With Net Neutrality Vote Looming, Cities Look to Publicly Owned Internet Options

The buildout of a network would cost Boulder, Colo., between $70 million and $140 million, but some argue it could be the answer to a free and open local Internet.

by Alex Burness, Daily Camera / December 11, 2017
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(TNS) — It's going to cost somewhere between $70 million and $140 million, officials estimate, to build out the underground fiber-to-the-premises network that Boulder needs to make communitywide broadband a reality.

The question for the City Council has never been whether this pursuit is worthwhile, as voters and elected leaders clearly agree on the value of open-access, affordable, high-speed Internet — the introduction of which would put pressure on the incumbent Comcast-CenturyLink duopoly to lower their prices and offer higher speeds.

Rather, the question is: Who is going to pay for this buildout? And, for much of the past year, based on advice of a consultant, Boulder has paid $186,000 to date, the most likely answer seemed to be that the city would partner with an outside provider willing to pay for the buildout.

But now, Boulder is taking its closest look to date at another path, in which the city finances the build and owns the network.

"We've heard from people saying, hey, what would it look like for the city to do it alone?" said Chris Meschuk, assistant city manager. "We had not done a ton of analysis of that option, so right now we have a consultant doing that."

Meschuk has assumed the responsibility on the project once held by Don Ingle, the information technology director who is no longer with the city.

The consultant, Maryland-based CTC Technology & Energy, is the same consultant Boulder's already paid $186,000. For this latest study, the city will pay CTC another $50,000, Meschuk said, bringing the total since 2015 to $234,000.

Net neutrality threatened

This exploration of municipal broadband, as opposed to a public-private partnership, comes as the Federal Communications Commission prepares to vote this week to gut Obama-era rules meant to stop broadband companies such as Comcast, AT&T and Verizon from exercising more control over what people watch and see on the Internet.

Councilman Bob Yates, a former telecommunications executive and the council liaison on the broadband project, said that the potential repeal of net neutrality gives Boulder yet another reason to care about getting a third competitor in the local market.

"The internet was begun a generation ago with the concept that it would connect people around the world freely and openly, without restriction," Yates said. "That's how it's operated for decades, so the FCC's change of position on net neutrality is dramatic and quite unfortunate."

Yates is far from alone in his dismay.

Net-neutrality rules bar cable and phone companies from favoring certain websites and apps — such as their own services — and give the FCC more oversight over privacy and the activities of telecom companies. Supporters worry that repealing them would hurt startups and other companies that couldn't afford to pay a broadband company for faster access to customers.

Critics of the rules say that they hurt investment in Internet infrastructure and represent too much government involvement in business. Phone and cable companies say the rules aren't necessary because they already support an open internet.

While libertarian and conservative think tanks and telecom trade groups have spoken up against net neutrality, everyday people have been vocal in protesting the rules' repeal.

Since the FCC announced just before Thanksgiving that it was planning to gut the rules, there have been about 750,000 calls to Congress made through Battle for the Net, a website run by groups that advocate for net neutrality.

Meanwhile, net-neutrality supporters protested outside 700 Verizon stores Thursday, said Tim Karr, senior director of strategy for Free Press, an advocacy group involved in Battle for the Net.

And in midtown Manhattan, hundreds were seen chanting slogans and waving signs.

"Access to a free and fair internet is necessary for a functioning democracy," said Lauren Gruber, a writer for a branding agency who joined the New York protest. If the net-neutrality rules are repealed, she said, "it's just another showcase of oligarchy upon America."

But while the threat to net neutrality appears to give Boulder another incentive to pursue citywide broadband, a difficult and essential dilemma remains: Does the city ask residents for up to $140 million and go it alone, or partner with an outside company that would lessen Boulder's control over the theoretical future network but dramatically lower the amount of money residents must pony up to make the network happen?

