Tag: "financing"

Posted January 3, 2014 by Lisa Gonzalez

In 1985, Auburn Electric became one of the first communities in the midwest to deploy fiber. At the time, the purpose was to improve electric and voice systems substation communications within the municipal utility. That investment laid the foundation for a municipal network that now encourages economic development and saves public dollars while enhancing services.

Auburn expanded its fiber network beyond electric systems in 1998. The utility began using the network to serve city and county government operations. It is not well known, but Auburn offered gigabit service to its public sector customers way back in 1998.

The benefits from the deployment prompted community leaders to develop an Information Technology Master Plan in 1998 that would answer the question of what other ways the fiber could serve the community? As part of the Master Plan, Auburn leaders collected information from other communities that were capitalizing on their own local fiber. While Auburn made no immediate plans, they kept an open mind, waiting until the time was right.

In 2004, Cooper Tire and Rubber (now Cooper Standard) was about to be sold from its parent company. The $1.6 billion auto component manufacturer needed a data center but bandwidth was insufficient and inconsistent in Auburn. Cooper considered leaving because the incumbents, Mediacom and AT&T, could not or would not provide the broadband capacity the company needed. If Cooper left town, an estimated $7 million in wages and benefits from 75 high-paying tech jobs would also leave. At the time, Auburn was home to 12,500 people.

County Courthouse in Auburn, Indiana

According to Schweitzer, the City tried to persuade the telephone company to find a solution with Cooper but the two could not reach an agreement. Rather than lose Cooper, the City of Auburn stepped in to fill the connectivity gap in 2005.

In a 2007 interview with Public Power magazine, Schweitzer noted advantages in Auburn that facilitated the project:

“We also had a major tier-one Internet provider with a...

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Posted December 19, 2013 by Lisa Gonzalez

Tullahoma Utilities Board's triple-play FTTH LightTUBe, began serving Tullahoma in 2009. The fiber network utility is paying off its city bond debt on schedule reports the Tullahoma News.

The network's income during the first four months of fiscal year 2014 is a positive $58,939. General Manager Brian Skelton spoke with Chris Mitchell in July 2013 and expressed confidence that that network will continue to operate in the black. The News reported on our podcast interview with Skelton and provided some recent updates:

With an estimated potential customer base of 9,000 in the TUB service area, LightTUBe services 3,201 fiber customers. That number is slightly ahead of goal (3,186) and represents nearly 36 percent market penetration against primary competitor Charter Communications.

Tullahoma deployed its network to encourage economic development. In 2011, we reported on J2 Software Solutions. The company located its headquarters in Tullahoma because LightTUBe offered fast, reliable, affordable service. 

According to the News article, expenditures on Internet service remain consistent while subscriptions grow. The Tullahoma Utilities Board (TUB) only recently approved a $7 rate increase for video service due to an increase in the cost of television content. When content rates rose in the past, TUB chose to absorb the increase but the cost of content continues to increase for all providers. Since 2009, TUB increased Internet service speeds five times without increasing prices. From the article:

”LightTUBe is in a very comfortable position from a financial perspective. Our biggest concern at this point is the unreasonable price increases that we (and others in the video business) are seeing from many of our channel providers,” said Skelton.

That comfortable financial position appears to rest largely on the shoulders of LightTUBe’s Internet service.

While video and telephone services together generate enough income to offset the system’s net maintenance and depreciation costs, Internet services generate enough income to offset...

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Posted December 12, 2013 by Lisa Gonzalez

Chanute's City Commission voted on November 25th to move forward with plans for a FTTH network. The community of approximately 9,000 began installing fiber in 1984 for electric utility purposes. They have slowly expanded the network throughout the community. Chanute's fiber and wireless broadband utility now serves government, education, and several businesses. We documented their story in our case study, Chanute’s Gig: One Rural Kansas Community’s Tradition of Innovation Led to a Gigabit and Ubiquitous Wireless Coverage.

