community broadband networks

“Fiber is the key to assuring Palo Alto's long-term position as the Leading Digital City of the Future"

That was Palo Alto Mayor Greg Scharff who was giving his State of the City Address at Tesla Motors in February.

Mayor Scharff described 2013 as "the year of the future" for Palo Alto, with technology and infrastructure as two of the city's most pressing priorities. Scharff called for developing a plan to expand and optimize the city's current 33 miles of fiber with the aim to bring that fiber to homes and businesses. Scharff echoed the recent Gigabit City Challenge, offered by FCC Chairman Genachowski, noting that Palo Alto users should be have access to 1 gig, minimum.

Jason Green of the Mercury News reported on Scharff's speech in which he referenced the city's long desire to provide high speed access to residents:

"Ultra-high-speed Internet has been a Palo Alto vision for a long time. Now is the time to fulfill that vision," Scharff said. "Google has recently deployed ultra-high-speed Internet in Kansas City. Palo Alto can do better and has all of the elements that will make this a success."

Scharff also referred to how the city is currently using its fiber and some of the benefits:

“In 1996, our city built a 33-mile optical fiber ring routed within Palo Alto to enable better Internet connections.  Since then, we have been licensing use of this fiber to businesses. For the past decade, this activity has shown substantial positive cash flow and is currently making in excess of $2 million a year for the city. We now have that money in the bank earmarked for more fiber investments."

We spoke with Josh Wallace, from Palo Alto's Fiber Optic Development, in episode 26 of the Broadband Bits podcast about how the city uses dark fiber to connect businesses. As we noted in the past, a thorn in the side of Palo Alto's plan to offer lit services is Comcast, which has been willing to engage in dirty tricks in other communities to stop community owned networks.

A recent Palo Alto Online article by Gennady Sheyner, reported on the most recent joint meeting between the City Council and the Utilities Advisory Commission. Like the Mayor, both bodies decided exploration of uses of city fiber must be a priority.

While Palo Alto has wrestled with expanding the use of its fiber in the past, things appear to be changing. From the article:

But perhaps the biggest change between the city's previous stabs at the fiber project and its current exploration has to do with perspective. Before, city officials viewed the effort strictly in utility terms, with low costs and no risks being key requirements. In 2008, the city explored a partnership with an Internet consortium to create a $45 million citywide system. The group, led by Axia Netmedia Corporation, withdrew from the partnership in May 2009 after the global economy tanked, one of its financing partners withdrew and the city declined to subsidize the network with a contribution of $3 million to $5 million annually.

A 2012 utilities commission recommendation, based on work from two separate consultants, did not endorse the idea of pursuing a fiber-to-the-premise build out. Attitudes have since shifted:

But utilities commissioners and council members agreed Monday that project warrants re-examination, even if the economic argument is difficult to make.

"If you look at it from the utility's standpoint, it's hard to get it to work," said Commissioner John Melton, who had dissented in the June vote along with Foster and Asher Waldfogel. "If you look at it from a broader perspective, it may well make a lot of sense."

We would say the different evaluations are based on what value one places on the many indirect benefits of a network, such as more jobs, a real choice for residents, and the cost savings everyone experiences in the newly competitive environment. A privately owned company would not consider these benefits as part of its return on investment, but a community can. Not all do, but sometimes it just takes a few local leaders to step up and change the frame.

The success of the dark fiber network has eased some anxiety from city leaders and the discussion is moving forward. In February, the City Council declared "technology and the connected city" an official priority for 2013. Also from the article:

Dexter Dawes, who chaired the utilities commission at the time it was considering the earlier [unfavorable] fiber proposal, said that the council's framework for looking at the project will make a difference in the commission's work.

The commission, he said, "has been challenged by having chains on them by considering it on a risk-free basis where there would be no subsidies from the city," Dawes said. "It will be a tough job figuring this out, but I think this can be done."

In 2014, we hope to be able to report that 2013 WAS the year of the future for Palo Alto. Regardless of whether or not they eventually decide to offer more than dark fiber, we are pleased to see city leadership reconsidering the possibilities.

