Tag: "financing"

Posted December 23, 2011 by christopher

One of our kindred spirits across the pond reached out to me after I wrote about Vermont's self-funded community network. The B4RN initiative, Broadband for the Rural North, has launched using a coop model that will offer 1Gbps connections to everyone in the covered territories.

The business plan is available here.

Broadband for the Rural North Ltd has been registered as a Community Benefit Society within the Industrial and Provident Societies Act 1965 (IPS), and is controlled by the Financial Services Authority. Shares will be issued to provide funding for the project and members of the community will be encouraged to subscribe to the share issue. The share issue will comply with the Enterprise Initiative Scheme established by HMRC to encourage individual share holdings in new and developing companies. Under certain circumstances investors could reclaim 30% of the value of shares produced.

As a community company, the project will be funded and to a greater extent built by the community for the community. Our ambition is to keep expenditure, where possible, within the community. In addition to purchasing shares, the community will have the opportunity to “purchase” shares in exchange for labour and materials during the project build.

The initial share offer will be £2,000,000 of shares with a face value of £1, to be launched in late 2011 and open for 1 year. The project is expected to commence on site in early 2012 and completed by the year end. The initial network will be progressively added to over subsequent years until approximately 15000 properties in adjoining rural parishes are completely connected to the FTTH network.

To keep costs low in their rural areas, B4RN will be taking a non-traditional approach:

B4RN image

B4RN will adopt a different approach; we will lay the duct not on the highway but across the farmland on the other side of the wall. Digging a narrow trench and installing a duct within it is dramatically less expensive across private farmland than along the highway. The...

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Posted December 21, 2011 by christopher

Vermont's East Central Fiber-Optic Network (ECFiber) has finished its second round of financing. We noted that the network had exceeded its financing goals at the beginning of this year by raising over $1 million and subsequently began connecting rural homes with its next-generation network. (See all of our ECFiber coverage here.)

The network is now connecting 120 households, a bit below its goal of 164 for the end of the calendar year... but it also had to deal with an unexpected hurricane (Irene) that seriously disrupted the entire state and kept fiber-splicers running ragged.

ECFiber has just completed its second round of financing. While the first round was dominated by a few major investors, the second round had a broader base -- a sign that many in the community have embraced the approach. From the ECFiber press release:

ECFiber is using an innovative funding method to extend its network, supported by local citizens who lend funds that enable build-out to local neighborhoods within and across member towns. Citizens who invest as little as $2500 allow ECFiber to reach all households along designated routes. ECFiber determines where it will build by choosing routes that reach the greatest number of unserved businesses and households, which are then connected to ECFiber’s state-of-the-art fiber-optic service.

These people are literally investing in themselves. ECFiber is an InterLocal Contract with a Governing Board composed of a representiative from each member town (of which there are 23). Investors are purchasing tax exempt 15 year promissory notes that effectively earn 6% interest (due to the one year holiday from interest and principal).

They have raised $340,000 in this round of financing, which will allow the network to pass 60-65% of Barnard's 950 residents. Spokesman Bob Merrill said the network again surpassed its expectations of investor interest and noted that several neighborhoods came on board after one or two interested residents rallied neighbors to invest so they could finally have high-speed connections to the Internet.

The network remains committed to connecting every person in the 23-town area but absent outside...

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Posted November 17, 2011 by christopher

Dunnellon, a small town in Marion County south of Gainesville, decided to invest in a community fiber network to spur growth and diversify its income stream. Though citizens did not want to cut government services, they have not been pleased at property tax increases.

364 days ago, we published a story discussing their financing.

The town itself is quite small, with 1,733 residents but the network will be serving areas in the County as well. Though AT&T and Comcast offer services in the area, they have big gaps in coverage and apparently the cable television packages are antiquated (only 50 channels???).

An article last year noted Dunnellon's Internet connections will range from 10Mbps to 125Mbps. They hope to sign up 1,647 subscribers within 6 months of launch -- the network is named Greenlight (not sure if they were aware that the city of Wilson, NC, already operates a triple-play FTTH network called Greenlight).

They hoped to launch 6 months ago. Bill Thompson's "Dunnellon dreams of a connectied future," offers a comprehensive look at the promise and the challenges Dunnellon faces.

Dunnellon's city manager comes from Valparaiso, which had a city-owned cable network that upgraded to FTTH. Unfortunately, Dunnellon is in the hard position of building a network from scratch.

logo-valp-net.jpg

Building a new network requires a massive up-front capital investment - in this case the city will have spent $4.4 million to connect the first connection. Good thing they aren't all that expensive!

The article identifies two main sources of the delays: difficulty in getting on the poles owned by Progress Energy and long delays in receiving the fiber-optic cable they ordered (stimulus projects have hogged the supply). Rather than taking 12 weeks, they had to wait 30. Delays cause problems:

The installation delay has put the city in a pinch with its lender, Regions Bank. The city was scheduled in November to pay...

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Posted September 9, 2011 by christopher

After more than a year of expecting Citibank to file suit against Burlington, they finally did. Burlington Telecom, a muni FTTH network, now illustrates the worst case scenario for muni broadband. After the founder of the network left following disagreements with the Mayor, the Mayor's Administration ran the network into the ground (leading us to recently publish the report "Learning from Burlington Telecom: Some Lessons for Community Networks."

Burlington had financed its network with a municipal capital lease, rather than the more commonly used revenue bonds, meaning that the actual network secures the loan. In this arrangement, the network is technically owned by the lender (Citi) and Burlington leased it. So when Burlington decided to stop paying the lease for the network, it became Citi's problem.

And Citi had a lot of problems due to the games massive banks were playing having killed the economy. BT became just one more non-performing asset. They did nothing while the City continued to run the network without making lease payments. Now Citi is suing for the world (this is how these things work) but it isn't clear that Citi can actually get what it demands (the State has a say in whether the network simply gets shut down, which Citi is presently asking for). And if the network did get shut down, Citi would be in a worse position to recover any of its losses because the value of the network is far greater than the sum of its parts.

State law says that losses from a public telecom venture cannot be carried by taxpayers, which is where we return to an interesting document prepared by the Mayor's Administration. As reported by Blurt:

In its lawsuit, Citibank notes that a letter written by attorney Joe McNeil on behalf of Burlington "expressly warranted to Citibank that at least 40 percent of Burlington's revenues were derived from sources other than taxpayers' funds and would be available to fund payments to Citibank, and further, that Burlington had the financial resources and ability to make all payments to Citibank for the full...

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