Beth Ringley from The Motive Group presented its feasibility study to the City Commission at the meeting. The proposal includes smart grid technology to support Automated Metering Infrastructure for the municipal electric, natural gas, and water utilities and enhanced triple-play service offerings. City leaders hope to eventually support multiple providers via the infrastructure.

The Motive Group predicts a 35% take rate with 5,000 premises passed. The estimated cost will be $19.5 million; revenue bonds would finance the deployment. Business models predict a positive cash flow after six years with capital costs paid off in approximately 20 years.

The City Commission voted unanimously to allow the City Manager to move forward by investigating financial options for the project and make recommendations for Commission approval. The City Manager will also proceed with negotiations with vendors needed to construct and manage the project. 

The City Commission meeting is available online. Discussion about the proposal begins approximately one hour into the meeting. You can also view slides of The Motive Group Presentation in the meeting documents.

Posted November 14, 2013 by Lisa Gonzalez

We caught up with Carole Monroe from New Hampshire FastRoads to get an update on what is happening in the legislature this sesssion. We reported last spring on HB 286, intended to allow local communities more decision making power. The bill did not advance last session, but new language may breath new hope into the proposal.

If the bill passes, it will remove restrictions that prevent local governments from bonding to finance broadband infrastructure. This and similar bills have been introduced in the past, but large incumbent providers always seem to stop them.

Monroe tells us that this session the bill clarifies the definition of "open access network." The bill also changes language regarding "unserved and underserved" areas. Now the bill requires municipalities to include areas without "adequate" broadband if they choose to finance through bonds. "Adequate" in the bill language relies on the FCC definition of broadband as it changes over time, currently 4 Mbps download and 1 Mbps upload. The change does not restrict building in all areas as long as some areas without "adequate" coverage are included.

The new language also clarifies that municipal networks built only for government purposes do not have to be part of the open access model. Past versions of the bill questioned application of the open access model to municipal I-Nets.

While some of the language of the bill has changed, the fundamental goals remain the same. Local communities need to make the decision to bond. In order to do so, state barriers must be removed. Current state law only allows bonding for broadband infrastructure under strict criteria which only apply in a fraction of the state. 

Monroe reiterates that the bill intention is also to create a more competitive environment. She noted that the area is already benefitting from a competitive spirit. Broadband pricing proposals to community anchor institutions show significantly lower rates per Mbps. Service level agreements are more favorable to community anchor institutions since the creation of FastRoads.

Representative Charles Townsend told us via email that the House Science, Technology and Energy Committee met in...

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Posted November 13, 2013 by Lisa Gonzalez

Last week, we were excited by the results of Longmont's referendum, but we sure weren't alone. The Washington Post's Brian Fung wrote, "Big Cable may have felled Seattle's mayor, but it couldn't stop this Colo. project.

Our regular readers know that Comcast succeeded in defeating the Longmont measure in 2009 but the electoral would not be swayed by false promises and lies the second time in 2011. This year's proposal asked voters to approve a revenue bond for $45.3 million to speed up a planned expansion, which voters approved 2:1.

Contrary to past experience, Comcast and allies did not launch a full frontal assault in Longmont this year to sway the vote. Fung's article looks at the math for a possible  explanation:

There are 27,000 households in Longmont. Even if the city were to connect all of the eligible homes [close to the fiber ring] to its existing fiber network overnight, it would still reach only 1,100 residences. Cable companies therefore spent over half a million dollars [in 2011] trying to prevent four percent of city households from gaining access to municipal fiber on any reasonable timescale. That's around $600 a home, or six months' worth of Xfinity Triple Play.

Even if the cable companies decide it was not worth the fight in Longmont, they have shown repeatedly that they have cash, will travel. Fung's article describes another 2009 election in which the cable industry spent large to prevent public investment in fiber:

In North St. Paul, Minn., a 2009 ballot measure to let muni fiber move forward was defeated by a resounding 34-point margin. Opposition to the fledgling network, PolarNet, was led by the Minnesota Cable Communications Association. In the weeks leading up to the vote, it and other opposition groups spent some $40,000 campaigning against the measure. MCCA alone contributed more than $15,000 to the effort over the same period.

