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The Chelan Public Utility District in Washington began its county-wide fiber-optic network build. They have since passed some 80% of the county but are temporarily pausing expansion efforts. Chelan is a rural county and the network is not expected to break even for quite some time.
In Washington, state law limits the powers of public utility districts to offer broadband. As with communities in Utah, these public sector entities are forced to operate an open access network and are unable to offer services directly. While the open access model is a great one for some communities (and one we encourage when the numbers work), it can be difficult to implement depending on local circumstances.
The Wenatchee World recently covered the decision to hire a consultant to identify means of lowering costs. The network has cost $80 million to get to this point and will require an additional $40 million to connect the remaining 15-20%.
The network can provide access to over 30,000 residents, businesses, and community anchors (schools, hospitals, muni facilities). Subscribers choose from a variety of service providers for services and take rates vary from 30%-60% depending on the area.
The network is operating at a loss (probably due to a combination of the high costs of FTTH in rural areas, the low take rates, and lower revenues from operating on a purely wholesale basis). Residents were conflicted about the network's inability to pay for itself but a majority have continued to support it because they often have no other broadband options. However, the current economic climate has resulted in more concern about the costs.
Chelan PUD has apparently covered the losses from broadband (as well as some sewer and water services) with the sales of surplus electricity on the wholesale market. Those prices are rather low right now, forcing the PUD to make some difficult choices.
Sanders has already laid underground conduit for her own house and two of her neighbors’, following assurances from PUD staff that it would speed the installation process.
Another resident, Rachel Imper who lives on Brown Road, said she needs a fast Internet connection to exchange writing assignments that she...
UTOPIA, the open access FTTH network in several cities of Utah, has been seeking some $20 million to continue adding new subscribers to the network. The cities involved seem to be on board, committing to the funding following recent successes.
Mayor Mike Winder, of West Valley City - one of the UTOPIA cities, makes the case for digging deeper to lend money to the network:
UTOPIA's good news is that since June 2008, it's added over 3,500 new customers and reached about 10,000 subscribers, the number of service providers on the network has grown from three to 12, and national voices — from Google to the New York Times — are trumpeting the virtues of an open-fiber network.
The plain and simple fact is that these towns have already committed to the project; they are vested in its success. Now under better management, perhaps his whole town will have access to fastest speeds available in the country:
Only 23 percent of my city has UTOPIA fiber, and there are homes and businesses that want access to the speed of light. After weighing the issue for months, I've concluded that we need to bring UTOPIA fiber to the rest of West Valley City, and just as importantly, to grow UTOPIA to profitability. I will be encouraging my council and my colleagues in UTOPIA cities around the state to join me in charging forward.
A press release from UTOPIA announces ambitious plans:
The new plan anticipates adding about 20,000 more customers over the next several years. “We’ve known for a long time that UTOPIA needs a much larger customer base, and a good mix of business and residential customers, to make the books balance,” says Murray Mayor Dan Snarr. “Our cities are already obligated to the network for years to come, so we need to grow to critical mass rapidly, based on a plan to ensure long-term financial health.”
And Orem's mayor reiterated UTOPIA's philosophy (noting that the NY Times have called for open access networks):
Governments build roads, and allow FedEx and UPS to compete on...
Australia is planning to build a nationwide open access network that will be owned by the public. Ars Technica recently covered their progress - Australia has released a consultant report on the proposed network.
If the major incumbent, Telstra, works with the government on the network, the costs will be lower. But Australia will not let Telstra dictate the terms of their relationship:
But it's clear that the new network won't be held hostage to Telstra's demands. The consultants conclude that, in the absence of an agreement, [the fiber network] should proceed to build both its access network and its backhaul unilaterally." [src: Ars Technica]
Between the original plan and a revised plan suggested by the referenced study (bullet points here), over 90% of Australians will have a real choice in providers over a FTTH connection whereas the rest will have a combination of wireless and satellite options. The prices are expected to be affordable, and will probably be well below what we pay here in America.
