Alabama Republican State Senator Tom Whatley tried again this session to convince his colleagues that municipal utilities need the ability to expand beyond current coverage areas. Once again, his appeal to common sense for better connectivity fell on deaf ears.

Deja Vu

Whatley, representing the Auburn region, held fast to his promise to bring back a proposal like 2015’s SB 438. Early in February, he introduced SB 56, which stalled in the Senate Transportation and Energy Committee, unable to get a hearing. The bill eliminated limitations on both services offered and where municipal systems can offer those services.

In a January OANow article, Whatley explained that, once again, he was driven by the desire to improve economic development in Auburn:

On the local level, Sen. Tom Whatley, R-Auburn, is sponsoring two bills that he hopes will drive industry to and create jobs in Auburn and Opelika. An Internet availability bill would allow municipalities that offer their own high-speed [gigabit] Internet service, such as the city of Opelika, to expand and offer it in other areas, such as in Auburn and Russell or Tallapoosa counties, which are not eligible for [gigabit] service through private Internet companies.

“The [gigabit] service is something that businesses look for,” Whatley said, adding industries look at [gigabit] Internet the way they do school systems and water and sewer before moving their business into a city. “It’s an economic development tool.”

To Spread The Wealth

A recent Wall Street Journal (WSJ) article (requires subscription) chronicles the increasingly problematic effect of data caps on the quality of residential subscribers' Internet access experience.

Also known as a bandwidth cap, a data cap is a monthly bandwidth usage limit Internet Service Providers (ISPs) sometimes impose on subscribers at their standard monthly rates. While some ISPs charge customers more for exceeding their monthly bandwidth caps, in other cases ISPs may even cut off a customer’s service completely.

The problem is also harming companies like Netflix and Sling TV who are losing customers who can’t justify paying for a high capacity video streaming service that’s only available until they hit their data caps partway through the month. In response, Netflix lowered the video quality for users on ISP networks that use data caps as a way to help them avoid the limitations. The plan worked, but in the process Netflix angered customers, who blamed both the ISPs and the streaming service for the lowered video quality.

It's Not All About The Money

The problem goes beyond the extra fees charged to customers who use a lot of data. The WSJ article cites two Internet users who’d like to join the growing number of “cord cutters” who are dropping television service for Internet-based video. As one man put it:

“I wouldn’t have regular TV if not for the data cap,” he says. “Comcast has got me by the throat.”

Another added:

“I was planning to cut the cord when my DirecTV contract is up,” he says. “This is essentially a ploy to keep people from cutting cable in my opinion.”

An increasing number of subscriber complaints and suspicions about the accuracy of measuring bandwidth usage heighten concerns.

Feds Take Notice

At a recent City Council meeting, New Braunfels council members approved $57,000 in funding for Phase II of a study to explore the feasibility of constructing a city-owned fiber network. The city's Industrial Development Corporation (4B Board), which helps guide the city's economic development initiatives, previously recommended moving on to this next phase of the project. 

Because state laws in Texas prevent municipalities from offering retail telecommunications services, New Braunfels must advance carefully. The city is proceeding with the consultant's recommendation to pursue a public-private partnership (PPP) for the proposed network. With this second phase of the study, the consultant will help the city release a Request for Proposals (RFP) to solicit interest from would-be private Internet Service Providers (ISP) for the city-owned network.

Clarification from Christopher Mitchell: In Texas, the term telecommunications does not include Internet service. Communities cannot offer telephone service but are able to offer Internet only type services.

Some Findings from Phase I of the Feasibility Study

At a February 4B Board meeting, the New Braunfels Assistant City Manager Kristi Aday noted that the proposed network would cost the city somewhere in the range of $3 - $5 million. A major factor in determining the cost of the network, she said, is whether to use underground fiber for the network or to go with an aerial approach, using poles owned by New Braunfels Utilities.

In March, we wrote about a prospective municipal fiber network project in the western Michigan city of Holland. Holland’s Board of Public Works (HBPW) began a pilot test in January, offering gigabit speed services to three commercial buildings in the city via a system of dark fiber cable that the city has owned for more than two decades.

Holland’s Board of Public Works (HBPW) has since released a study that details options for a citywide municipally owned Fiber-to-the-Premises (FTTP) network. Although the study is only a first step toward developing a final business plan for the network, it gives significant insight into the city’s plans for the project.

Prospective Network Footprint and Business Model

In the first option, the city could invest $63.2 million to add nearly 500 miles of fiber lines to the city’s existing fiber infrastructure to create a municipal FTTP network for the entire HBPW service area. The new network would reach all of the homes, businesses, and municipal facilities in Holland and in neighboring communities that fall within the HBPW’s service area.

The second option suggests a $29.8 million investment on a fiber network with a smaller FTTP footprint that would provide gigabit speed fiber connections to all premises within the Holland city limits.

According to the study, the city prefers a “hybrid open access” business model in which Holland would provide retail services while also preserving its current open access model. The study also discusses potential FTTP models the city could consider, including one in which the city serves as the network’s sole ISP as well as several different potential public-private partnership (PPP) models that have been successful in other cities.

The study suggests that the city can finance the larger of the proposed network projects with a combination of bonds and loans. The study assumes a 39.6 percent take rate

Faster Speeds, Better Rates

Valparaiso, Indiana, is investing in dark fiber to stimulate economic development; it is deploying ValpoNet, a dark fiber network to serve local businesses and institutions.

