Opinion: Selling stocks for municipal broadband isn’t as crazy as it sounds.
All of you who believe in broadband’s impact on economic development (or are a little jealous of stories like this about Chattanooga’s 1 gigabit network), should look to the Green Bay Packers of the NFL for the key to financing your broadband network.
Yeah, they kind of choked in last Sunday’s playoff game against the N.Y. Giants. But the team is a surefire winner when it comes to raising money. The franchise raised $70 million to rehab its football stadium (Lambeau Field) by selling 280,000 stock shares to individuals at $250 a pop. They pulled off this amazing feat in just five weeks!
With apologies to New Orleans Saints fans — “Who Dat” is bringing big bucks into town for a project that will pump up the local economy? The citizens of Green Bay. Literally. The Green Bay Packers are a nonprofit corporation owned by local residents and businesses. Packers pride enabled Green Bay to outdo tech companies that can’t get an initial public offering off the ground, let alone raise $70 million.
If Green Bay can do all this for a football field, can’t your hometown or county convince constituents to raise just a few million for a broadband network? What if you create a nonprofit organization similar to the Packers, but with the goal being to build a broadband network, and then sell stock that:
The main challenge facing this strategy is more cultural than anything else, according to Wally Bowen, who is the founder and executive director of the nonprofit Mountain Area Information Network (MAIN). Discussing on Gigabit Nation how MAIN successfully brought broadband to rural North Carolina, Bowen stated, “we have been marinated in a corporate culture that believes only a Fortune 500 company is able to deal with high tech.”
In another example, Vermont town governments have come together to create a limited liability nonprofit corporation, ECFiber. ECFiber offers tax-exempt, 15-year $2,500 promissory notes that effectively earn 6 percent interest. The nonprofit raised nearly $1 million in 2011 to launch a network buildout. These rural communities only have 50,000 people combined. ECFiber is doing additional fundraising rounds, such its most recent one in which three of the towns generated $350,000.
In rural Lancashire in the northwest of England, eight parishes united to form Broadband for the Rural North (B4RN), a not-for-profit community co-op. Similar to Green Bay, stock in B4RN is sold at 1 pound a share, with a required minimum purchase of 100 shares. Investors buying 1,500 shares get a year’s worth of broadband service with the deal. And, further bonding community support, those who buy 3,000 shares can donate half the shares and broadband service to a neighbor. B4RN currently is more than halfway to reaching its financial goal that enables the network buildout to start.
Creating a nonprofit for building a broadband network is pretty easy. Moving from a nonprofit corporation on paper to executing a full-blown strategy is a bear. On the other hand, how much will your community benefit from the end product — a future-proof fiber network? It doesn’t even have to be fiber. A decent fixed wireless network delivering 15 to 20 Mbps would be a blessing for quite a few communities.
First, communities need a small army of true believers. Use the value and virtues of broadband for improving economic development, health-care delivery, education and other areas to build a depth of support to mirror what’s driving ECFiber’s and B4RN’s progress.
Make sure what’s earned in and for the community stays in the community. Early on, Green Bay made rules to keep the Packers organization in the hands of the community and not lose that control to any corporate interests.
Sound budgeting and fiscal management, effective legal planning and good operations management are crucial. Reporting rules, returns to investors and numerous little details with big consequences must be addressed before, during and after the buildout. B4RN and ECFiber rely on as much local talent for as they can find to handle these tasks. B4RN believes in paying for these types of services in shares whenever possible and within the rules. However, go where you need to go to find the right people, particularly for financial and legal assistance.
Support stock offerings with other methods of raising capital. Communities can design the nonprofit to be eligible for charitable gifts plus the full range of grants that can be tapped for broadband, public works and economic development. There also are more than 400 community foundations in the U.S. Determine if the nonprofit can link its efforts with an existing foundation or create one. iMAN is an enabling organization for the Steuben County Foundation in Indiana, and the driving force for its community’s fiber network. After the network is built, 65 percent of subscribers’ $225 monthly service fee will go to providing funds for economic development projects.
In order to sort out the options and opportunities for making local investment in broadband networks a success, these communities must do an effective needs analysis on the front end. I’ve worked with community stakeholders on these analyses, and this is how they uncover the extent of their need and determine how meeting those needs will lead to financial sustainability of the network. Good needs assessments identify, recruit and motivate potential investors; build valuable partnerships with local stakeholders; and unlock the doors to long-term financial stability.
Can you win with local broadband investors? You won’t know unless you get in the game.