Rural areas face substantial risks in their efforts to provide high-speed Internet to citizens who live in remote places. Here's what local leaders should consider as they plan to expand broadband.
The essential point at the Nevada Broadband Workshop in Reno last Friday was this: Communities that want broadband should produce a plan that’s as comprehensive as possible.
Hosted by the National Telecommunications and Information Administration’s (NTIA) BroadbandUSA program, the workshop guided attendees through various aspects of broadband planning for smaller communities. Even if the cost for a project seems exorbitant, a plan can still be made.
“If you don’t have a million dollars, don’t let that mean you don’t get started on the issue for your rural communities,” said Laura Spining Dodson, acting associate administrator at NTIA.
As event speakers suggested, numerous planning options exist for communities. The trick is determining the relevance and risk of all options for a given community. Without such in-depth knowledge, a local area might unintentionally sabotage its potential for providing fast Internet service.
Right off the bat, it’s easy to get lost in the jargon infused with the broadband space. Katherine Bates, state and local partnerships manager for BroadbandUSA, covered the most common terms associated with broadband. She homed in on the difference between speed, which refers to the rate at which data travels (Mbps), and bandwidth, which indicates the total amount of data that can travel through a network connection. With these concepts in mind, the goal is to build a network that can allow consistent service.
“You can have a broadband network, but if it’s not reliable, it’s not really a broadband network,” Bates said.
What should a community build to establish a reliable network? It all depends on nearby network infrastructure. Communities, especially rural ones, must consider both middle-mile and last-mile network connections. Middle-mile connections create links between major broadband transmission lines (the “backbone”) and local networks. Last-mile connections create links between local networks and end users, including businesses and households, located in the open countryside, along backroads, and so on.
Many discussions about bringing broadband to rural areas focus on last-mile connections, as many rural buildings reside outside of place boundaries. Just don’t forget about middle-mile infrastructure. “If you don’t have that middle mile, you can’t get anywhere,” Bates said.
The next step is understanding the options for providing last-mile service. In regard to fiber, aerial fiber, which is deployed on poles, tends to cost less, but can be a problem for areas with extreme weather due to its vulnerability to the elements. Buried fiber is often more expensive and more difficult to fix, but its underground position means it will not take as much of a beating from weather.
Rural communities should also be aware of copper-based tech, such as coaxial cable and digital subscriber line (DSL), and the different wireless options, including fixed, mobile, satellite and microwave. The viability of these options depends on cost, performance standards, existing infrastructure and geography (e.g., microwave signals require line-of-sight locations).
It’s a lot to keep in mind. Joe Freddoso, co-founder and COO of Mighty River, has helped communities in states like Nevada, North Carolina (Mighty River’s home), Texas, Michigan and Florida with broadband planning. Unpacking the language of broadband is a frequent initial challenge.
“The first thing is kind of taking away the intimidation factor of broadband,” Freddoso said. “A lot of government officials and community members get intimidated by the techno speak.”
If nothing else, an all-inclusive broadband plan assists communities when tough calls must be made.
“One of the most important things you can do is to document that plan as you go along,” Dodson said, “so that when you have competing priorities, when cost becomes a big issue, or if [the] timeframe for getting things done becomes an issue, you’ve defined what your objectives and priorities are, and you can make that decision not in the heat of the moment.”
A critical first step is defining the community’s objectives. Not only will objectives shape the overall project vision, but they will also guide the development of different planning teams, Dodson said. For instance, if enhanced education is an objective, one planning team might include teachers, educational administrators, library specialists and parents.
Assessing community resources usually comes next. This step involves creating an inventory of public and private assets that can make it easier for providers to deploy technology. Dodson said Google’s checklist offers insight into what can attract companies.
“Understanding your buying power can really change the dynamic of the conversation in your planning efforts,” Dodson said.
