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Municipal Networks and Economic Development

Economic Development and Community Networks

When a community invests in a municipal broadband network, it often does so because it hopes to reap economic benefits from the network. Much has been written about the positive relationship between municipal Internet networks and economic development, including a White House report published in January 2015. Municipal networks create jobs by serving existing businesses and attracting new businesses to local communities, increase productivity by allowing individuals to telecommute and work from home, support advanced healthcare and security systems, strengthen local housing markets, and represent long term social investments in the form of better-connected schools and libraries. They also create millions of dollars in savings that can be reinvested into local communities. 

When municipalities choose to deploy fiber networks, they introduce Internet services into the community that are not only significantly faster than Digital Subscriber Lines (DSL) and cable, but more reliable. With fiber connections, businesses and individuals are far less likely to experience temporary blackouts that can harm their ability to provide services to customers. And because these networks are locally-owned and operated, business owners do not have to spend hours on the phone with an absentee Internet Service Provider like AT&T in the (albeit unlikely) event of a problem. 

Community Broadband Networks and the Institute for Local Self-Reliance have catalogued numerous examples of economic development achievements that have occurred as a result of cities and counties deploying a municipal broadband network. Below, you can find a wide range of articles, studies, blog posts, and other resources that speak to the economic successes enabled by municipal networks, organized by topic:

* Job Creation

* Attraction of New Businesses

* Expansion of Existing Businesses

* Home-based Productivity 

* Healthcare, Education, and Research

* High Tech Industries and Entrepreneurship

* Savings 

* Property Values 

* General Resources

In West Texas, "Hub City" Conducts Fiber Feasibility Study

A feasibility study conducted by the Lubbock Power & Light (LP&L) Electric Utility Board this April discussed several potential benefits of installing a fiber optic cable in the City of Lubbock, Texas. Charles Dunn, a member of the Utility Board, proposed installing fiber optic cables alongside the city’s utility lines, which are currently being buried underground as part of a three-phase, $1.9 million downtown redevelopment initiative

A fiber optic cable, Dunn contended, could increase Internet speeds hundredfold (from a max speed of around 10 Mbps to one above 1 Gbps), attract high tech companies to the city, and induce Texas Tech University students to stay in Lubbock after they graduate. In Lubbock, where Internet speeds run about 35 percent slower than they do in the rest of the state, a fiber network could be a boon for businesses and residents alike.

According to the April feasibility study, the fiber project might not even eclipse $100,000. LP&L would shoulder the costs of the project by drawing from its own budget. Both Dunn and LP&L director of electric utilities, David McCalla, believe that fiber would greatly benefit the community.

CEO of McDougal Companies, Marc McDougal, also argued in favor of the installation of the cable. From Fox 34 News:

Quite honestly, it would give us something that very few cities have... It would give us a huge advantage in another market to recruit businesses for downtown Lubbock. 

If plans to build the network were to move forward in Lubbock, LP&L would not be able to immediately offer Internet access to customers because of state law discouraging municipalities from offering telecommunications service. Though a Texas Utilities Code prohibits municipalities from offering telecommunications services to the public, that restriction does not appear to apply to Internet service (which is why AT&T a decade ago unsuccessfully tried to explicitly revise the barrier to include Internet access). The municipality would almost certainly have to defend its interpretation of the law in court, work with a private provider to offer services, or petition the FCC to overturn the current state law

While many municipal networks are located in smaller towns and rural areas, Lubbock seems to be an ideal mid-sized city for a high-speed municipal fiber network. Nicknamed the “hub city” on account of the key economic and educational role it plays in the South Plains region of West Texas, a foray into fiber optics has the potential to turn Lubbock into a hub for local self-reliance, as well.

From FOX 34

Chanute's FTTH Project on Hold Indefinitely

Changes in leadership in Chanute have put the community's FTTH plan in suspended animation. In April, the City Commission decided to delay financing shortly before the scheduled bond sale. It is unfortunate that residents and businesses will lose the opportunities the fiber deployment would bring. Nevertheless, they deserve the right to make their own choices, good or bad.