Mount Vernon, Washington, started building their own fiber optic network in 1995 and over the past 18 years have continued to add incrementally. While the network started as a way to connect a few municipal facilities, it has since expanded to nearby Burlington and the Port of Skagit. The network now serves government, schools, hospitals and clinics, and a broad range of businesses in the area.

We spoke with community leaders from Mount Vernon for our 38th episode of the Broadband Bits podcast. Mount Vernon owns the network and operates it out of the Information Systems office.

The network required no borrowing or bonding because initial funding came from a state Community and Economic Revitalization Board (CERB) grant. Since then, Mount Vernon has used revenue from the network and creative cost sharing with partners to expand throughout the city. When expanding into Burlington and the Port of Skagit in 2008, city leaders received a county sales tax grant to fund deployment.

The Mount Vernon School District became a partner early in the evolution of the network. According to Kim Kleppe, Information Services Director, K-12 schools do not pay a monthly fee to receive up to 1 gig of capacity for their 10 facilities. He estimates the current costs of a dark fiber connection for one facility at $700 per month. Total savings are astronomical, allowing the schools to dedicate significant dollars toward other expenses.

Mount Vernon city government saves over $100,000 per year and nearby Burlington saves over $52,000. The network has never been in debt and maintains a reserve.

Mount Vernon's network is an open access model on which ISPs serve customers via the city's infrastructure. Subscribers pay a one time fee to the city to be connected. Onging revenue comes from the ISPs, who pay to the city a percentage of what they collect in customer connectivity fees. Currently, eight different providers offer services via the Mount Vernon network, providing ample competition.

Like other communities we see that choose the open access model, Mount Vernon acknowledges that they could take the next step and provide retail services but they choose not to. Kleppe tells us that Mount Vernon wants to let the private sector do what it does best - provide retail services - while the city offers the infrastructure.

Healthcare, aerospace, engineering, banking, technology, and legal data services are a few high bandwidth industries with locations on the network. Jana Hansen, Community and Economic Devlopment Director, believes the fiber optic network is a key element in bringing new companies to Mount Vernon. Hansen decribes the network in the Port of Skagit as a "tremendous success" and notes that businesses have re-located from Seattle to the Skagit Valley. While those businesses often cite quality of life as a driving factor, Hansen believes Mount Vernon, Burlington, or the Valley would not have been considered without the fiber network.

Jana Hansen shared these thoughts from a business that moved to Mount Vernon from Seattle:

As a Seattle law firm with an integrated information security business for the past twelve years, our Pioneer Square office lease term was ending, and we needed new, larger, space. As we began the process of evaluating our options, we came to realize the significance of the fact that our customers are national, or international, and that less than ten percent of our revenues for the past three years came from Washington. This meant that as far as our customers were concerned, we could relocate our offices anywhere, provided that our new location met three important criteria: (1) access to tech-savvy workforce pool; (2) dependable high-speed business-quality internet; and (3) reasonable proximity to air transportation.

Skagit County, and Mount Vernon in particular, meet and exceed all of these. MV’s location astride I-5 means that our employees can live from Bellingham to Everett and still face a much shorter, and more comfortable, commute than if they lived in Bellevue and travelled to downtown Seattle during rush hour. This huge area is filled with energetic, technically sophisticated potential employees who appreciate the opportunity to avoid the morning grind. Secondly, Mount Vernon’s ahead-of-its-time fiber ring means affordable, dependable internet access of the highest quality. We are accustomed to paying thousands of dollars per month for bandwidth. Not only will we pay less in MV (for more capacity), but fiber optic circuits are more reliable and flexible than the older data lines we have been required to use in Seattle. Finally, the improvements to conveniently located Bellingham’s airport over the past few years have opened up routes all over the country, and more are on the way.

I suppose there are other places that would also meet these three criteria, but none of them match the most important reason of all that we are moving to Mount Vernon: quality of life. No traffic concerns, affordable cost of living and housing, great schools, proximity to major metropolitan areas (Seattle and Vancouver) without the negative points, equal proximity to all that outdoors and nature offer, and, of course, friendly and helpful people who are a pleasure to interact with. We couldn’t imagine moving anywhere else.

For these reasons, we’ll be opening our offices in Mount Vernon this Spring.

