Holyoke: A Massachusetts Municipal Light Plant Seizes Internet Access Business Opportunities

Author(s): 
David Talbot
Waide Warner
Carolyn Anderson
Kira Hessekiel
Daniel Dennis Jones
Publication Date: 
Wednesday, 2015, July 8

Fifteen years ago, Holyoke Gas & Electric  (HG&E) began its incremental fiber deployment to meet the need for better connectivity in the community. Since then, they have invested savings created by initial and subsequent investments. Over the years, HG&E expanded their services, becoming the ISP for several local business customers in two nearby communities. HG&E also established a regional interconnection agreement and it is now an ISP for municipal agencies in a third community 30 miles away.

The Berkman Center's most recent report, report, "Holyoke: A Massachusetts Municipal Light Plant Seizes Internet Access Business Opportunities,” documents their story.

From the Abstract:

The Holyoke Gas & Electric Department’s telecom division competes with Comcast and Charter and serves 300 business customers and numerous public buildings. It has shown steady growth in revenues, and $500,000 in net earnings over the past decade. It also saves the city at least $300,000 a year on various Internet access and networking services. HG&E's telecom division is also now providing a variety of services to three other municipalities. Finally, the utility is considering a residential high-speed Internet access offering, something the muni in neighboring Westfield is piloting later this year. HG&E’s success in a competitive environment was achieved without any debt issuance, tax, or subsidy from electricity or gas ratepayers.

Key Findings:

  • HG&E Telecom saves city offices and HG&E itself more than $300,000 a year by providing Internet access and networking and telephone services to public agencies.
  • The utility provides approximately 300 businesses and large institutions with telecom services and creates competition, which tends to improve service offerings from all market participants, aiding the local economy.
  • HG&E Telecom forged inter-municipal agreements that extend services and accompanying benefits to the neighboring city of Chicopee and to the city of Greenfield, 30 miles north.
  • While HG&E Telecom has focused on selling services to businesses, the utility is now considering a residential fiber-to-the-home (FTTH) offering, given the declining market pressure to provide television content.
  • Demonstrating that a municipal light plant can diversify into the consultancy business, HG&E Telecom also recently became project and network manager for a FTTH project in the town of Leverett.
  • HG&E Telecom has shown steady growth in the face of competition, never incurred debt, and has reaped a 10 percent profit in both 2013 and 2014. 

HG&E is among 12 Municipal Light Plants (MLPs, the entities that administrate these networks) out of 41 in the state to offer fiber Internet services. Researchers at the Berkman Center believe that MLPs could play a large role in expanding Internet access and business opportunities throughout the state as electricity revenues experience diminishing returns and data needs grow. For example, HG&E’s fiber connection was a factor in the Massachusetts Green High Performance Computing Center’s decision to open a $90 million data center in Holyoke. 

You can download the full report below or from the Berkman Center's website.