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financing
Content tagged with "financing"
Lake County, National Public Broadband, Go Separate Ways
Lake County could not reach agreement on a permanent contract with National Public Broadband, its consultant firm for nearly two years. The two sides battled for nearly two months and couldn’t solve issues based on bonus payments and the ability for the county to fire NPB without cause and without penalty. The negotiations had bogged down work on the actual project, Commissioner Paul Bergman said, and the board wanted a fresh start.Additionally, due to the state of financial markets, the County is planning to self-fund the $3.5 million local obligation required to access to the broadband stimulus award. Lake County hoped to bond for the matching funds but the current interest rates make that an fiscally unwise approach. While this does not change the project, it will change the perception of the project and open it to increased attacks from those who don't want the County to build a network (despite the fact that private providers have no interest in providing anything other than slow DSL and cable networks). The County had long maintained that no public money would be used. However, most people will likely not care as long as the project keeps its promise to deliver fast, reliable, and affordable broadband to the community.
EC Fiber Pilot Project Exceeds Financing Goals
Update: We have covered the second round of financing from ECFiber here.
The East Central Vermont Fiber Network, connecting some 23 rural towns, announced back in July that they would self finance a pilot project as a preliminary step to securing the full funding for the project.
Right around Thanksgiving, last year, David Brown updated the community on progress via an article in the Vermont Standard:
It would have been terrific to get the $50million needed to build out all 35,000 telephone and electric poles with 1,500 miles of fiber optic cable. Along the way, we learned an important lesson. We noticed that government money went to existing telephone companies to expand existing networks rather than funding start-ups like ours. That’s when the ECFibernauts decided on a change in strategy: build a small network, get a few real customers, and deliver rock-solid ultra-fast Internet to them as a proof of concept – all using our own money. Then, when all the critical components are up and running, go to the commercial markets for funding needed to expand out to all 23 towns.
The ECFiber Governing Board and our technology partners ValleyNet, Inc. are fortunate to have several experienced financiers within our ranks. Working with our attorneys (to keep everything legal) ECFiber is reaching out to the community with a private offering of tax-exempt promissory notes. As of this writing, we have raised more than three-quarters of what is needed to complete Phase I of our project. The ECFiber hub is now under construction on Waterman Road in Royalton and an initial pole attachment application for 500 poles is being processed. Phase I will bring ECFiber service to selected businesses, schools, town facilities and residents in Bethel, Barnard, Stockbridge and Royalton.
RUS Stimulus Program, BIP, Greatly Favored For-Profit Companies with Grants
We are noted critics of federal policies that prioritize subsidies and support for private companies over the public sector (broadly defined to include local government, nonprofits, and cooperatives). When we analyzed the stimulus rules, we were horrified at the reversal of Congressional Intent, which was clearly to prioritize publicly accountable entities over private entities.
Telecompetitor brings our attention to an RUS report summarizing awards from the BIP stimulus program. Download the report here [pdf].
As we feared (and previously wrote here), the private sector was heavily prioritized by the Rural Utility Service. For-profit companies won more awards and received more funds than entities that are structurally accountable to the community. While we are not opposed to profits per se (we are strong allies with local businesses in the many aspects of our work), the history of private companies owning infrastructure (thereby making the rules) has taught us that communities do best when they have a strong voice over essential infrastructure.
Further, in the rural areas that RUS oversees, networks that are focused on profit have refused to upgrade to modern networks and often offer poor customer service. Throwing more public money at the private sector is a terrible long-term solution that will require ever larger subsidies over time when policy should encourage self-reliance and a lessening need for subsidies over time.
These charts are snipped from the RUS Report linked to above.
Medina County Bonds for Network in Partnership with OneCommunity
The Port Authority of Medina County, Ohio, has successfully bonded $14.4 million to take advantage of a broadband stimulus award to build a fiber-optic network connecting community anchor institutions and businesses with better broadband.
Bethany Dentler, executive director of the Medina County Economic Development Corporation, said Dec. 17 that a bond consultant had just completed sale of the bonds at an average interest rate of 5.96 percent. Cash from the bond sale was expected to be in the hands of the Medina County Port Authority by the end of the year and a fiber lighting ceremony to kickoff the construction phase of the project is planned for March or April. Dentler said the port authority, which will own the network, plans to pay off the bonds over the next 20 years with fees charged to customers of the fiber network.
