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Public Private Partnerships: A Reality Check
When Westminster, a community of 18,000 in rural Maryland, found itself with poor Internet access that incumbents refused to improve, it decided to join the ranks of a growing trend: public-private-partnerships between local governments and private companies to invest in next-generation Internet access. They are now working with Ting - one of a growing number of private sector firms seeking partnerships with cities – though how partnerships are structured varies significantly across communities.
In building an infrastructure intended to serve the community for decades, city leaders knew Westminster should retain ownership of the network to ensure it would remain locally accountable. Ting is leasing fiber on the network and providing Internet services to the community with plans to offer some type of video in the near future. The public-private-partnership (or “P3”) includes a temporary exclusivity arrangement for two years or when a minimum number of subscriptions are activated. Westminster will then have the ability to open up its network to other providers in an open access arrangement.
Communities are realizing that if they want better connectivity, they need to take matters into their own hands. As local leaders wade through the complex process of planning, financing, and deploying Internet network infrastructure, P3s are becoming more common. Communities with little or no experience in managing fiber optic networks may assume that P3s are safer or easier. That may be true or not depending on the specific P3 approach; the data is only starting to come in. P3s have been relatively rare compared to the hundreds of local governments that have chosen to build their own networks in recent decades.
Partnerships will continue playing a larger role when improving local connectivity but this area is still maturing – there are already a few examples of successful P3s though many will also recall the failed Gigabit Squared P3 approach.
Princeton, Mass, Setback in Muni Fiber Quest
Folks in Princeton, Massachusetts have anxiously awaited better broadband for about two years as community leaders explored ways to deploy fiber in the community. According to the Telegram, the wait will be even longer than expected. The tentative deal between Princeton and Matrix Design Group for a public private partnership is over.
As we reported last December, 90 percent of voters attending a special town meeting approved a measure to borrow funds to get deployment started. Princeton planned to use $1.2 million for make-ready measures to pave the way for Matrix to install its FTTH network. The town would not have to pay any more to construct the network, but they would be sacrificing control over the infrastructure.
Apparently, it is this lack of control that soured the proposed deal. From the Telegram article:
But while the town authorized borrowing the money, the broadband light plant commissioners could not secure authorization from bond counsel to borrow the money without an operating agreement that said the town had control over the design, construction, operation, maintenance and pricing of the network.
In a Princeton press release [PDF]:
“Matrix, citing its business model, was not willing to discuss or negotiate its position of network control for a period of 20 years before turning it over to us,”[said Stan Moss, Princeton Selectman and one of the leaders of the initiative].
As part of the agreement between Princeton and Matrix, the city would have obtained control and ownership of the network after 20 years.
Another wrinkle in the plan appeared when Princeton learned that they would not qualify for grant money available from the Massachusetts Broadband Institute (MBI). The organization is handling distribution of state and federal funds to assist in local deployments. Handing over control of the network to a private party in such a fashion is against the criteria established for grant eligibility.
Princeton Voters Authorize FTTH Make-Ready Funds in Record Turn-Out
On November 18th, 90% of voters at Princeton's special town meeting approved a measure to fund $1.2 million in make-ready costs bringing the community one step closer to fiber connectivity. The number voters who attended the meeting broke the previous attendance record set 15 years ago by 30%.
We introduced the central Massachusetts town of 3,300 in 2013. The community suffered from poor Internet connectivity negatively impacting its schools, real estate market, and economic development. Since then, the community voted to create a Municipal Light Plant and to appropriate funds to keep the project moving forward.
Community leaders have investigated several options and last fall entered into a relationship with the Matrix Design Group. According to the Memorandum of Understanding [PDF], Matrix will design, build, and operate the FTTH network for a period of 20 years. At the end of that time period, Princeton Broadband Municipal Light Plant has the option of renewing that relationship or purchasing the network for $1.
As their contribution, Princeton will provide rights-of-way, police details during construction, powered telecom shelters, and will pay for utility pole make-ready costs. According to an article in the Landmark:
The make ready work includes replacing approximately 80 utility poles, and moving telephone and electrical lines on 450 poles, providing housing for the electrical components needed to operate the system, and paying for police details during the make ready work.
The borrowing is expected to cost the owner of a home valued at $300,000, about $10 a month or $115 a year increase on their taxes for 12 years. Internet service plus telephone will cost $115 a month. Once a contract is negotiated with Matrix, construction on the make ready phase would start in January 2015 and the project would be completed by January 2016.
Princeton Voters Want to Bring FTTH to Their Rural Massachusetts Community
On May 13, Princeton voters decided to continue their municipal network planning. At the annual town meeting, 91.4% of voters [no-glossary]passed[/no-glossary] Article 4 [PDF], authorizing a new Municipal Light Plant. A year ago, voters approved a measure to proceed with planning.
Princeton, a community of 3,300 residents and 1,270 households, has DSL access available to approximately 49% of residents. Satellite, dial-up, and wireless are the other options.
Entrepreneurs rent office space in nearby communities with better connectivity. Real estate professionals bemoan bad Internet because it lowers property values. A 2013 survey revealed an overwhelming desire to take action. Residents and businesses want an FTTH option.
The Worcester Telegram reported that the community also voted to appropriate $17,000 to make-ready costs, possible legal fees, construction costs for telecommunications huts, and other possible network costs.
