Budget & Finance

Cape Cod Broadband Network May Be Model Stimulus Project

OpenCape demonstrates a business model that local governments seeking broadband stimulus money may want to study.

by / July 26, 2009 0

Stiff competition awaits local governments that are seeking a piece of the $7.2 billion set aside for broadband infrastructure in the American Recovery and Reinvestment Act. Many already have plans that were shelved after the national craze for broadband deployments imploded a few years ago.

Local governments with less developed strategies may want to learn from one initiative observers consider a likely recipient of stimulus money: OpenCape is a consortium of local government and small business representatives in Cape Cod, Mass., who spent the last two years crafting a plan to deploy a broadband backhaul network for the entire cape.

OpenCape is applying for stimulus funds to build the network. Commercial providers will be able to use the infrastructure to provide services to residents, businesses and government entities on the cape that the providers currently don't serve because it's cost prohibitive.

Funding the backhaul with federal money should make doing business less costly for "last-mile" service providers, said Daniel Gallagher, executive director of IT for Cape Cod Community College and an OpenCape representative.

"We intend to build the middle mile for the region that will serve as the conduit for all of the Internet service providers that might wish to provide last-mile services," Gallagher explained.

Critical to OpenCape's strategy is its plan to sustain the network financially in the future. The organization gleaned input from broadband providers on what would make offering services in Cape Cod's low-density towns more profitable.

One challenge is providers can't afford to build the infrastructure required to connect Cape Cod to the broader Internet, Gallagher said. "The capital expenditure is far too great, but if they could get a prorated cost and pay per megabit or whatever their need might be, then it would be a reasonable business model to offer those services."

The final submission window for broadband stimulus applications will likely end in September 2010, according to Mark Tolbert, spokesman of the U.S. National Telecommunications and Information Administration, which is disbursing $4.7 billion of the broadband stimulus. That gives governments roughly a year to hone their strategies before the money is spent entirely. A look at OpenCape's business plan could give competing governments a focus.

Not Repeating History

By studying past municipal broadband failures, the OpenCape team noticed that overly broad goals were a factor in their demise.

"Some of those wireless metropolitan solutions where they were trying to deal with the underserved, the poor and businesses -- they were basically trying to be all things to all people," Gallagher said. "They failed because of it."

Gallagher and his colleagues decided that a narrow focus for their network goals promised a better chance at success. OpenCape is applying for $20 million in federal stimulus dollars to install approximately 225 miles of fiber-optic cabling, microwave links and a co-location center on Cape Cod.

Various broadband service vendors can then target communities likely to be good fits for their services. With the fiber backhaul already in place, the vendors could extend their infrastructures from it to whatever community they want to serve. Gallagher said trying to determine which service would best suit individual communities was too complex for OpenCape to do effectively.

"Those technologies -- specializations, really -- private companies are best able to provide. What they have been missing is the capital," Gallagher said.

Bypassing Lady Luck

Many failed municipal broadband networks, like Philadelphia's unsuccessful citywide Wi-Fi project, gambled that citizens would want to buy service subscriptions. By contrast, OpenCape is comprised largely of organizations professing interest in being anchor tenants for broadband providers. Gallagher represents one of them.

"Cape Cod Community College, where I work, would likely be an anchor tenant. So would a lot of the municipalities around the cape, the health-care industry

and Woods Hole Oceanographic Institution," Gallagher explained.

The Woods Hole Oceanographic Institution (WHOI), based in Cape Cod, promises to transfer the bulk of its business to a high-speed provider willing to set up shop on the cape. Certain federal grants evade WHOI because the organization lacks multiple fiber paths leading from the cape back to the broader Internet. Access to those grants would produce more research and more need for broadband services, said Art Gaylord, computer and information services director of WHOI. The resulting research can result in spinoff businesses when WHOI creates technologies with profit potential. For example, years ago a company called Benthos formed on the cape to sell marine exploration tools first developed by WHOI.

The institute also wants the fiber backhaul because it would be capable of running more than the standard Internet protocols. In the next few years, WHOI plans to use ocean exploration devices that could require an underwater high-speed Internet network.

"We need to be able to use whatever protocol works best to get to those things. That may not always be standard Internet protocol. Fiber will allow us to use whatever protocols we need," Gallagher said. Research organizations with access to currently unused, or "dark," fiber already can do experiments with such technologies, he said. Dark fiber could be necessary to keep WHOI competitive.

While OpenCape has many members promising to be anchor tenants, Gallagher said opportunities for broadband providers won't end with those anchor tenants. He described the questions OpenCape asked while studying the area's appetite for broadband services.

"What are [end-users] spending now? How much of that market do we think we can capture? What do we expect their growth to be? How much of that growth will we capture? Do they have needs that aren't being met now?

"If more retail providers were to come into the market for that last-mile portion, how much of that market could the retailers capture if we provided the backhaul for them? We have a lot of market studies identifying the potential market," Gallagher explained.

Strength in Neighbors

Cape Cod and Rhode Island think they can strengthen their individual cases for broadband stimulus money by building their networks in conjunction with each other. One of OpenCape's two proposed fiber lines for leading back to the broader Internet would connect to Providence, R.I. The tiny state happens to need a new fiber line in the same area OpenCape wants to run its fiber. Officials from the two projects realized that Rhode Island and OpenCape could share the section of fiber stretching from the cape to Providence. OpenCape would build fiber to Rhode Island's borderline. The state would deploy the fiber from that point, extending it to Providence. Funding both projects would give the federal government more for its money, said George Loftus, executive director of OSHEAN Inc., a nonprofit leading Rhode Island's broadband effort.

"It makes both of our stories better," Loftus said. "It shows we're cooperating regionally."

OSHEAN is a consortium of universities, hospitals, government agencies and nonprofit organizations that purchases technology in bulk and shares services. The organization leases fiber lines in metropolitan areas and functions as its own Internet service provider (ISP), which saves money. However, some institutions can't participate because they reside in areas lacking fiber that can be leased. Those organizations buy broadband from ISPs, which is typically more expensive and slower than the organizations want. Like OpenCape, OSHEAN has a strategy to sustain the network financially. Institutions seeking the fiber, like the University of Rhode Island, already have budgets to fund services on the proposed network. They would merely shift the funds they pay an ISP to OSHEAN for running the newly deployed fiber.

Gallagher said partnerships similar to OSHEAN's with OpenCape could give governments arriving late to the game a better shot at getting stimulus money.

"A government that hasn't done the analysis we have done could potentially get in on one of the grants by looking to some other regional proposed solution that has done the homework and partner with them," Gallagher said.

Andy Opsahl

Andy Opsahl is a former writer and features editor for Government Technology magazine.