Update: Some have asked (rightfully so) for more information about the grants involved in building this network. IS Director Kim Kleppe sent this to Christopher to explain more about the financing:

We had two grants helping to fund various parts of the project. The first one was actually 2001 for $500,000 and the second one in 2005 we received $367,506. Other than that we had a lot of partnerships to help extend and push out various demarcation points and this would be hard to calculate. A lot of the areas we built around were built based on where are facilities were - for example our wastewater pump stations which really covered a lot of area which was partially funded by that utility and where other partners like the Schools, County and Hospital sites were located sharing costs for the build. It was built based on both vision for needs for both public and private needs and is still a growing process, but no debt was incurred and not much of a budget to work with.

The lesson we take away from this is that most communities have many opportunities to make investments like this. Local officials need to be creative and determined. Opportunities rarely surface themselves, they are created by building relationships and coordinating infrastructure efforts.

Last summer, the city of Staunton, Virginia, sent out a press release about its new citywide free wi-fi service. Four hours later, a destructive storm ripped through Gypsy Hill Park knocking down trees and damaging buildings. Nevertheless, the equipment held on. Five days later, celebrants at the city's July 4th party used the free service in droves.

A William Jackson GCN article from December, 2012, highlights the popularity of the network:

Wi-Fi use in the park had begun well before the formal launch. Almost as soon as installation of the access points began in May, park workers noticed people congregating with their laptops in areas near the points, Plowman said, demonstrating the demand for Wi-Fi access.

Public Wi-Fi has become a popular feature at the park. “People are finding creative uses for it,” [chief technology officer for Staunton, Kurt] Plowman said, such as the woman who used a laptop Web camera to send a ball game in the park to a player’s grandmother.

As we have seen in other communities, a wireless network enhances local connectivity as a complement to a fiber network. Staunton is the County seat of Augusta and home to nearly 25,000 people.

The City owns two separate networks. In addition to the fiber used by city facilities, there is a separate dark fiber network. The city installed the dark fiber with the intention of leasing it to the Staunton Economic Development Authority. The Authority then leases it to local phone, Internet, and wireless provider, MGW. MGW serves residential and commercial customers in south and west Virginia.

In 2012, the city built a new fiber institutional network to avoid having to lease from the private sector.

We touched base with Kurt Plowman who told us that the fiber connects twelve major city facilities, including libraries, fires stations, and public works facilities. There are also over fifty traffic signal cabinets and ten facilities in Gypsy Hill Park on the fiber.

When compared with the city's past lease payments for fiber and data circuits, payback will be complete in 10 years. Additionally, there are more facilities connected and bandwidth is increased.

Plowman also told us that the $1.25 million cost of the project was well below estimates. The build was a Public-Private Educational Facilities Infrastructure Act (PPEA) project in conjunction with Lumos Networks from Waynesboro, Virginia. Lumos performed the engineering, contracting, and project management in exchange for several strands of the fiber. Plowman tells us that all connections are 1 gig but that there is considerable room to increase capacity. Additional dark fiber was engineered into some routes for future expansion. Schools and libraries are connected for free. Update: We connected with Kurt Plowman again who told us that prior to Staunton's infrastructure investment, schools were paying $2,000 per month just to lease fiber.

In addition to serving schools, libraries, and government facilities, the fiber supports the free wi-fi. From the article:

For Staunton, the driver for public Wi-Fi was the creation of a 30-mile fiber optic city backbone about two years ago to replace the city’s leased lines. Thirteen years ago, telecos had leased the city’s dark fiber, but over the years they had become more interested in selling services than capacity, and the city decided to build out its own infrastructure in cooperation with a local carrier.

“Cost was a driving factor, along with bandwidth,” Plowman said. “We built a better network as a public-private partnership and saved a lot of money in the long run.”

The fiber links about 30 government locations, including Gypsy Hill Park, which has heavy use all summer. The park’s bandstand offers entertainment four or five times a week throughout the summer and there are frequent festivals and other activities. Officials decided that, “for what we’re spending putting fiber in, let’s put something in to give the public something for the expense,” Plowman said.