The city of approximately 32,000 people is a little over an hour southeast of Chicago and home to Valparaiso University, Purdue University North Central, Indiana Vocational Technical College, and several other colleges. The community also has a large manufacturing base and a number of hospitals and medical clinics, so there is an ample supply of entities with IT departments with the requisite knowledge to use a dark fiber network.

If At First You Don't Find Fiber...

In 2010, a regional economic development organization developed a report that identified the lack of fiber in "Valpo" and Porter County but no project developed. The city moved on to other things until 2014. A situation with a large financial information company in town breathed new life into the idea of municipally owned fiber. The company wanted to expand its facility and wanted to be sure it could access better connectivity. Several years earlier, there had been an ice storm at one of the company's home offices and, while they thought they had redundancy from the incumbents, such was not the case. They lost connectivity for days and from that point on, whenever they opened new offices, expanded, or relocated, redundancy was always a top priority. 

Valpo's Redevelopment Commission decided to hire a consultant to draft a feasibility study. He determined that a dark fiber network was not only possible, but needed. The study revealed that other companies suffered from poor reliability and considered affordability another pressing issue. 

Virginia Beach has launched a $4.1 million capital improvement project to extend the city’s high-speed Internet network to all municipal buildings. The network will also offer connection spots on the system for colleges, businesses, and neighboring cities, according to the Virginian Pilot.

The city (pop. 448,479) plans to more than double the reach of its municipal network, adding 73 more sites, including more police stations, fire stations, and libraries. Project work is currently underway and is expected to finish in the next year to 18 months. In addition to extending the municipal network, the project will include buying new networking equipment. The city is using money from its capital fund to pay for the project.

Once the project is completed, Virginia Beach will become the first community in the South Hampton Roads region of Virginia with its own Internet network linking all of its government buildings, the Virginian Pilot reported. 

Growing City Internet Needs

Virginia Beach started its municipal Internet network in 2002 with the local public schools. Since then, the city has invested a total $27 million to install about 225 linear miles of fiber-optic cable, linking all the public schools along with  “connecting many government buildings, including police stations, fire stations, libraries, recreation centers, and Human Services facilities,” according to a city news release.  

Today, Virginia Beach’s burgeoning Internet needs are fueling its municipal network expansion. The network helps maintain traffic lights, facilitates video conferencing, and provides infrastructure for email. A city spokesperson told us that 100 Megabit per second (Mbps) symmetrical service is available to most of the sites on Virginia Beach’s municipal network. 

Network Yields Savings

A March article in Broadband Properties Magazine spotlights three communities around the country that are making progress toward creating municipal fiber networks. The City of Centennial, Colorado announced that they have completed a feasibility study and a Master Plan detailing the city’s plans to develop a network. Additionally, the Cities of Indianola, Iowa and Rancho Cucamonga, California announced that they have begun studying the feasibility of starting their own municipal fiber networks. 

Indianola, Iowa

Indianola, Iowa is a city of about 15,000 just 20 miles south of Des Moines. As we wrote a few years ago, Indianola currently owns an open access Fiber-to-the Premise (FTTP) network which provides Gigabit speed Internet access, plus TV, and phone service to most businesses and select residents in Indianola. The study they recently commissioned will explore the feasibility of using this existing network for constructing a FTTP network to the entire community. 

Indianola built its existing fiber network, which they launched in 2012, out of frustration as CenturyLink refused requests from the community to upgrade their DSL network and the incumbent Mediacom began overcharging for their Internet services. Today, Indianola Municipal Utilities is the infrastructure owner and a wholesale provider of this fiber network while Mahaska Communication Group, an Iowa-based Internet Service Provider (ISP), performs the operations and maintenance services for the network. 

Rancho Cucamonga, California

The City of Rancho Cucamonga, California recently asked a private consulting firm to perform a study to determine the feasibility of creating a fiber optic network. City officials see a municipal fiber network in this city of just over 170,000 as a potential driver of economic development. The city is located about 45 miles east of Los Angeles.

The Southern Tier Network (STN), a community-owned dark fiber network that spans multiple counties in upstate New York, enables fast, affordable, reliable Internet access in New York’s Southern Tier region. Locally based private Internet service provider Empire Access offers services via the network as it continues to expand.

The Corning Leader reports that Empire Access intends to offer residential Internet access over the STN in the Cities of Corning and Elmira sometime in the next year. 

Empire Access

Empire Access, which offers current customers Internet access, voice, and 200-plus Digital TV channels, is waiting to launch services in Corning and Elmira until after they gain approval from the New York Public Service Commission (NYPSC) to provide digital TV services in these communities. Although the company could begin offering fiber and phone services at any time, the company wants to be able to offer the full bundle of options before they officially launch in Coring and Elmira.

As Stop the Cap! wrote in a June 2015 article about the STN, the business strategy at Empire Access is focused on bringing Internet access to areas of the state where Verizon refuses to go and where Time Warner Cable’s service tops out at 50 Megabits per second (Mbps) download and 5 Mbps upload. For current residential customers, Empire Access offers bundled services about $30 per month on average less than competitors.

In addition Corning and Elmira, Empire Service now provides triple play services via the STN Network to the City of Hornell, the Town of Bath, and the Village of Watkins Glen.

Economic Benefits of the STN