Comcast also exhibits its willingness to...

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Posted November 4, 2013 by Lisa Gonzalez

The Iowa community of 4,000 will take up Public Measure D on November 5th. Voters will decided whether to approve a $3.5 million bond issue to cover approximately half the cost to build a FTTH system. Incumbent Mediacom is distributing flyers throughout the community urging a "no" vote. Community leaders are doing their best to combat Mediacom's propaganda by educating the voters.

We reported about the community's 1998 vote to establish a municipal cable communications or television system. The city did not act on the vote at the time because the project was cost prohibitive. The estimated cost of the project is now about $3 million less than it was in the late 1990s. Emmetsburg wants to seize the opportunity by joining The Community Agency (TCA), a coalition of municipalities in the region that collectively own a hybrid fiber coaxial cable network. Emmetsburg would join with a full fiber network.

The town currently provides natural gas, water and wastewater services through its municipal utility.

In a flyer [pdf] aimed at convincing locals to vote no, Mediacom brags that "Customers in Emmetsburg get the same services as those in larger cities..." Unfortunately, Mediacom's service in larger cities is also awful and more suited to the late 1990's than the modern digital economy. Consumer Reports has rated Mediacom among the absolute worst Internet providers in the United States.

Public Question D reads:

"Shall the City of Emmetsburg, Iowa issue its notes in an amount not to exceed $3,500,000 for the purpose of paying costs of constructing and equipping all or part of the Emmetsburg Municipal Communications Utility, including the acquisition, construction and installation of a fiber to the premise broadband communications system and related equipment and distribution facilities, and including all or a portion of the costs associated with connecting the Emmetsburg Municipal Communications Utility fiber system with the system of the Community Cable Television Agency of O'Brien County a cooperative undertaking among the cities of Hartley, Paullina...

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Posted October 29, 2013 by Lisa Gonzalez

November 5th probably seems like deja vu for the people of Longmont, Colorado. For the third time, the voters will respond to a ballot question that will impact their community's connectivity. Past referendums addressed whether or not the community could use its fiber ring for connecting businesses and residents.

They now have that authority. This year the question will be "when?"

Local incumbent providers grossly outspent municipal network supporters in 2009 and in 2011 with astroturf campaigns against referendums. Nevertheless, voters decided in 2011 to grant the local utility permission to use existing fiber resources to bring connectivity to businesses and residents. 

Since then, Longmont Power and Communications (LPC) began a slow build-out of fiber to businesses and homes within 500 feet of the existing loop. Local businesses, frustrated with poor service from Comcast and CenturyLink, jumped at the opportunity to have real high-speed connections. With a long list of businesses in queue for their connections, the City Council voted to use LPC reserve funds to connect businesses and residents to the loop. Clearly, the people of Longmont were ready for something better than the existing incumbent services.

Local blogger Steve Elliott connected to the service in September. To satisfy his curiosity, he ran speed tests immediately before and after he transitioned from Comcast service.

Comcast timed in at 26.08 Mbps download and 5.76 Mbps upload. LPC provided 89.99 Mbps download and 62.01 Mbps upload

From his post:

I also timed downloading movies on Netflix on my TV. Before, I could run...

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Posted October 15, 2013 by Christopher Mitchell

As Longmont prepares to vote on November 5, we are paying special attention to question 2B, which will authorize the city utility to issue revenue bonds to finance the FTTH network already being built. The successful referendum from 2011 gave the City authority to build the network and this referendum, if successful, will finance a rapid expansion rather than the present incremental approach that will take decades.

We have a double interview today, with Vince Jordan rejoining the show from Longmont Power and Communications. He previously spoke with us on episode 10 but today he just gives us the facts about the network and scenarios of what will happen depending on how the city votes.

