Tag: "financing"

Posted November 9, 2012 by Lisa Gonzalez

We have covered developments in the town of Indianola, Iowa, where the community decided to build their own network in 1998. The original purpose for investment was to use the network to enhance public safety and increase efficiency with SCADA applications. In 2005, however, the network began offering telecommunications services to local businesses. As of October, Indianola Municipal Utilities (IMU) began offering fiber-to-the-home to residents as it gradually begins expanding the use of its fiber asset.

You can now hear firsthand about the network, its history, and how the municipal utility navigated the journey to its next-generation open access network. Craig Settles interviewed Todd Kielkopf, General Manager of IMU, in an August Gigabit Nation podcast. The two discuss IMU's evolution since 1998. They also talked about the unique advantages that exist when a community considering network infrastructure investment already has a municipal utility in place.

Kielkopf tells how the driving factor for the fiber installation was to allow easier management and communication between utilities. When a 1990 franchise agreement with MediaCom was about to expire, the city investigated options. Hopes were that that the city could build a fiber network and MediaCom would offer services over that network, but that vision was never embraced by MediaCom.

Iowa law allowed the city to hold a referendum asking residents for permission to provide telecommunications services through the municipal utility's network. The referendum passed and they created a five year financial plan. Financing was with taxable and tax exempt bonds. The electric utility would build and own the network and a new telecommunications utility would license to a private partner that would offer retail services. Now, IMU and Mahaska Communication Group (MCG) have an agreement whereby MCG provides retail services over the network. While the agreement is not exclusive, no other providers currently use the network.

Kielkopf discusses three distinct phases in the development of the network's current status. First the network connected schools, libraries, government entities, and other anchor...

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Posted October 16, 2012 by Christopher Mitchell

Sandy has run a wireless network for over eight years and has just announced a partnership with i3 to bring FTTH to everyone using i3's technology to run trunk fiber lines through existing waste water and storm water pipes. We previously wrote about Sandy here.

Joe Knapp, the IT Director for the city of Sandy and the General Manager of SandyNet, is our guest on this week's Community Broadband Bits podcast - episode 17. He discusses how Sandy began offering broadband access to itself, residents, and businesses and how they expanded to fiber originally. And toward the end, he gives us the low-down on how the partnership with i3 is structured.

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 subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can download the Mp3 file directly from here.

Read the transcript of this episode here.

Find more episodes in our podcast index.

Thanks to Fit and the Conniptions for the music, licensed using Creative Commons.

Posted September 28, 2012 by Lisa Gonzalez

We have closely followed the efforts of WiredWest, the collaborative project involving 37 (and growing) towns in western Massachusetts. The group is currently collecting pre-subscription cards to show support for the project. The pre-subscription results will also assist efforts to finance the project by documenting the existing demand.

Plans for the 2,000 mile fiber optic network continue to inch forward with every new town that joins the group. Estimated cost for the network is between $60 million and $120 million and, as the cooperative grows, so does the group's ability to successfully apply for grants and issue bonds. Much of the cooperative's business and technical expertise comes from in-kind contributions from its members. We see Wired West as a prime example of communities coming together to take control of their own destiny.

A recent Berkshire Eagle article by Scott Stafford discussed some of the results from a March marketing survey. From the article:

Average survey respondents have two computers (desktop, lap-top or notebook devices) in the home. And while 88 percent currently have some type of home Internet service, 45 percent are dissatisfied with the speed of their Internet.

The survey also showed that 25 percent who responded currently run a business from home or telecommute. An additional 30 percent said they would likely operate a business out of their home or telecommute if they had better Internet access.

He spoke with Monica Webb, Chair of WiredWest's Executive Committee, who pointed out some economic realities:

"Many people are saying they would start a home-based business or telecommute if they had better broadband access," Webb said. "And there are a number of second homeowners that would stay in the county longer, or relocate here full time, if there was better Internet service."

The impact on the regional economy could be significant. Webb described the role of broadband access to the local economy as "fundamental infrastructure," comparable to the telephone service and electricity.

"We know it will be good...

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Posted August 21, 2012 by Christopher Mitchell

The ninth episode of the Community Broadband Bits podcast features Leslie Nulty, from the East Central Vermont Fiber Optic Network, commonly called ECFiber. ECFiber is using a unique financing arrangement, wherein debt is sold to those in the community as the network slowly expands. They have already raised over $1 million dollars and are providing services in three towns.

The network is ultimately owned by the 23 towns that joined together to form the initiative. Leslie explains the history behind the network, the financing approach, and some lessons for others who want to duplicate it.

Leslie has also just appeared on Gigabit Nation along with her husband, Tim Nulty, to discuss their approach.

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 25 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can download the Mp3 file directly from here.

Read the transcript of this episode here.

Find more episodes in our podcast index.

