Golden Opportunity for Municipal Fiber Network in Colorado

A month ago, President Biden visited the city of Golden, Colorado to tout his Build Back Better Agenda, which includes a bipartisan infrastructure package that invests $65 billion to expand access to high-speed Internet connectivity. But years before that, city officials had already been preparing for the possibility of building a municipal fiber-to-the-home (FTTH) network.

Although the President didn’t say it during his remarks after a tour of Golden’s National Renewable Energy Lab (NREL), the city’s desire to offer municipal Internet service is a prime example of what the Biden Administration’s American Jobs Plan envisioned: investing in local, publicly-owned community broadband networks.  

Though this city of approximately 20,000 is served by CenturyLink and Comcast Xfinity, along with a handful of other smaller Internet Service Providers (ISPs), city councilors agree that a municipal FTTH network would be a boon for business and offer more affordable and reliable options to residents.

It’s an idea that has garnered the support of voters when five years ago a referendum was passed authorizing the city to opt out of the Colorado state law (SB 152) that bars local governments in the Centennial State from establishing municipal Internet service. Golden is one of over 150 communities in the state to have opted out of SB 152 since the law was passed 15 years ago; most notably Loveland, Fort Collins, and Estes Park, all of whom are building out municipal fiber networks in the Front Range region.

A recent survey of Golden residents was further evidence that the city is hungry for better broadband. The survey showed that nearly 90 percent of respondents consider high-speed Internet connectivity to be a “necessary utility” and not a luxury service. And when asked “if the private sector (the phone company, cable company or other company) does not provide adequate and affordable broadband service to your home, should the city of Golden consider doing so?” a whopping 85 percent said “definitely yes.”

A survey of Golden business owners found similar results with 76 percent saying “definitely yes” when asked the same question.

‘Crawl, Walk, Run’  

Golden officials turned to Magellan Advisors to conduct a feasibility study and create a fiber master plan to help the city weigh its options. That plan was completed in July 2019 with Magellan Advisors recommending Golden take a “crawl, walk, run” approach.

In doing so, the feasibility study further recommended “the City immediately move forward with development of the Phase 1 Fiber Backbone. This will support the City’s needs and build a foundation for future broadband, Smart City and community uses.”

Golden paid heed to that advice and right now is in the midst of the Phase 1 “crawl” phase. In the spring, the city began working with Jeffco County schools to build about half of the city’s planned 10.5 mile fiber ring, deploying 432-count fiber-optic cable underground to serve as the backbone running north to south through the city. The estimated cost to build the entire fiber ring is $3.8 million, which includes about $300,000 in cost-savings thanks to Verizon agreeing to build 3.5 miles of shadow conduit along the backbone.

Meanwhile, at a recent city council study session Golden's Chief Innovation and Technology Officer Jiles McCoy revealed that the city has been approached by two ISPs interested in partnering with the city to provide citywide Internet service.

As reported by the Golden Transcript, McCoy said one company, ITC, would be willing to build out the network with the city picking up between 10-15 percent of the cost of construction. Under that arrangement, ITC proposed, the city would get a corresponding cut of the revenues generated by the service. McCoy added that ITC said it was also willing to pay for the entire cost of building out the network for residential service but in that case would keep all of the revenue.

The other company that approached the city, McCoy said, was Nelnet, who has yet to provide the city with details on what kind of partnership and/or cost-sharing agreement it would be willing to make.

Financial Fork in the Road

While the city council are all in support of a citywide fiber network, at the late August city council study session, Mayor Laura Weinberg said that while she was in favor of exploring a public-private partnership, she was concerned about “having a private entity own our infrastructure.”

Weinberg’s concerns are well-worth considering, as the feasibility study noted that if the city were to build the network and serve as the retail service provider, “the program would achieve positive net income in its sixth year and positive free cash flow in its eighth year.”

That assumes 45 percent of residents and 30 percent of businesses will take the Internet service, which will offer three tiers — $40 per month for a symmetrical 100 Megabits per second (Mbps) connection; $60 per month for 500 Mbps symmetrical service; and $90 per month for a symmetrical gig.

The feasibility study goes on to say that “between year eight and year ten, the program would generate $2 million of excess cash that the City could utilize to contribute to the general fund or use to lower future Internet rates to residents and businesses. From years 11 to 20, the program (would generate) $16 million of free cash flows, demonstrating that the broadband program could entirely fund itself and provide a new revenue source to the City.”

Weinberg’s question about whether the city should build, own, and operate the network as a telecommunication utility or whether to pursue a public-private partnership led to discussion about whether the city could even afford to do it all on its own. And that’s when City manager Jason Slowinski pointed to the challenge of the go-it-alone approach: the estimated $30 to $40 million price tag to build out a citywide network would be cost prohibitive for the city to shoulder by itself.

“Notwithstanding $40 million falling from the sky, we can’t afford to go out and build a broadband network,” he said.

Still, as City Councilman Casey Brown said during the recent council study session, “I think the need for us to do this kind of stuff is there, we all know it's really important and the pandemic has made us realize even more how important broadband is…But I do think the devil is in the details.”

We will continue to follow the Golden details, especially considering that billions are “falling from the sky” in the form of federal funds in the American Rescue Plan Act (ARPA) and potentially billions more should Congress pass the Infrastructure Investment and Jobs Act.

Header image courtesy of Wikimedia Commons, Attribution-ShareAlike 4.0 International (CC BY-SA 4.0)

Inline image of fiber ring courtesy of City of Golden