What's the Public CIO's Role With Broadband Stimulus?

When building a community broadband network, local government IT leaders must be smart, shrewd and honest in the mad dash for federal dollars.

by / June 4, 2009

Hardly a town, hill or hamlet in America has not contemplated how it might take advantage of the $7.2 billion broadband stimulus package. Many have been planning for months. Whether acknowledged or not, the local government's CIO has a prominent role in this pondering and planning.

Local governments typically are a driving force in broadband initiatives. Their CIOs, logically, should be the point people since they know technology better than most, their job is determining which technologies best meet end-users' needs, and they have expertise implementing technology.

Your first main task is getting government and community stakeholders to come to grips with a cold reality: The broadband network is a business venture. Sure, the stated public policy is to make high-speed Internet access available where currently there is none, or none adequate enough. But a network costs much more to operate than any stimulus money you get. If it cannot earn the bulk of its keep as a business venture, those who need access the most may not benefit.

What Government Leaders Say

Recently I've talked to dozens of government CIOs running broadband projects, and the vice president of IT and Broadband Services for Jackson, Tenn.'s public utility crystallizes the feedback rather nicely. Michael Johnston believes "you can't make financial decisions as if this were a typical government project," and you can't be a "nice, fluffy businessperson and make this network a success."

You also need people to accept that individual constituents and residences likely cannot financially sustain your network. Think of broadband as a three-legged stool. Individual subscribers are the weakest leg. Local government is a leg, institutional customers the other.

Stated simply, it costs a ton of money to solicit, close and manage these individual subscribers. Marketing to keep them as customers costs money, and at the first hint of competition, marketing costs increase. (What, you think incumbents won't jump in just because they initially refused to build the network?) Competition leads to churn, meaning customers constantly leave the service and you have to constantly replace them. That's more money.

You need financially superior alternatives, the 20 percent of subscribers whose revenues cover 80 percent of operating costs. Oklahoma City CIO Mark Meier says its citywide wireless network pays for itself through benefits city workers get from using it. But if he were to charge constituents for access, customer service costs would immediately put the network in the red. It's actually cheaper to give away service to individuals.

During the planning phase, you need to do rather thorough needs assessment. You have to determine:

  1. Who needs super-fast services (10, 20 Mbps or more)?
  2. Who is willing to pay fair market prices and premium dollar for premium services?
  3. What technology affordably meets those needs?

Resolve these questions and you have the financial wherewithal to provide access for underserved constituents.

In an unconventional move (for government), Fredericton, New Brunswick CIO Maurice Gallant assembled 12 of the largest businesses in town that could benefit from broadband and sold them on becoming anchor tenants along with the city. Collectively they underwrote the network, citizens and visitors get free wireless everywhere and now there are more than 30 anchor tenants.

To make the numbers work, you have to be financially creative. CIO Jory Wolf of Santa Monica, Calif., started with outdated communications technology, a handful of fiber threads and no budget. So he cut a deal with the city council. If he found a way to improve city communications operations, any money saved would stay within the IT department.

Wolf's generated $750,000 in savings plus excess bandwidth by replacing poor voice and

data services with a fiber network. Santa Monica sold dark fiber and excess bandwidth to corporations. The city's operations fund is now self-sustaining, IT has $2.5 million in capital and it's getting ready to launch a citywide wireless network.

The CIO should be the lead deal-maker, partnering with community stakeholders, other local governments and nonprofit entities. You must partner because the best deals that ensure network benefits for constituents have the best shot at stimulus dollars. Partnering with vendors and service providers is equally critical. These deals must be well structured so private-sector partners do as well as the public-sector ones.

Perhaps the biggest public CIO challenge is being brutally honest about whether your local tech resources are up to the challenge. Your IT department's good at taking care of servers, so you think, "OK, they'll be good telephone guys." Sometimes the two skill sets don't match. Same with that brother-in-law of the mayor who happens to "know a little something" about technology. When you have capable local talent in- and outside of government, as is in places such as Franklin County, Va., that's often your best bet. But be willing to cast your net wide when necessary.

Craig Settles Contributing Writer

Craig Settles consults with municipalities and co-ops about their broadband networks' business and marketing plans. His latest analysis report is Telehealth and Broadband: In Sickness and In Health, an assessment of why telehealth providers and community broadband builders should work together to drive broadband and telemedicine adoption.