Thanks to Fit and the Conniptions for the music, licensed using Creative Commons.

Posted August 4, 2012 by Christopher Mitchell

When communities are trying to figure out how to pay for networks, they sometimes fail to explore some logical places. A recent article on Telecompetitor gives us an estimate for revenues from inserting ads in cable television programming.

Before the economic downturn, a typical small video service provider could expect between $1.25 and $2.00 a month per subscriber in ad revenues, noted Walter P. Staniszewski, president of Prime Media Productions – a company that sells advertising for small video service provider clients. Since the downturn, the numbers are more like $1.00 to $1.50.

The article focuses on the windfall cable operators are seeing due to all the money being spent by big-money interests in anticipation of the election in November.

However, the smallest networks may not want to commit to ad-insertion until they are reaching thousands of homes, according to the Telecompetitor source:

“If you study the cable industry, even the big guys didn’t have their own sales force until they developed some real scale,” said Staniszewski. He cautioned operators with systems with fewer than 5,000 or 6,000 subscribers against hiring their own sales force.

Posted July 30, 2012 by Christopher Mitchell

In the excitement around Google's unveiling of the $70 gigabit broadband connection in Kansas City, some may be wondering how it is that Google can offer a gigabit for moderately more than what most of us pay for far slower cable broadband connections.

On one side of the equation is the fact that big cable companies (Time Warner Cable, Comcast, etc.) have long been ripping off consumers by pricing their services far above cost -- something they can easily do because they face so little competition. But the more interesting side of the equation is how Google can make its gigabit price so low.

Recall that Chattanooga made major waves with its gigabit service, priced then at the rock-bottom rate of $350/month. A gigabit is not available in many communities and where it is available, the price is often over $10,000 per month. We published an in-depth case study of their approach a few months ago.

But, as Milo Medin -- the head of the Google Fiber project -- is fond of saying, "No one moves bits cheaper than Google." Google has built an incredible worldwide fiber optic network. Let's call this lessons 1 and 2.

Lesson 1: Google built its own network. It isn't leasing connections or services from big telecommunications companies. Building your own network gives you more control -- both of technology and pricing.

Lesson 2: Google uses fiber-optics. These connections are reliable and have the highest capacity of any communications medium. The homes in Kansas City are connected via fiber whereas Time Warner Cable, CenturyLink, and others continue to rely on last-generation technologies because they are delaying investment in modern technology to boost their profits.

EPB Installs Fiber Cables in Chattanooga

Others have already followed these lessons but are not able to offer their gig for such a low prices. To understand why, let's start with some basics. I'm hypothetically starting Anytown Fiber Net in my neighborhood and I want to offer a gig. Whenever any of my Anytown subscribers want to transfer files amongst themselves, the operating cost...

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Posted May 15, 2012 by Lisa Gonzalez

Recently, we let you know about the situation in Siloam Springs, Arkansas, population 15,039. The town is now investigating the possibility of building their own fiber network. They have had several community meetings and a "vote of the people" is set for May 22, 2012.

Pamela Hill is investigating the twists and turrns in a series of articles about the vote. In one of her articles, Hill looked into another Arkansas community, Paragould, home of the annual "Loose Caboose" Festival.  This community, located in the northeast corner of the state, has successfully operated their own cable network since 1991. Unlike Siloam Springs, the people of Paragould weren't focused first on generating new revenue for the local government, they just wanted to be able to watch tv for a reasonable price.

Back in 1986, Cablevision was the only provider in Paragould. Hill spoke with Rhonda Davis, CFO of Paragould Light, Water & Cable:

"The public wasn’t happy with Cablevision’s service or rates,” Davis said. “We took it to a public vote and did it.”

Prior to Paragould's decision to build their own network, the City had a nonexclusive franchise agreement with Cablevision. The town was dissatisfied by the service they received and, in 1986, Paragould voters approved an ordinance authorizing the Paragould Light and Water to construct and operate a municipal cable system. Three years later, there was a referendum that authorized the city to issue a little over $3 million in municipal bonds to finance the system.

That same month, Cablevision filed suit alleging antitrust violations, breach of contract, and infringement of first and fourteenth amendment rights. The district court dismissed the antitrust and constitutional claims and Cablevision appealed unsuccessfully. The case attracted attention from lawyers and business scholars across the country.

By 1998, the City had purchased Cablevision's remaining service and began offering Internet service. The City has continually upgraded their investment, which now consists of fiber lines that run to nodes throughout the city. Coaxial cable delivers signal and data...

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Posted April 9, 2012 by Christopher Mitchell

We are thrilled to finally unveil our latest white paper: Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks. This report was a joint effort of the Institute for Local Self-Reliance and the Benton Foundation.

We have chronicled how Bristol's BVU Authority, Chattanooga's EPB, and Lafayette's LUS built some of the most impressive broadband networks in the nation. The paper presents three case studies and then draws lessons from their common experiences to offer advice to other communities.