The second interview is with George Oliver, co-founder of the grassroots group Friends of Fiber that is advocating for people to vote yes on question 2B. George explains the benefits of passing this debt, namely that area residents and businesses will gain access to a world class networks without increasing any taxes.

Friends of Fiber is on Twitter and Facebook. Read our other stories on Longmont here.

Read the transcript from this show here.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed.

Listen to previous episodes here. You can can download this Mp3...

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Posted September 16, 2013 by Lisa Gonzalez

Austin, Texas, with a little over 820,000 people, is home to several centers of higher ed, the Southwest Music Festival, and a next generation network known as the Greater Austin Area Telecommunications Network (GAATN).

It was also the second metro area selected by Google for the Google Fiber deployment. But before they got Google Fiber, a local partnership had already connected key community anchor institutions with limitless bandwidth over fiber networks. The network measures its success in terms of cost avoidance, and averages out to a savings of about $18 million per year combined for its 7 member entities.

In 2011, the National Association of Telecommunications Officers and Advisors (NATOA) named GAATN the Community Broadband Organization of the Year. Today, GAATN also serves the  City of Austin, the Austin Indepedent School District (AISD), Travis County, local State of Texas facilities, Austin Community College (ACC), the University of Texas at Austin (UT), and the Lower Colorado River Authority (LCRA).

GAATN's bylaws prevent it from providing service to businesses or individual consumers. Texas, like 18 other states, maintains significant barriers that limit local public authority to build networks beyond simply connecting themselves. As a result, local entities must tread lightly even if they simply want to provide service for basic government functions.

Austin Logo

Decades ago, Austin obtained an Institutional Network (I-Net) as part of a franchise agreement with a private cable company, Cablevision. At that time, AISD used the I-Net for video and data transmission, with frequent use of video for teaching between facilities. In the late 80s, the district experienced large growth, which required adding facilities and phone lines. Phone costs for 1988 were estimated as $1 million and the 10 year estimate was $3 million. In 1989, AISD hired a telecommunications design company to conduct a study and make recommendations. JanCom recommended a 250 mile fiber network connecting schools. The network was expected to pay for itself in 10 years when only...

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Posted September 13, 2013 by Lisa Gonzalez

Indiana's Metronet Zing winds its way through South Bend, Mishawaka and St. Joseph County providing dark fiber service to businesses, government and education. The project started as an economic development initiative when community leaders in the area realized that the high cost and lack of high-speed connectivity in the area kept businesses away.

Project Future, the economic development organization serving South Bend, Mishawaka and St. Joseph County until 2012, studied the potential benefits that might flow from better telecommunications in the region. The nonprofit inspired the county Chamber of Commerce, local government, nearby universities, healthcare, and businesses to develop a new nonprofit network model. The 100 mile network offers a dark fiber open access model that encourages competition, keeping prices in check. Nineteen carriers deliver services over the network. Average price for 1 gig service is $1,000 per month.

In the early 2000s, South Bend leaders wanted to take advantage of the regional long-haul fiber that runs directly under South Bend. There was very limited access to fiber connections in the area from providers and rates were high. St. Joseph's County, city government, and the University of Notre Dame needed better, faster, more reliable telecommunications.

A study commissioned by nonprofit Project Future confirmed what community leaders suspected. Education, economic development, healthcare, research and a better quality of life in South Bend depended on the community's access to a dark fiber network. Project Future developed a plan that would involve public investment in an open access dark fiber network. Community leaders joined together to form nonprofit St. Joe Valley Metronet, Inc. in 2004. Metronet's purpose was to build the infrastructure the region so desperately needed. Revenue would be passed back to the community through reasonable rates. 

South Bend and nearby Mishawaka owned fiber networks that ran through conduit to serve the cities' traffic monitoring systems. New fiber, dedicated to the telecommunications network, would be installed in the conduit to reduce the need for excavation. The community did not want to be a...

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