The Implementation Study has some words about ownership of the National Broadband Network (NBN):
Government should retain full ownership of the NBN until the roll out is complete to ensure that its policy objectives are met – including its competition objectives
On technology, they reiterate what we have been saying for years:
Fibre to the premise is widely accepted as the optimal future proof technology with wireless broadband a complementary rather than a substitute technology;
Have no fear though, we will undoubtedly hear from many apologists for the private telecom companies that Australiai's NBN has "failed" because it is losing money. Estimates on the break even are many years out:
BN Co can build a strong and financially viable business case with the Study estimating it will be earnings positive by year six and able to pay significant distributions on its equity following completion of the rollout;
Brace yourself for a slew of reports noting the operating losses in the early years as "proof" the government should never have built this broadband infrastructure. These are the tried...Read more
Back in early March, Highland Illinois, broke ground on its publicly owned FTTH network project. Plans call for connecting some businesses by the end of this year and connecting everyone by the end of 2011.
The entire concept is expected to cost $13 million. About $9 million of the start-up costs will be funded by bonds - a move voters signed off on last year.
One of the focuses of the recent FiberFete conference is what do communities do once they have built a next-generation network. Lafayette had lots of ideas.
Let's start with counting new jobs. Lafayette Pro Fiber recently discussed one of the employers adding jobs. The post acknowledges that the fiber network is not the sole reason for these particular jobs, but it does play an important role:
You have to know if you've been down to "the egg" at the LITE building that they're not going to put 100 cubicle workers in that facility. No way they'd fit. However they do have to do the tedious work in Louisiana to get those credits. So some large percentage of those 100 workers will have to be off-site. But they'll have to be able to do their work as if they were in the same building with, at a minimum, the 100 megs of connectivity that standard ethernet LANs provide. That, of course, is exactly what LUS provides on its justly acclaimed 100 meg intranet. A person setting behind a nice workstation setup on Moss Avenue with a nice VLAN setup could work within the Pixel Magic network as if they were just down the hall from the boss's glossy corner office (something both would probably prefer). The ultimate in working from home. I'll not be surprised if Pixel Magic opts for an offsite work center like NuConn did—but there too LUS' fiber-to-every-nook-and-cranny make it possible to shop for the cheapest appropriate location rather than the cheapest location that has something close to real connectivity. In that sort of situation it would be easy and damned inexpensive to leverage LUS Fiber to provide a gig or several of commercial grade connection between the two points.
This is only one of several employers who have added many jobs in Lafayette because of the publicly owned fiber network.
Another avenue Lafayette is exploring is high-bandwidth classrooms. They have created a specific FiberKids program (which was discussed at FiberFete).
The project is intended to test live streaming, high-definition capabilities for school conferences, lectures and field trips.
Students are encouraged to explore the uses of fiber-optic technology in the classroom....
The Institute for Local Self-Reliance is pleased to release this comprehensive report on the practices and philosophy of publicly owned networks. Breaking the Broadband Monopoly explains how public ownership of networks differs from private, evaluates existing publicly owned networks, details the obstacles to public ownership, offers lesson learned, and wrestles with the appeal and difficulty of the open access approach.
Download Breaking the Broadband Monopoly [pdf]
Across the country, hundreds of local governments, public power utilities, non-profits, and cooperatives have built successful and sometimes pioneering telecommunication networks that put community needs first.
These communities are following in the footsteps of the publicly owned power networks put in place a century before. We watch history repeating itself as these new networks are built for the same reasons: Incumbents refusing to provide service or charging high rates for poor service.
Cities like Lafayette, Louisiana, and Monticello, Minnesota, offer the fastest speeds at the lowest rates in the entire country. Kutztown’s network in Pennsylvania has saved the community millions of dollars. Oklahoma City’s massive wireless mesh has helped modernize its municipal agencies. Cities in Utah have created a true broadband market with many independent service providers competing for subscribers. From DC to Santa Monica, communities have connected schools and municipal facilities, radically increasing broadband capacity without increasing telecom budgets.
These pioneering cities have had to struggle against many obstacles, often created by incumbents seeking to prevent the only real threat of competition they face. Eighteen states have passed laws that discourage publicly owned networks. When lawsuits by entrenched incumbents don’t thwart a publicly owned system, they cross-subsidize from non-competitive markets to temporarily reduce rates in an attempt to starve the infant public network of subscribers.