In a phone interview with Government Technology, Freddoso echoed Dodson’s words, pointing out that a “broadband story” has more power when it cites all of the demands of a community. Don’t simply bid out for a need; find out what you have first. “You never know what piece of demand is going to trip a higher level of investment from a service provider,” Freddoso said.
At the event, Dodson also highlighted the importance of engaging stakeholders throughout the entirety of the planning process.
“You need to think about it [stakeholder engagement] both in terms of ‘Who are the people that can impede my ability to be successful?’ and ‘Who are the number of organizations and individuals that can help me be successful?’” Dodson said.
Partnerships are a key aspect of building teams and bringing assets to a project, Dodson added. Partnerships help communities determine which business model makes the most practical and financial sense for them, whether it’s government-owned, nonprofit-owned, public-private, a cooperative, utility-owned or privately owned.
Freddoso told Government Technology that many states restrict what can be done with the business model. He also hesitated to broadly recommend community-based models, despite the success of individual stories like those in Chattanooga, Tenn., and Wilson, N.C.
“While there have been community-based models that have worked well, that is a very, very heavy lift [for a smaller community],” he said. “If there is an electric membership cooperative … that’s where I’ve seen it work best.”
Finally, Dodson said a good broadband plan is actually made up of three plans: a project plan, which documents, among other things, the vision, mission and operational structure of the project; an implementation plan, which should be shown to investors and potential funders; and a financial plan, which might require the expertise of consultants for detailed costs and projected revenues.
According to BroadbandUSA, a preliminary feasibility study for a community broadband project often costs between $40,000 and about $60,000. Financial plans may cost approximately $40,000 to $140,000. Then engineering, permitting and construction can total $1 million or even $20 million. Thus, most small communities interested in broadband must explore funding opportunities — and they often need more than one type.
“Everybody is always looking for money,” Bates said, adding that some communities even pursue crowdsourcing online.
At the workshop, Bates mentioned two types of bonds that communities can pursue: general obligation (GO) and revenue. The GO is a municipal bond that requires voter approval, so it may lengthen the planning process. Revenue bonds can be issued faster, but they can only be repaid by revenues spun off from the project, Bates said. This fact, along with high interest rates, can make revenue bonds a very risky proposition for a community.
“If you decide to pursue bond financing, know it’s complex,” Bates said. “Know that you’re going to know a whole lot more about bond financing than you do now.”
Government-backed loans provide another way to pay for broadband projects. These loans tend to have lower interest rates. But the criteria for the loan could constrain network-provided service, and worse, if you fail to make a payment, public scrutiny can be tougher to deal with, according to the workshop’s presentation booklet.
A bank loan uses similar criteria as a government-backed loan, but they don’t subsidize interest rates and have restrictive collateral requirements. “They might ask you to put up your network as collateral,” Bates said.
However, banks that finance broadband projects can receive credit thanks to the federal Community Reinvestment Act (CRA), which encourages banks to meet the credit needs of their communities. Bates said communities can look more into this option by contacting the appropriate Office of the Comptroller of the Currency (OCC) branch.
“Work with the people who work in the state with the banks, and they will help you work with banks to understand projects,” Bates said. “A lot of community banks, they’re willing to put some skin in the game because they live there.”
For less financial risk, communities can apply for grants. USDA offers several grants for rural broadband deployment (communities should contact their state’s general field representative about all USDA-related funding). The Economic Adjustment Assistance Program and Community Development Block Grant Program can fund broadband planning. Bates said the main issue here is keeping a careful eye on grant activities.
“If you apply for a grant, make sure someone in your organization is following it and making sure they’re following up and doing the right things,” Bates said. “Because if a grant is not used for what it’s originally intended to do, it’s not a grant anymore and you have to pay it back.”
Bates mentioned one form of funding that rural communities probably don’t need to bother with: private equity investors.
“To be really honest, they’re looking for a guaranteed rate of return,” Bates said. “And they’re not looking for a guaranteed rate of return that a rural network is going to spin off five years out.”
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