"Passing Article 4 will allow us to start negotiations with the vendor," said John Kowaleski of the Broadband Committee. "Without passing this article we will have to wait two years to approach this subject again."
According to Selectman Stan Moss, the community continues to explore a variety of options. Community leaders have met with several providers to discuss public/private partnerships. Large corporate players, including Charter and Comcast, are not interested in working with Princeton.
MassBroadband 123 Complete in Massachusetts
The Massachusetts Broadband Institute (MBI) just announced that the 1,200-mile fiber network MassBroadband 123 is now complete.
According to the official announcement, the middle-mile network will eventually serve over 1,200 community anchor institutions. The open access network, constructed with $45.4 million in stimulus funding and an additional $40 million in state bond proceeds, lit up in March 2013. Schools, hospitals, and municipal government are some of the entities already connected.
Communities with a history of little or no middle-mile options will now have some level of connectivity via MassBroadband 123. The Commonwealth hopes to attract last-mile providers to connect homes and businesses, something we have yet to see succeed. We are afraid a more likely scenario will be a few providers seeking to connect the highest revenue customers with no intention to connect everyone, an outcome that would perversely make it more expensive to build financially sustainable networks in these areas.
A few places, like Leverett and Princeton, plan to invest in their own publicly owned infrastructure and will have the option to connect to the outside world through MassBroadband 123. This is an excellent approach that we applaud because it leads us to universal access.
According to a Bershire Eagle article, the state legislature plans to bring more funding to the initiative for last-mile connections:
But state Rep. William "Smitty" Pignatelli, D-Lenox, pointed out in an interview that much investment is needed before individual homeowners and businesses can connect to the network.
The state Senate is poised to move on a bond bill which includes $50 million to be put toward the project's phase, Pignatelli said.
In Western Mass, Holyoke Gas and Electric Brings Broadband - Community Broadband Bits Episode #65
Princeton, Massachusetts, Moves to Design Phase
Princeton, Massachusetts, continues to move steadily forward with its municipal broadband initiative. We first reported on the community's plans in the Spring of 2012. The community approved funding for design services in May and recently hired G4S Technology to design the FTTH network for municipal government, schools and residents.
The design will take into consideration more than 1,350 homes situated on Princeton’s 80.62 miles of road resulting in more than 425,600 feet of fiber optic cable. It will encompass access to all homes, including those set back from the road and those with underground utility services. A small number of Princeton homes located on Route 140 that rely on electrical services provided by the town of Sterling will be excluded from the completed design.
“We are excited to work on the design phase of this project with the town of Princeton,” said Bob Sommerfeld, President of G4S Technology. “We believe bringing broadband into smaller communities across the state will make a tremendous impact on economic growth, education and public safety. Community members will also enjoy the speed, reliability and convenience that high-speed broadband services will provide them on a daily basis at their schools, libraries, offices and homes.”
The design will be developed this summer anticipating a town vote this fall based on the design. A two-thirds vote will be required at a special town meeting and will ask the voters to borrow funds for the project.
Princeton, Massachusetts, Plans Next Step of Fiber Network
Community members in Princeton, Massachusetts, voted on May 14th to proceed with planning for a next-generation fiber network. The picturesque New England community voted to spend $10,000 on a system design and to establish an entity to operate the network in the future, if the community decides to proceed with the investment.
According to News Telegram story, the question passed by more than the required two-thirds majority at 274-61.
Earlier this year, the Princeton Broadband Committee distributed a survey to residents. Results showed the people of Princeton desperately want something better than existing DSL, satellite, wireless or dial-up. School's must now connect with expensive T1 connections and property values suffer due to the lack of broadband. Telecommuting is not an option in Princeton.
The design should be completed this summer, opening the way for the next step in the process. Voters will need to approve by a two-thirds majority a request to borrow funds and the establishment of the town broadband entity.
Princeton, Massachusetts, Considering Building Own Fiber Network
We recently reached out to Princeton, Massachusetts, after reading several local news articles about the city's ambition to improve broadband in the community. Phyllis Booth of the Landmark has been covering the story. Community leaders recently mailed survey cards to every residence in town and put the survey online to provide ample opportunity for feedback.
With survey results complied, the answer from respondents was an overwhelming, "Yes! We want better Internet!" The Princeton Broadband Committee has since made the results available in a series of visuals that express the community's experiences with speed, customer satisfaction, desirable applications, and other respondent concerns. Detailed survey results are available for review [PDF].
The results come as no surprise to Stan Moss, Board of Selectmen Member who is also on the Broadband Committee. "Everybody has tried everything," says Stan when he describes the survey outcome. The community of 3,300 has access to DSL in about 49% of households and other choices are satellite, dial-up, and wireless. According to Moss, Princeton DSL customers averaged a D+. From the Landmark article:
“Once we invest in the fiber it’s pretty good. It’s not costly to upgrade in the future, it’s reliable once it’s in place,” said [Broadband Committee Member John] Kowaleski. “If the town doesn’t do this, no one will,” he added. The town has contacted Verizon and Charter and “we’re not even on their plan,’’ said Kowaleski. “Princeton has insurmountable challenges. It isn’t profitable for Verizon or any other company to provide the infrastructure to give us the service,” said Kowaleski.
Moss says he receives calls on a regular basis from residents who want to know when the city is going to provide FTTH. Most of those calls come from people who work from home or have school age children.