The nonprofit organization OneCommunity will build and presumably operate the network, which will be owned by the County. Being located in close enough proximity to work with OneCommunity appears to be a terrific advantage for communities who make investments in broadband infrastructure. The $1.4 million in stimulus funds aiding this project were a part of the larger award given to OneCommunity as part of their efforts to better wire 20 counties in Ohio.
Burlingon Telecom Audit and Nulty Response
Bristol Virginia Utilities Refinances Debt
“We’re going through the VRA pool which helps fund 88 cities and service authorities. Because of that – and because of the market – we’re potentially looking at very low interest rates of 3.3 percent,” Rose told the board during his presentation.The debt currently has an interest rate approaching 5%. After refinancing, the utility expects to save some $500,000 to $750,000 a year - for a period of 20 years. The cost of refinancing is $900,000. This story is worth noting for two reasons:
- Restructuring debt is not necessarily a sign of weakness -- BVU's OptiNet is quite successful.
- A reminder that small communities can benefit significantly by pooling bonding through programs like Virginia's VRA. States should help communities to work together in this way.
Rural Washington Network, Chelan PUD, Increases Speeds and Expands
Sixty-four percent of 450 randomly chosen Chelan County registered voters who were part of phone survey in August said they favor taking the grant and completing the buildout, even if it means their electric bills will go up by as much as 3 percent — about $1.50 more on a $50 per month power bill.On November 9, PUD Commissioners approved the rate increase. Chelan's service providers currently offer connections of 6Mbps/384kbps or 12 Mbps/384kbps.
Vermonters Angry at Wireless Broadband Stimulus Grant Instead of Fiber Loan
Senator Bernie Sanders led off his “broadband town meeting” Saturday morning at Vermont Technical College with a ringing affirmation of the need for better broadband coverage in Vermont and the nation. However, nobody in the crowd of nearly 300 people needed to be convinced of that. What they wanted to know was whether a huge new federal grant to a private company was the right way to do it.VTel, a small private telephone company, received a $116 million grant to build a FTTH network to serve their existing 18,000 footprint as well as a wireless network that is intended to serve the entire state. In contrast, the East Central Vermont Fiber Network (which we have covered previously), applied for a loan to build a FTTH network to everyone in the 24 communities that have joined together to form the network. The ECFiber network would be run by a nonprofit and would repay the loan from revenue generated by selling triple-play services on the network.
Background From Reedsburg, Wisconsin: Community Fiber Pioneer
RUC first entered the telecommunications business in 1998, when it constructed a ring to tie its wells, its five electrical substations together and to provide Internet access for its high school, middle school and its school administration building. In planning the ring, the city asked Verizon and Charter if they would build it, but they were not responsive. RUS built a partly aerial, partly buried 7-mile ring of 96-strand fiber at a cost of about $850,000. Internet access was provided by Genuine Telephone, a tiny subsidiary of LaValle Telephone Cooperative which ran a fiber from LaValle, about 8 miles NW of Reedsburg.As they were building the ring, local businesses asked to be connected as well. Reedsburg took the path that so many communities have followed, start by building for yourself and expand opportunistically. Of course, this requires that you originally engineer the network so it can be later expanded, which is good practice regardless of your future plans. Reedsburg used bond anticipation notes, a financial mechanism that few others have used in building similar networks.
A local bank loaned the initial $5 million in bond anticipation notes for planning and construction.
Florida Muni Dunnellon Building FTTH Network
The City Council voted unanimously Monday night to approve the $7.3 million in funding with Regions Bank in Orlando. City Manager Lisa Algiere told the council members the city would be doing most of its business with the local Regions Bank. The funding will come in the form of three bonds: a series 2010A Bond, which is good for 20 years and has an interest rate of 3.61 percent; the second bond is a Series 2010B Bond and is for five years with an annual interest rate of 3.20 percent; while the third bond is a Series 2010C Bond and is good for one year. The funding secured by the city is a drawdown loan, meaning it will only take what it needs and only repay that portion.The network has been branded Greenlight (though the website is not yet fully functional). Greenlight is also the name used by the Community Fiber Network in Wilson, North Carolina. Light Reading interviewed a network employee, shedding more details than have been released elsewhere. He says they are passing 7,000 premises, but Wikipedia only notes a population of 2,000 in 2004, so there is more than meets the eye at first glance. They financed the network without using general obligation bonds, working with a nearby bank (Regions is a big bank, headquartered out of state). Local competitors are AT&T and Comcast, though both offer extremely slow services; the fastest downstream speed available from Comcast is 6Mbps. The new network, as do nearly all recent community fiber networks, will offer much faster connections, the slowest being 10Mbps.