The community of Chanute deployed a network incrementally with no borrowing or bonding in order to improve efficiencies, save public dollars, and control connectivity for municipal facilities. Local schools and colleges, struggling to compete, began taking advantage of technology in the classroom and expanded distance learning. The network eventually created a number of economic development opportunities when community leaders started providing better connectivity to local businesses. We told Chanute's story in our 2013 report "Chanute's Gig: One Rural Kansas Community's Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage." 

Chanute made history when it was the first municipality in Kansas to obtain permission from the Kansas Corporation Commission to issue bonds for the project. They also became the first municipality in the state to seek and receive "eligible telecommunications carrier" (ETC) status. Chanute was awarded over $500,000 in Rural Broadband Experiment Funds from the FCC. Whether or not they will still be able to take advantage of those funds remains a question. After taking action and putting so many of the necessary pieces in place, it is disheartening to see the plan abandoned by politicians.

Regardless of the future of the FTTH project, Chanute has the infrastructure in place to encourage more economic development, connect community anchor institutions, and allow the community to control its own costs. The FTTH project is still a possibility.

You can learn about the origins of Chanute's network in episode #16 of the Community Broadband Bits podcast.

Alabama Republican Speaks Out in Favor of Local Authority

As we have learned, communities with municipal networks have tended to be politically conservative. Nevertheless, conservative state level politicians have often supported measures to revoke local authority to encourage local Internet choice. Recently, Alabama State Senator Tom Whatley, a Republican from Auburn, expressed his support for local authority in AL.com.

Whatley introduced SB 438, which would remove service area restrictions on municipal providers and remove the currently restriction preventing other municipalities from providing voice, video, or Internet access services. As he notes in his opinion piece, the bill did not move beyond the Transportation and Energy Committee, but he also asserts that he will be back next year to press for the measure. 

Auburn is near Opelika where the community has deployed a FTTH network to serve residents and spur economic development. If the restrictions are eliminated, Opelika could expand to Auburn and even other rural areas nearby.

Whatley makes comparisons to the strides America made with the national interstate system. He also acknowledges the way Chattanooga's network has transformed what was once described as the "dirtiest city in America." Whatley takes the same approach we encounter from many communities where, after failed attempts to entice private providers to serve their citizenry, eventually decided to take on the task themselves.

He writes:

As a Republican, I believe the private sector is usually the best and most efficient method for providing a service. But when private companies, for whatever reason, make a decision not to serve an area, we should not handcuff the people of that region if they decide to use a public entity to receive that service (in this case, broadband Internet) in order to compete today for the jobs of tomorrow.

Boston Globe Profiles Lafayette; OpenCape Inspired

In a recent Boston Globe Opinion, Dante Ramos notes that Boston has a reputation as a technology hub. When seeking options and affordability, however, Ramos recounts the successful approach of Lafayette, Louisiana:

Today, the top broadband speeds advertised to residential customers in Boston are about one-ninth of what’s available in Lafayette. A municipal network in Boston isn’t inconceivable; the fiber-optic network now connecting scores of government facilities could theoretically become the spine of a citywide system.

Ramos acknowledges the challenges Boston would face if it were to take up such a project, but he also notes that it was no small feat for Lafayette. The economic development gains have more than justified the investment:

Half a decade later, though, the benefits have come into view. A company serving an active Louisiana film industry can use the Lafayette network to transmit massive quantities of digital footage. Employees of a major jewelry manufacturer in town can get medical advice remotely without having to go in and out of a highly secure plant. And the presence of the network is shaping investment decisions in subtle ways.

Ramos shares the story of his encounter with the owner of a local Internet consulting firm who chose the company data center location because it was within the LUS Fiber service area. He also valued the network's speed, reliability, and quality customer service.

Lafayette's network has also continually drawn in new employers, including three high tech companies in the fall of 2014. Along with those approximately 1,300 well paying positions come the multiplier effect on the local economy.

Ramos' piece inspired a letter to the Globe from Art Gaylord and Dan Gallagher, Chairman of the Board of Directors and Senior Consultant respectively, from OpenCape. The two find inspiration in the story of Lafayette but lament what they see as a lack of enthusiasm in the Cape Cod region.

The 350-mile OpenCape network was developed throughout the Cape Cod region to serve community anchor institutions, municipal facilities, libraries, schools and private businesses. The project was developed by a nonprofit organization and funded with a combination of ARRA stimulus funds, state investment, and private investment.

