Partnerships Foster Fiber Hotbed in Southwest N.H.

Many cities in Cheshire County, N.H., are funding high-speed Internet networks via municipal bonds through local banks, while others are signing public-private partnerships with ISPs. Both models have pros and cons.

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The southwest corner of New Hampshire will be blanketed with fiber-to-the-home (FTTH) networks over the next two years, as 16 communities are drawing up plans to enter into public-private partnerships to boost high-speed Internet access in the Granite State.

Fitzwilliam, Marlborough, Gilsum, Troy and Roxbury voted in March and April to issue bonds through the New Hampshire Municipal Bond Bank to construct fiber networks; Greenfield, Jaffrey, Marlow, Peterborough and Temple have measures on town meeting agendas for May and June.

According to New Hampshire’s Southwest Region Planning Commission (SWRPC), six more cities have also issued warrant articles indicating their interest in partnering with a private Internet service provider (ISP) to improve insufficient connectivity. Most of the cities are considering partnerships with Consolidated Communications.

Consolidated recently completed construction of FTTH networks in Dublin, Rindge and Westmoreland, and the company is just breaking ground on projects that will serve 8,000 premises in Walpole and Harrisville. Upon completion of the most recent service agreements, Consolidated will have upgraded an additional 9,400 Cheshire County residents to Internet speeds of up to 1 gigabit per second.

“Consolidated has really made a tremendous effort and commitment to working with towns that want to do this,” said Tim Wessels, a Rindge Teltech Committee Member. “The company is doing a lot of the legwork. They see the writing on the wall — their future is not in DSL networks in northern New England.”

POTENTIAL PARTNERSHIP DETAILS


The project service agreements for the towns voting to bond this spring will largely mirror the contracts Consolidated finalized with the towns of Dublin, Rindge and Westmoreland last year.

Towns voting to issue municipal bonds will execute a 20-year contract under which they own the network and Consolidated maintains, operates and monitors the network. When the 20-year contract ends, each town will be able to renew the contract with Consolidated or request bids for a new network operator. Consolidated has guaranteed the debt payments in contracts so far.

To finance the town’s bond payments, Consolidated will charge every subscriber a monthly infrastructure fee based on how many miles of fiber will be needed in the towns and how many residents are projected to subscribe to the company’s broadband service. This method doesn’t raise local property taxes and subscribers only pay the infrastructure fee if they choose to take the service.

Contractually, Consolidated has to complete these builds within 24 months. Once the fiber builds are complete, the towns will own the portion of the network and equipment funded by their bond. As owners, municipalities have a say in establishing basic policies to create equitable networks, such as practicing non-discrimination, prohibiting bandwidth caps, and providing a service option affordable for low-income residents.

As it stands, none of the partnerships with Consolidated will result in open-access networks. The fact that contracts give Consolidated sole ISP rights to the new networks may leave subscribers and municipalities in the Monadnock Region with less power to advocate for affordable pricing and better service. With that said, Consolidated is taking on some risk in guaranteeing the bonds and the ISP will have to make a case for renewal after 20 years.

Very large incumbent providers like Consolidated have historically been frosty to partnerships where the community controls the fiber. However, Lumen (until recently called CenturyLink) has also broken ranks, partnering with Springfield, Mo., on muni fiber, where it is going head-to-head in competition with AT&T.

DIVERGENT PARTNERSHIP MODELS


The towns of Sullivan and Peterborough are planning on taking slightly different paths to better broadband than neighboring communities. Sullivan has opted to partner with FiberCast, a local ISP, to build an FTTH network. Peterborough voted to contract with Consolidated, but the town will not be issuing a municipal bond.

To construct Sullivan’s fiber network, the town will issue a bond which will be paid off through service fees charged to subscribers. The town will follow the “Chesterfield” model, under which a private ISP runs and maintains the network with a 20-year contract. Upon completion, FiberCast will own the network. If enough subscribers do not take to the network it will not affect the town, but is instead the business risk of FiberCast, who contractually has to pay the difference.

Peterborough already has over 37 miles of fiber-optic cable within town limits from a FairPoint Communications build in 2016, which Consolidated now owns. The town voted to extend high-speed fiber Internet to 20 percent of town residents who are currently unserved by the service. The cost of Peterborough’s proposed project is $262,288, which is low enough that it will not require issuing debt, saving the town from having to pay interest.

There will likely be more exceptions to what has been a fairly consistent partnership model in the future. Although at this time no New Hampshire communities working with Consolidated have voted to fund through means other than municipal bonds, according to Jeff McIver, Consolidated's manager of Consumer Product, Consolidated is “in discussion with some towns to fund through different means, but none have yet approved a model that funds the fiber expansion.”

LEGISLATION AND DEPLOYMENT MODELS FUELING THE MOVEMENT


New Hampshire’s unserved towns did not have a solution to the lack of adequate Internet service until S.B. 170 was signed into law in 2018, allowing municipal governments to bond in order to build broadband infrastructure in places not served by commercial ISPs.

Though the public-private partnership model seems to be serving Cheshire County, New Hampshire’s municipalities are able to explore a variety of regional models for broadband improvement thanks to H.B. 1111, legislation passed last year allowing for the creation of Communications Union Districts (CUDs).

Wessels weighed the pros and cons of the CUD model. Although CUDs have proven to be an effective approach for the state of Vermont, he believes they are a “long-haul proposition” for New Hampshire.

“CUDs are a slow go. I think those propositions are two-to-four year obligations, while private-public partnerships with Consolidated are at most a two-year proposition from the time you send out the proposition to customers getting connected,” said Wessels. “In the COVID-era, faster is better.”

Though the public-private partnership model may be a faster approach, the trade-off is that it may not introduce competition or elevate the voices of subscribers in the way CUDs would.

Jericho Casper is an associate broadband researcher with ILSR’s Community Broadband Networks Initiative.
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