Despite these obstacles, more and more cities are building these networks and learning how to operate in the challenging new era in which all media is online and a high speed tele-communications network is as much a part of the essential infrastructure of...Read more
Lake Minnetonka Communication Commission -- a group representing a number of suburban communities located west of Minneapolis -- is seeking to build a community-owned FTTH network. LMCC has decided not to seek funds from the broadband stimulus programs and instead seek private funding (likely from a revenue bond offering).
Much like Lafayette in Louisiana, these communities mostly have access to broadband already, but it is slow and overpriced. They are motivated to build a faster network that responds to community needs.
As is common with community networks, they have a significant hurdle in finding the start-up funding needed to pursue full funding for the project. Before they can approach the bond markets, they need to establish a business plan and demonstrate they are capable of building and operating the network. These costs can be substantial, but will be repaid after a successful bond offering.
We've added Tonka Connect to the links in the right sidebar and wish them the best of luck.
After focusing on the North Carolina battle at the Legislature (regarding whether cities should be allowed to choose to build their own broadband networks or if they should solely have to beg the private sector for investment), I wanted to check in on Salisbury, which is building a FTTH network.
Salisbury has persevered through many obstacles, including finding financing for the project in the midst of the worst economic downturn since the Depression. They will begin serving customers this August.
After choosing the name "Fibrant" as the name of the network, they have established a slick web presence at fibrant.com. The site has a a blog, but is rarely updated currently.
Earlier in the month, the local paper discussed the ways in which the fiber network will aid public safety. The short answer is video, video, video.
Video can be used for security cameras (both in public places and in private homes) as well as to give officers better situational awareness when they arrive on a scene. But wireless video access is often the key - both so officers can stream video in the cruiser and because wireless video cameras are easier to place (no pesky wires to run) and move around.
Though wireless video is helpful, it creates of a lot of data that is best moved across fast, reliable, wired networks. This is why fiber-optic networks and wireless are better understood as complements than substitutes. A robust fiber architecture greatly eases the problems incurred by creating a wireless network because the wireless nodes will be more efficient if all are tied into a fiber network. Rather than streaming data across the entire city to send a single feed to a cruiser, a local access point will stream it across a smaller footprint.
"They are potentially looking at helmet cams," Doug Paris said, assistant to the city manager. "Those who are sitting outside (the structure) will be able to see what's going on inside."
It would make little sense for the fireman to have wires coming out of their helmets. But that wireless signal from the helmet probably won't propagate to the fire hall or police station. Instead, a wireless access point near the fire can grab the signal and make it available to anyone...Read more
Herman Wagter has published an informative article about the last-mile economics of fiber networks on Ars Technica.
A Utility Infrastructure Law commonly quoted by engineers says, "The closer you get to the home, the more investment is needed, averaged per home connected." This law applies to all parts of the physical network, like water pipes, sewage pipes, and electricity cables. What are the applicable numbers for telecom cables?
The large expense of building fiber networks has little to do with the technology:
In dense cities, the bill of materials is as low as 20 percent. The cost of labor per meter exceeds by far the cost of a fiber cable or a coaxial cable per meter. Deploying fiber or coax or copper wires would not make much of a difference. The phrase “it’s the backhoe, stupid” even applies in areas like Uganda.
This is why incumbents have such tremendous advantages and why policies predicated on encouraging facilities-based (as in, everyone builds their own network) have failed (and will continue to).
Given the fact that almost all costs in the access network are sunk, it is hard to envision two or more new fiber access networks being deployed in parallel to each home, leading to a stable competitive environment over time. (Unless the ISP’s or network's owners are allowed to divide the market and raise prices to compensate for the underutilization of the networks). If the medium is no longer limited and the access network is the expensive part of the investment, why duplicate the cables? We not do duplicate cables for electricity or other utilities either, for the same reasons.
As we tend toward a single fiber line (wireless is a complement for wired, not a substitute), who owns that line is tremendously important. Private companies want to monopolize the line to maximize their profits -- that is their job. Public ownership offers democratic accountability and a much greater potential for open access, creating robust competition in a sector almost entirely lacking it.
The second page of the article offers more in-depth analysis of various FTTH technologies that communities would be wise to understand before picking what model they want for their community.