OpenCape logo

When we last reported on OpenCape, their goal of attracting a high number of high tech jobs had not yet been realized. Gaylord and Gallagher point out the most difficult hurdle facing OpenCape and other stimulus projects: encouraging last-mile private investment:

The challenge is attracting investment to build out the so-called last-mile connections, which would enable other large data users, businesses, and ultimately residents to bring this critical resource to their doorstep.

According to a recent post on OpenCape's news blog, the organization announced that it will move more aggressively to pursue private and public capital investment to build out the network. In early May, Gaylord spoke about the next phase at the SmarterCape Summit:

“OpenCape has been and continues to be focused on fulfilling our vision of enhancing economic development and quality of life of the Cape and southeastern Massachusetts. However, it has become clear that OpenCape needs to do more to facilitate the public and private investment needed to complete the network’s vital ‘last mile’ connections.”

In their letter, Gaylord and Gallagher sum up what Lafayette has that they hope to acheive with OpenCape:

Ramos’s column captures the excitement and boundless economic opportunities brought to a small Louisiana community by a municipal-owned fiber-optic broadband network. We should be able to do better here.

Fortunately, communities in the OpenCape region already have a fiber backbone in place that many other communities lack. Last-mile connectivity is one step closer. Whether it is Lafayette, Cape Cod, or Boston, Ramos' question still applies:

When communities aren’t being served — or, as in Lafayette’s case, they want better service than they’re getting — why should they wait for Comcast Corp., Cox Communications, or other broadband giants to come to their rescue?

They shouldn't and they aren't. Ramos concludes:

If Google and other deep-pocketed companies ever build commercial fiber networks to compete with cable companies from coast to coast, they’ll spare market-oriented Internet junkies a lot of philosophical dissonance. Until that day comes, competition from local government is better than no competition at all.

WiredScore Rates Commercial Real Estate Connectivity in NYC

As a major metropolitan community, New York City has found a way to establish a link between connectivity and real estate for potential commercial tenants. 

WiredNYC, a certification program launched in 2013, provides broadband ratings for office buildings in the city. WiredNYC has been renamed WiredScore and now operates across the United States, in partnership with local governments. The program provides a simple survey online at WiredScore.com that analyzes a variety of factors and provides a rating based on:

Building Connectivity: The number of internet service providers, the quality and speed of connections, and the access to provider cabling in the building...

Infrastructure: Factors specific to the building's physical internet infrastructure (i.e., number of entry points, designated utility spaces, and risers)...

Readiness: How ready a building is to improve its connectivity... 

The survey provides feedback based on the survey results and offers a preliminary rating of "Certified," "Silver," "Gold," or "Platinum." In order to complete the certification, the City will send an engineer to the building to verify the survey results. WiredNYC also provides advice for building owners and landlords who have taken the survey but whose structures do not meet the minimum standards for certification or who want to take steps to achieve a higher standard of certification.

Landlords can use Wired Certification to market their building to potential tenants. Their buildings appear on WiredScore.com website and they receive similar benefits.

A March report from the Vertical Systems Group concluded that fiber is now present in approximately 42.5 percent of U.S. commercial buildings. Ten years ago that figure was only 10.9 percent. Fast, affordable, reliable connectivity is quickly becoming an integral component of the real estate market. Programs like WiredNYC will allow entrepeneurs and established businesses find the types of connections that suit their needs.

Update: We have updated the story because WiredNYC expanded to be WiredScore and works with all manner of commercial buildings.

Sonic.net Lights Up In Brentwood CA

Last summer the community of Brentwood began working with Sonic.net in a plan to use publicly owned conduit for a privately owned fiber network. Earlier this month, the partners celebrated completion of part of that network and officially lit-up the first residential neighborhood served by Sonic.net's fiber gigabit service.

The Mercury News reports that residents are much happier with the new Internet service provider than they were with incumbents Comcast and AT&T:

"I had no lag, no buffering, no waiting -- it almost feels like the Internet's waiting on you, rather than you waiting for the Internet," said Brentwood resident Matt Gamblin, who was one of the first residents to sign up for the service. "The hardest part about the process was canceling my old Internet."