Staunton first invested in wi-fi about 10 years ago when it was installed in the public library. While city leaders considered providing it in other areas, they did not feel technology was ready to meet their needs. They were also concerned about competing with private carriers. Technology has since advanced and the city has taken special steps to avoid competing with private carriers in the vicinity of the park.

“I’m almost embarrassed to say how easy it was,” Plowman said of the wireless segment. “It was an opportunity to give something back to the public.”

Nearly 20 years ago, a small community between Seattle and Bellingham, Washington, began building a fiber optic network to connect key municipal facilities. In the years since, Mt Vernon has expanded the network to many community anchor institutions and businesses locally, including in two nearby towns.

Information Systems Director Kim Kleppe and Community & Economic Development Director Jana Hansen join me to explain how they began the network and what benefits they have seen from the investment.

They did not borrow or bond for the network and they don't have a municipal electric department, which makes them particularly interesting in this space. They also run an open access network that allows eight providers to compete in delivering the best services to subscribers. The network has encouraged several businesses to move to the community.

Our interview begins with an introduction from Mayor Jill Boudreau.

We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.

This show is 25 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!

Listen to previous episodes here. You can can download this Mp3 file directly from here.

Thanks to D. Charles Speer & the Helix for the music, licensed using Creative Commons.

We have long been impressed with Cedar Falls Utilities (CFU) in Iowa. They built an incredibly successful municipal cable network that has now been upgraded to a FTTH network. CFU transfers $1.6 million into the town's general fund every year, reminding us that community owned networks often pay far more in taxes than the national cable and telephone companies.

Last week, Moody's Investor Service gave an investor-grade A-3 rating to revenue debt from CFU, another sign of its strong success.

Moody's rating report noted the utility's large market share, competitive pricing and product offerings, expansive fiber optic network, long-term financial planning and conservative budgeting practices as reasons for the continued strong rating of the utility's revenue debt.

CFU also compiles the community savings resulting from each of its services by comparing its rates to nearby communities (see most recent comparison [pdf]). The benefits total $7.7 million each year, almost $500 per family. This includes a $200 difference in cable TV bills and a $130 difference in Internet service.

In December, 2012, a group of local residents decided to engage in an effort to turn beleaguered Burlington Telecom into a coop. The effort has advanced and the organization, Keep BT Local, continues to gain pledges. To date, the organization has collected pledges in the amount of $108,000 for equity and $156,000 in loan pledges.

Keep BT Local is ultimately shooting for membership pledges from about 4,000 residential and business customers. The goal has been to collect $250,000 worth of pledges to move forward with incorporation this month.

Local Chanel 17 carried a discussion on the effort to get more info on the business plan. Alan Matson and Don Schramm, who head up the Steering Committee talked with host, Matt Kelly, about the venture and took calls from viewers.

In addition to a discussion about the the heart of what is "local," the group discussed the business plan and where challenges may arise.

The discussion is about 30 minutes long.

Steve Downer is the Associate Executive Director of the Minnesota Municipal Utilities Association, MMUA, and he previously served on the Blandin Foundation Strategy Board. He offered these thoughts on page 4 of the "The Resource" [pdf] from January 2013 and has allowed us to reprint them below.

According to online reports, House Commerce Chairman Joe Atkins has listed his top 10 issues for his Committee in 2013. Included on the list, at No. 4, is Telecommunications and Broadband Law Update. As municipal involvement has been a hot-button topic over the years, this should be of interest to municipal utilities.

The idea of re-writing state telecom law was a priority of the Ventura administration but, even with agreement among various parties that state law was antiquated the discussion never gained much steam, largely because the telecom companies decided the law was just fine after all. Efforts have been made over the years to remove or reduce the super-majority referendum requirement to build a municipal telephone exchange, but have withered in the face of vociferous opposition.

On the other hand, efforts to further restrict municipal provision of broadband service, a concern in recent legislative sessions, have also languished. So, what does Chairman Atkins have in mind?

Perhaps local interests, working through organizations like MMUA, could suggest the state needs to be more open to partnerships and local government projects, if it is ever to reach its broadband goals.

Cities have proven fully capable of providing a full range of telecommunications services over the years. Counties are providing cutting-edge communications services. The Southwest Minnesota Broadband Services project (a consortium of eight cities) shows how ordinary people, working through their local governments, can work together to provide high-quality voice, video and data service at reasonable prices.

