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Cleveland Advances $20M for Broadband Expansion

The revised plan would now still allocate $20 million of American Rescue Plan Act funds to the local nonprofit DigitalC for expanding affordable broadband service throughout the city.

(TNS) — After months of hesitation, the city of Cleveland is moving forward with Mayor Justin Bibb’s $20 million plan to expand broadband throughout the city.

The revised plan would still allocate $20 million of American Rescue Plan Act dollars to local nonprofit DigitalC for expanding affordable broadband throughout the city. But City Council members, skeptical that the largely untested nonprofit can deliver on its promises, built in some safeguards on Thursday. Namely, funds will be withheld from DigitalC until it shows it is able to meet some of its goals.

Those changes passed city council’s Utilities Committee on Thursday. The next step will be council’s powerful finance committee, which effectively functions as the last deliberative step in the legislative process. Legislation that passes finance committee almost never fails before the full council.

Council President Blaine Griffin, who chairs the finance committee, praised the changes made on Thursday, and said he looks forward to a hearing on the amended legislation.

City Council shelved the DigitalC plan when it was considered earlier this year, citing concerns that DigitalC has never proven itself at scale. However, DigitalC won a competitive selection process in which other, brand-name companies like AT&T, Spectrum and T-Mobile also submitted proposals, according to city documents.

DigitalC’s technology hooks into existing networks to provide wireless broadband internet. The group has promised upload and download speeds of at least 100 megabits per second (mbps) at $18 per month, for all Cleveland homes. For comparison, Netflix recommends having an internet connection of at least 15 mbps to stream in the highest quality available.

It’s still unclear whether DigitalC will be able to succeed at scale. The nonprofit, which has been around since 2015, has around 2,000 customers as of June, but says it needs to grow that to 25,000 in the next four years to be sustainable, reported previously.

In order to receive its first batch of money from Cleveland, DigitalC has to more than double its current customer base by attracting 3,500 new subscribers and providing digital literacy training to 7,500 Cleveland residents. If DigitalC is able to accomplish that, the city will provide the nonprofit with $3.75 million, Utilities Chair Brian Kazy said during the meeting.

“Everything is going to be performance-based and DigitalC is going to have to prove themselves the first year before any of the dollars are dispersed,” Kazy said.

Each year of the four-year agreement will require DigitalC to continue growing its customer base and provide digital literacy to ever more residents, Kazy said. If it hits its annual targets, Cleveland will deliver more money.

DigitalC would not get extra money if it exceeds its goals, and will not get partial funds if it fails to reach those goals, Kazy said.

“You either reach the agreement or you don’t,” Kazy said.

DigitalC CEO Joshua Edmonds expressed optimism during Thursday’s meeting.

During a recent expansion into Glenville in which 600 homes were eligible for DigitalC, more than 10% of those homes opted to subscribe. While that’s still below the 14% adoption rate needed for success under the city’s proposal, it’s better than the company has been doing in the past. Other areas, such as Phoenix Village in the Central neighborhood, the adoption rate was as high as 35%, Edmonds said.

Aside from the potential money from Cleveland, DigitalC says it has secured $20 million from the Jack, Joseph, and Morton Mandel Foundation and the David and Inez Myers Foundation and $3 million from the federal government, which will fund the infrastructure needed for DigitalC to scale up, Edmonds said at the Thursday meeting.

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