Brentwood began installing conduit as a regular practice in 1999; the community adopted the policy as a local ordinance, requiring new developers to install it in all new construction. The city has experienced significant growth and the conduit has grown to over 150 miles, reaching over 8,000 homes and a large segment of Brentwood's commercial property. As a result, they have incrementally developed an extensive network of fiber ready conduit. 

As part of their agreement with Sonic.net, Brentwood will save an estimated $15,000 per year in connectivity fees because the ISP will provide gigabit service at no charge for City Hall. Sonic.net will fill in gaps in the conduit where they interfere with network routes. In school jurisdictions where 30 percent or more of households subscribe, public schools will also get free Internet access. (We have grave concerns about the impact of only extending high quality Internet access to schools where households are better able to subscribe to Internet access at any price point.)

City officials hope to draw more of San Francisco's high tech workforce to town. Over the past two decades of population growth, the city has prospered but community leaders want to diversify:

Officials don't expect the population growth to stop anytime soon, but they also don't want to rely too heavily on property tax revenues and risk having budgetary shortfalls during a housing crisis, such as what happened to Antioch in recent years. They're hoping things like this new high-speed Internet will attract more tech workers to town, and city leaders will be working this year to see if Brentwood can truly become an epicenter for business.

"That's the basic question: Are we a bedroom community or are we something else?" City Manager Gus Vina said. "And that 'something else' needs to have that balanced economy -- diversification is the key."

Fort Collins Local Media Endorses Muni Option

Communities all over Colorado have voted to reclaim local authority during the past year. Even though elected officials in Fort Collins are exploring the municipal network option, the City Council has yet to present the question to voters. Editors at the local news outlet, the Coloradan, recently expressed their support for a municipal broadband network, urging community leaders to let voters decide.

The Editorial Board focuses on the benefits Fort collins can expect from increased economic development, telemedicine capabilities, and relieved congestion from telecommuting. They see Internet access as one of the essential services cities provide such as water and electricity. The Editorial Board notes that city leaders have already budgeted $300,000 to create a strategic plan that includes community broadband.

The Board acknowledges that there are many unanswered questions - funding, cost, motivation for a deployment. Yes, questions need to be answered along the way, but it is time to move forward:

One hurdle is a 2005 state law that bans municipalities from starting their own telecommunications service, however, either a local vote or a federal waiver could override the law.

The time is now to sidestep the ban and approve municipal broadband.

Dublin Plans Upgrade Dublink to 100 Gbps

Dublin, Ohio's Dublink has been saving public dollars and spurring economic development since 2002. The gigabit fiber network is on the verge of a 100 gigabit upgrade. The Dublin Villager reports that in early May the City Council voted to implement the 100-Gigabit Dublink Ignite program.

According to the Villager:

The city has budgeted $865,000 over the next six years to complete the project, [City Manager Dana] McDaniel said, and will also use $300,000 in state funds and $360,000 from the Ohio Academic Resource Network for use of additional fiber optics for the project.

Increasing the city's fiber capability will allow the Dublin to provide fiber optics to older office buildings and make then more attractive, McDaniel said.

In addition to bringing fiber to a greater number of office buildings, the project may even lead to "fiber to the cubicle." 

As we reported in 2014, Dublin collaborated with the Ohio Academic Resources Network (OARnet) to create CORN, also known as the Central Ohio Research Network. This new 100 gigabit initiative plans to encompass those partnerships so companies can potentially access OARnet and CORN.

Dublin operates a "meet me" room at a local data center and anticipates using that facility as a place were a number of ISPs can compete for commercial customers. 

According to a detailed memo from Dana McDaniel [PDF], the city has calculated significant benefits for local businesses. Here are just a few (emphasis ours):

  • Backhaul to the local data center (Metro Data Center). This represents monthly cost savings to the company in the form of avoided carrier costs. Such cost savings are estimated to be $400/month or $14,400/3 year for 10 Mbps level of service; $800 /month or $28,800/ 3 year for 100 Mbps level of service; and $2000/month or $72,000/3 year for 1 Gbps level of service
  • Provide server space, at not cost, to local companies so they can create a presence in the local data center. Average cost per month for this service is estimated to be $1,013 per month. The company not only gets free space in an N+2 data center environment, but it also would get a value of $1,013/mo or $36,468 /3 years
  • Once a presence is created in the data center, companies and institutional users can choose among internet service prices. It is not yet known the effect of choice and increases capacity for a company. It is anticipated to lower the cost by $20-30/mo per Mbps which would save a small business with 10 Mbps on Internet services and additional $200/mo or $7,200/3 years.