Lessons from Fort Collins

Those keeping an eye on this question might do well to look north to Fort Collins, which is marching in the direction of municipal broadband, and which offers some lessons because it just went through an election process Boulder may very well experience itself a year from now.

Earlier in 2017, the two cities were in similar boats, with each closely eyeing public-private partnerships on broadband with Axia, the Calgary-based Internet service provider.

But Axia dropped out of the broadband game midway through the year, leaving both cities without their preferred partner.

For Boulder, this meant pumping the brakes, and removing the expectation many had that the city would place something broadband-related on the 2017 ballot.

Fort Collins put out another round of calls for potential partners, but no one as promising as Axia emerged, and the city placed a ballot measure to amend the city charter and allow it strike up a municipal utility for broadband, taking on up to $150 million in bond money for that purpose.

It passed last month, 57-43, despite the telecom industry spending $901,000 to defeat it, according to final campaign finance reports. By comparison, proponents spend closer to $15,000 — in other terms, $0.70 per vote, while the industry spent $55 per vote.

The Coloradoan newspaper said Fort Collins is now exploring various details of a city-run broadband utility.

Glen Akins, who helped lead the Fort Collins Citizen Broadband Committee to pass the ballot measure, said the threat to net neutrality underscores the importance of his group's effort.

"Municipal networks will be an excellent way to reclaim your privacy as well as net neutrality," he said. "The large Internet companies are willing to sell your data and throttle, block and sell fast lanes. With a municipal network, there's no financial reason for the city to sell your info or to block other people."

Longmont has a municipal broadband utility, called NextLight. It's consistently had a take rate — that is, the number of eligible customers who sign up — of at least 50 percent, spokesman Scott Rochat said.

And NextLight has already assured customers that nothing will change even if the FCC repeals net neutrality.

"Regardless of what changes the FCC makes to the regulations, we intend to keep providing our customers with the same excellent service they've come to expect, without shuttling users and services into fast lanes and slow lanes," Rochat said.

In Longmont, some users pay about $50 for gigabit-speed Internet — or, similar the amount many Comcast customers pay for speeds one-tenth as good.

The NextLight case is yet another example of the evidence-supported theory that the introduction of a new competitor improving customer choice and pricing.

"We've seen this happen in Longmont, in Nashville," Yates said. "Guess what happens to the incumbents? They get religion. They drive up quality and lower prices."

And that's the outcome on which Fort Collins is currently banking.

Boulder won't wait on electric utility

Though Boulder can take lessons from other communities, both Longmont and Fort Collins have municipal electric utilities, too, which Boulder famously does not.

The city is working hard to make sure it joins that pair and the roughly two-dozen other in Colorado with city-run electric service, and has spent many years and many millions of dollars on that project — known locally as municipalization.

When a community owns its electric utility, that means it also owns rights-of-way, poles and other infrastructure that can be used for broadband utilities. Essentially, it's much easier for a municipal electric utility to tag on a local internet service.

Boulder may succeed in municipalization, but even if it does, it will be at least about five years, according to city staff's estimates, before the city owns its electric utility. And Meschuk said, "We're not going to wait to see how that plays out in terms of exploring our different (broadband) options."

It's likely that Boulder will in the coming months issue its second requests for information from companies interested in partnering on broadband here. But the city knows how that first call turned out: It yielded a small handful of potential winners, and the clear favorite among them, Axia, is no longer a contender.

Plus, the city also knows how a second call turned out in Fort Collins.

"When Axia dropped away, Fort Collins went back and looked at the market," Yates said. "Those are smart people up there, and we don't have to do everything they do, but the fact that they appear to be leaning toward muni broadband, obviously that's instructive to us.

"While I'd love to get a really great partner to show up, I'm not optimistic that we will," he added. "In which case, we'll have one choice: Do we do a municipal broadband network or not?"

That's a question voters will have to answer, and they very well may get that chance in Boulder's local election next November.

©2017 the Daily Camera (Boulder, Colo.) Distributed by Tribune Content Agency, LLC.