the network from the member cities, while potentially offering them a source of revenue to pay down the existing bonds. It also offers universal basic internet access, and the chance for everyone to purchase high speeds and premium services (voice and video) in a truly competitive market running on state-of-the-art infrastructure. The downside, of course, is the monthly utility fee, which is already proving contentious, as well as ceding control of the network to Macquarie for 30 years.
In the third and final article on this Macquarie series, we’ll look at the political implications and weigh the costs and benefits of the utility fee compared to what these cities are already paying.

UTOPIA at a Crossroads: Part 1

This is the first of a three part series, in which we examine the current state of the UTOPIA network, how it got there, and the choices it faces going forward.

At the end of a month of public meetings, hearings, and city council votes, just over half of the cities that make up UTOPIA have chosen to take the next step in their negotiations with the Macquarie Group. The massive Australian investment bank has put forward an offer to become a partner in the troubled network in exchange for a $300 million capital infusion to finish the long-stalled FTTH buildout.

Of the 11 member cities that have debt obligations for the network, six (comprising about 60% of all 163,000 addresses in the UTOPIA area) have voted to proceed to “Milestone 2,” which means digging into details and starting serious negotiations on the terms of a potential public-private partnership. Macquarie outlined their opening proposal in their Milestone 1 report in April.

Macquarie has about $145 billion in assets globally, and is no stranger to large scale infrastructure projects. Their Infrastructure and Real Assets division has stakes in Mexican real estate, Taiwanese broadband networks, Kenyan wind power, and a New Jersey toll bridge, to name just a few. For their UTOPIA investment, they would be working with Alcatel Lucent and Fujitsu, highly capable international IT companies. So there’s some serious corporate firepower across the negotiating table from the UTOPIA cities - and in this case, that’s not actually a bad thing.

Jesse Harris of FreeUTOPIA has an excellent overview of the whole messy history of UTOPIA and the limited options the network’s member cities now face. While the network offers true competition, low prices, and gigabit speeds through an open access FTTH network, UTOPIA has faced a slew of setbacks over the years, from incumbent lawsuits and astroturf activism to mismanagement, poor expansion planning, loan disputes, and restrictive state laws. As a result, the network remains unfinished, with just over 60,000 of 163,000 addresses having been passed by fiber, while member cities are on the hook for about $500 million in long term debt and interest payments to go with annual operating losses in the realm of $2.4 million.

The UTOPIA cities have some choices to make. They could simply shut the network down, eliminating the operating costs - but also depriving the area of its best chance at ubiquitous and affordable high speed internet access, losing the revenue from current customers, and doing nothing about the long term debt. This would essentially guarantee that the cities would continue to make bond payments for the next 30 years while receiving nothing. It would also leave the many local businesses  that depend on the network’s reliable speed high and dry.

Or the cities could choose to sell the network, as nearby Provo did with its fiber network after state restrictions requiring an infeasible business model took their toll. Any proceeds from a UTOPIA sale would be dwarfed by the outstanding bonds, however, leaving the cities with most of the debt left to pay and little to show for it, handing over control of a local infrastructure asset to the highest bidder. This did not work out especially well in Provo, where the public sector held onto the network’s debt while a private provider (Broadweave) struggled to operate it. They have had better luck with a subsequent sale to Google, but still retain the public debt without community ownership. This is a fate UTOPIA cities should avoid if at all possible.

Stay tuned for the rest of this series. In Part 2, we’ll break down the main points of the preliminary Macquarie proposal. In Part 3 we’ll weigh the pros and cons, showing why this deal has the potential to make the best of a difficult situation for UTOPIA-area residents and businesses.

You Are Cordially Invited: June 17th Discussion on Cable Companies, Monopolies, and Community Networks

On Tuesday June 17th, Chris will be participating in a conversation hosted by the Media Consortium as part of its Media Policy Reporting and Education Program (MPREP). You are invited to sit in on what is sure to be a spirited discussion on community networks and the lack of competition in the cable industry.

What: Community Fiber Networks: A Realistic Solution to Cable Monopoly?

When: Tuesday, June 17, 3pm ET/ 12 PT

Who: Joining Chris will be:

Ryan Radia, Associate Director for Technology Studies at the Competitive Enterprise Institute. He is critical of government-run or regulated projects in general, and specifically critical of community networks. 

Wayne Pyle, City Manager and CEO of West Valley City, Utah's second largest municipality, and also  chair of the board of UTOPIA, the Utah Telecommunications Open Infrastructure Agency, a community network serving 11 cities.

This is the first of several monthly briefings hosted by MPREP to discuss media policy issues. Everyone is welcome to participate. Register online for this discussion.