Here is the press release:

The fastest networks in the nation are built by local governments, a new report by the Institute for Local Self-Reliance and Benton Foundation reveals

Chattanooga, Tennessee, is well known for being the first community with citywide access to a “gig,” or the fastest residential connections to the Internet available nationally. Less known are Bristol, Virginia, and Lafayette, Louisiana – both of which now also offer a gigabit throughout the community.

A new report just released by the Institute for Local Self-Reliance (ILSR) and the Benton Foundation explains how these communities have built some of the best broadband networks in the nation. Broadband At the Speed of Light: How Three Communities Built Next-Generation Networks is available here.

“It may surprise people that these cities in Virginia, Tennessee, and Louisiana have faster and lower cost access to the Internet than anyone in San Francisco, Seattle, or any other major city,” says Christopher Mitchell, Director of ILSR’s Telecommunications as Commons Initiative. “These publicly owned networks have each created hundreds of jobs and saved millions of dollars.”

“Communities need 21st century telecommunications infrastructure to compete in the global economy,” said Charles Benton, Chairman & CEO of the Benton Foundation. “Hopefully, this report will resonate with local government officials across the country.”

Mitchell is a national expert on community broadband networks and was recently named a “Top 25 Doer, Dreamer, and Driver” by Government Technology. He also regularly authors articles at MuniNetworks.org.

The new report offers in-depth case studies of BVU Authority’s OptiNet in Bristol, Virginia; EPB Fiber in Chattanooga, Tennessee; and LUS Fiber in Lafayette, Louisiana. Each network was...

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Posted April 5, 2012 by Christopher Mitchell

Siloam Springs, sporting 15,000 people in the northwestern corner of Arkansas, could be the next community to build its own community fiber network. But first they have to pass a referendum in May in the face of stiff opposition from Cox Cable, which would prefer not to face real competition.

For over 100 years, the city has provided its own electricity via its electrical department. Now, it wants to join the more than 150 other communities that have done so. After last year's changes to Arkansas law, Siloam Springs has the authority to move forward if it so chooses.

Pamela Hill at the City Wire has covered the situation with a series of stories, starting with an explanation of why they are moving forward:

David Cameron, city administrator, said the proposal is not so much about dissatisfaction with current providers as it is about finding new revenue for the city. Cameron said revenue from electric services has been a key source of funding for various projects and necessities for the city. That “enterprise” fund is getting smaller, Cameron said, and an alternative funding source is needed.

“We have done a good job managing accounts, building a reserve,” Cameron said. “We want to keep building on the programs we have. It takes money and funds to do that.”

City officials discussed the issue for the last 18 months and decided to put it to a referendum. Voters will decide the issue May 22.

That is a fairly unique reason. Most communities want to build these networks to encourage economic development and other indirect benefits to the community. Given the challenge of building and operating networks, few set a primary goal of boosting city revenue.

Map of Siloam Springs

If approved by voters, the city plans to spend $8.3 million to install 100 miles of fiber optic cable directly to homes and businesses. The city should be able to repay the debt in 12 years, if things go according to a feasibility study presented to the city’s board of directors in January. Cameron said projections show the system could begin making a profit...

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Posted March 8, 2012 by Christopher Mitchell

Chattanooga's EPBFi community fiber network has been one of the most celebrated muni networks in the nation. They were the first to offer a gigabit to anyone in the city and have launched a bounty for geeks that relocate to the "Gig City."

They have connected 35,000 subscribers to the network, blowing away their original goal of 26,000 by the third year. They have attracted thousands of new jobs that would not have materialized if they simply accepted the AT&T/Comcast duopoly for their community.

The Times Free Press reports:

At the current rate, EPB can shave seven years off the time it will take to pay off its telecom debt, becoming virtually debt-free by 2020 instead of 2027 as projected, Eaves [EPB CFO] said.

Even so, the government utility still is spending money to sign up new customers, a process that will increase debt until 2013, Eaves said.

The utility has $51 million in total debt so far, but it only needs 30,000 customers to break even on operational costs, Eaves said.

"We are currently cash- flow positive from an operations standpoint, but still increasing debt to fund the capital associated with signing up new customers," he said.

As we frequently remind our readers, finances are complicated. Even though the network continues to do very well, its debt will increase for a few more years while it continues rapidly acquiring new subscribers. Each subscriber takes years to pay off the debt of connecting them.

Recall that EPB unexpectedly got a Department of Energy stimulus grant to deploy its smart grid much more rapidly than planned for. As the electric division owns much of the fiber fabric, the grant does not impact the finances of the Fiber-Optic division, aside from allowing EPB to roll the network out to more people more rapidly. The changed plan increased their costs and their revenues over the original plan.

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