The city will also increase connection speeds for Dublin City Schools and Washington Township Schools and connect them to each other. Institutional users will have connectivity to the data center, which will allow them the opportunity to connect with OARnet. They will be able to choose from ISPs and can avoid carrier costs with the connection to the "meet me" room provided by the 100-Gigabit Dublink Ignite Program.

McDaniel told council. "We think that we will be off the charts for incentives we can offer to our businesses."

Places like Dublin are thinking ahead. Their foresight years ago positioned them so they are already able to offer connectivity to attract potential employers. This program takes Dublin to the next level ensuring their competitive edge.

Morristown FiberNET in the Spotlight

In a recent report, WBIR Knoxville shined the spotlight on Morristown. The article and video discuss how FiberNET has improved its telecommunications landscape by inspiring competition, offered better connectivity to the region, and how state law prevents other towns from reaping similar benefits. We encourage you to watch both of the videos below.

Morristown's utility head describes how it considers high-speed Internet access to be a necessary utility:

"You had railroads, you had interstates, and this is the new infrastructure cities need to have," said Jody Wigington, CEO of Morristown Utility Systems (MUS). "To us, this really is as essential to economic development as having electricity or water."

Morristown began offering gigabit service via its FTTH network in 2012. It began serving residents and businesses in 2006 because the community was fed up with poor service from incumbents. Since then, FiberNET has stimulated economic development, saved public dollars, and boosted competition from private providers. 

Prices for Internet access are considerably lower in Morristown than similar communities. From the article:

Morristown's Internet service is more expensive than Chattanooga, but much faster than the rest of the region at a comparable price. A 100 Mbps synchronous connection is $75 per month. Advertised rates for Comcast in Knoxville show a price of almost $80 per month for a 50 Mbps connection with much slower upload speeds. A 50 Mbps connection in Morristown costs $40 per month. The cable Internet option in Morristown is Charter, with an advertised price of 35 Mbps for $40 a month.

As we have seen time and again, the presence of a municipal network (nay, just the rumor of one!) inspires private providers to improve their services. AT&T offers gigabit service in Morristown and Comcast has announced it plans on offering 2 gigabit service in Chattanooga.

"Without a major disruptor like we've seen in Chattanooga and in Morristown, there's really no reason for these guys [private companies] to go out of their way to make a big spend to make bandwidth faster. It just simply doesn't make good business sense," said [Dan] Thompson, [senior analyst for Claris Networks].

Thompson said he does not believe there should be any concern that municipal Internet would result in a monopoly akin to other utilities.

"If you go to Chattanooga, Comcast advertises like crazy on billboards down there. You don't see that here [in Knoxville] at all. Comcast is still there. AT&T is still there. They're still viable options."

Beyond offering better service to residents, FiberNET also attracts more employers. In 2013, we reported on 228 new jobs in the community, attracted here in part because of FiberNET's reliability. Most recently:

"There is a new call center that is looking at relocating to Morristown. They told us the local provider can get them fiber in the building for around $1,000. The guy from our utility company told him we've already got fiber to your front door and we'll put it in the building for free because you're going to be helping our economy and jobs. Their jaws drop. Businesses really are shocked by what we have here," said [President of the Morristown Chamber of Commerce Marshall] Ramsey. "They looked at Blount County and looked at Knoxville, but the confidence in the networks just isn't there right now."

Even though the FCC struck down state restrictions on municipal networks in Tennessee, local communities are not rushing to deploy their own networks. The state is challenging the federal action, and no local community has announced an expansion due to the uncertainty around the appeal. With this appeal, the state of Tennessee is wasting taxpayer dollars to deliberately slow the deployment of essential infrastructure in rural communities.

As Wigington acknowledges in the story, a municipal fiber network is no small endeavor. Nevertheless, only a local community can know if it has the ability, drive, and need to venture into Internet access as a utility.

Wigington said the decision of whether to compete with private industry should ultimately be made by the cities, not made for them by the legislature or the cable companies.

"Cities need to be able to make this decision."