December 15, 2010 By Craig Settles
Many communities are at an important crossroad. Maybe yours is one of them. After a year of steady news about broadband stimulus awards and Google’s contest for a 1 gigabit network, there’s widespread awareness about the benefits of true broadband delivering hundreds of megabits per second.
With this awareness has come a strong yearning from constituents, local businesses, government agencies and various institutions for a piece of this broadband action. The question that stymies casual observers and visionaries alike, though, is how do we get there from here? Specifically how can we afford it?
The challenges need not be permanent barriers. Here’s one potential avenue to consider: Take a lesson from Ontario County, N.Y.’s partnership with Verizon. This mostly rural community paved a financially viable path to a good broadband network with mutual benefits for all public- and private-sector parties involved.
The county’s towns and townships teamed up to address their broadband needs. Without using taxpayer dollars, the county acquired several million dollars in financing to build their own fiber infrastructure.
Rather than the usual protracted battle that results from communities initiating these projects, Verizon took a different approach and decided to work with the county. The vendor got a good deal and Ontario County got revenue, improved cellular coverage and came away with no attorney fees from court battles with incumbents.
Your community may have offered something similar to incumbents in the past but to no avail. But times and economic conditions have changed. Go back to that well from the angle Ontario took: Offer cellular service providers an opportunity to use the fiber to backhaul data for their cell towers; and give wireline providers the ability to expand into your area with services while you provide infrastructure.
Then emphasize the economics. The community carries the capital expenditure, so providers are spared millions. First, a government entity possibly can get 12 to 25 years to pay back the debt depending on the financing vehicle. Second, the private sector likely can’t get as good financing, and aren’t willing to wait for the long payday. Third, even an incumbent with only 12 cell towers can save thousands of dollars per month in T1 charges: For example, Ontario only charges providers a few thousand dollars to ride the fiber, and several hundred dollars everywhere they run a cable off the network to a tower. Fourth, ask potential partners if they really want to pay through the nose for a mere 18 megabits of backhaul from a dozen T1s — rather than pay much less for hundreds of megabits.
One could be thinking at this juncture that a vendor may not care as much about a community as the local government does. Another argument could be that a national incumbent such as a cable company would view this only as potential competition. There are 100 other objections one could mention. I still believe there are creative ways to structure arrangements with the private sector that enable open-access broadband networks and make all parties involved happy.
How do you forge creative partnerships? First and foremost, stretch the collective imagination of key stakeholders to come up with those options. Second, “talk the talk” of broadband’s power to transform local economies, and “walk the walk” when selecting private-sector partners. I attended a workshop in California with rural county stakeholders, including 10 local service providers. In a panel discussion, many of them said their biggest frustration was watching their own communities run off to the national incumbents and not give the locals the time of day.
True, some of the smaller firms may lack the resources to properly service a community. But the right partnership and good planning can enable providers to initiate good service in limited areas, and then scale up to effectively tackle the broader market. Franklin County, Va., partnered with two local brothers who had the technical expertise and money to build a quality high-speed wireless network. They started small, and now the Internet service provider is becoming one of the county’s fastest-growing businesses as the service expands.
Here’s advice given by the service providers at that California workshop on how communities can work more effectively with the private sector:
If there’s a community master plan, include a checklist of broadband needs or tasks that should be addressed. Along with a checklist, include samples of resolutions, broadband rights-of-way rules, possible local ordinances, and RFPs so people have guides for creating the documentation that providers need during broadband implementation.
Vendor collaboration with local government officials is important, but so too is getting various constituents within communities to work with one another.
The first part of collaboration between the community and the provider is to identify the various grants that are available to help fund the effort, and for each partner to help get those grants. Providers also look to community leaders to educate them on all the local issues that will impact the ability to design, build and manage the network.
Communities should determine if there is statewide single-purpose infrastructure for health care, public safety, and middle-mile networks to link libraries and school districts that are already being planned or funded. Think about how to tap into these projects.
Government agencies can help by allowing providers to use towers to support the infrastructure, and revising building codes that restrict towers. In turn, agencies need to better understand the technology and business issues so they establish guidelines favorable to everyone’s success.
If possible, participate in the FCC rulemaking procedures for Universal Service Fund reform. Rural communities should combine efforts and form (or use existing) groups to advocate on everyone’s behalf in Washington, D.C.
Rural communities need to get together with local or state administrators and agencies that can introduce them to key decision-makers in the federal agencies that are providing grant money.
Try to get financing from grants and bonds, then go to providers. Providers have to be careful about which grants they pursue. Some cost more in the staff time necessary to win the grant or to meet reporting requirements than the actual value of the grant. Choose wisely.
In many cases, it’s preferable for a local provider to go with a local source that offers creative low-interest financing. This avenue can accelerate network projects in the same manner as Rural Utility Service’s standard funding programs.
When making budgetary and financial decisions on issues such as subscriber fees, focus on the value of the broadband services, not the price. Stop looking for the cheapest solutions. Understand broadband’s impact on economic development and its importance to education. Be realistic about the cost of buildouts.
Craig Settles is an industry analyst, broadband strategy consultant and co-founder of Communities United for Broadband, which delivers on-site training to private- and public- sector organizations. Follow him on Twitter (@cjsettles) and his blog, Fighting the Next Good Fight.
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