After much work, a similar project in Renville and Sibley counties has recently been stymied due to concerns over the ability of city-county partnerships to issue bonds. The project itself has been enthusiastically supported by rural and city interests and was well on its way to construction before last-minute legal concerns were voiced.

This is just the type of project the state should be fostering.

Yet, instead of recommendations to clearly allow this type of partnership in state law, it appears there may be efforts to stack the deck against local interests heading into the session.

The Minnesota Governor’s Task Force on Broadband, for example, recently released its Annual Report and Broadband Plan, including recommendations for the 2013 legislative session. The Report, while the result of much good work, bears the traditional hallmarks of large group writing efforts, and tilts toward the input of private interests that comprised the bulk of the members.

The report notes the obvious, saying, the private sector will play the leading role in expanding broadband access (it might as well have said ‘the sky is blue’).

Two sentences later, the report promotes “public-private broadband projects” but makes no specific mention of how to foster such projects.The recommendations that are made generally provide “incentives” (read tax breaks or subsidies) to private companies and doesn’t even mention local government, which has played a leading role in broadband provision in certain locales.

A number of recommendations are made, but a clear and consistent road map is lacking.

Some recommendations prove the point that governmental ‘pork’ is money that is going to somebody else. Current perks have apparently not been enough to ‘incent’ private providers to extend highspeed service in many areas. Yet, in some of these areas locals are more than willing to invest their own money to provide the service if they could just get the lawyers out of the way.

On the other hand, calls for new positions in state government, to untangle the web of available programs, only seem to prove the point that if bureaucracy grows large enough, you will need more of it to make its purposes clear.

Then there is this recommendation, rich in irony: “to coordinate highway construction and broadband deployment projects,” and have the state install conduit that would presumably contain privately owned fiber optic cable.

Does anybody remember Connecting Minnesota? This was a late-90s proposal for MnDOT, in cooperation with a private partner, to lay 2,000 miles of fiber optic cable in interstate highway right-of-ways. Legal battles, largely with US West (now CenturyLink) led to the demise of this public-private initiative.

A perfect example of public-private partnerships exists in the electric utility industry. Despite animosities, largely in the formative years, municipal, investorowned and cooperative utilities jointly invest in capital-intensive projects on a regular basis.

Utilities do this because they recognize the level of capital needed to improve service to their customers, and realize an effective way to raise the needed capital is to partner with others willing to invest, regardless of philosophical differences.

Enacting guidelines to allow similar investment in our broadband infrastructure would similarly benefit citizens of Minnesota.

We are encouraged by Rep. Atkins’s inclusion of telecommunications on his 2013 session “To Do” list and encourage him to recognize the important and effective role municipals can play to help the state reach its 2015 broadband goals.

As we monitored Georgia's HB 282, a bill to limit the capacity of local governments to invest in Internet networks that spur economic development, we learned of many existing networks that have helped communities to thrive.

Brian Thompson, Director of Electric and Telecommunications in Monroe took some time to tell us a little about their city network.  Located in the north central section of Georgia, with a population of 13,000, the network now offers triple play services to residents and businesses. Its network started in the 1970s with a municipal cable tv network. Today, the network is a hybrid with fiber having been added as an expansion to its cable network.

Monroe's investment in its fiber began as a way to improve connections for education. The Walton County School District could not find a private provider willing to collaborate on an affordable network between school facilities. The city took on the challenge and built a point-to-point network which the School District paid for in 10 years. In the mean time, the city expanded its network in other areas. Now, the Walton County Schools have gig service between facilities and to the Internet. The District pays only $500 per month for a service that would cost five times more from a private provider.

Thompson also confirmed what we hear from other communities with publicly owned networks - prices for business and residential services are very competitive and service is superior. He notes that customers often express appreciation for local representatives, rather than dealing with a huge bureaucracy like those at Verizon or AT&T. New connections can be created in a matter of hours or days instead of weeks.

Residential service for Internet access from MonroeAccess.Net includes affordable basic service (1 Mbps / 256 Kbps) for $21.95 per month. Two faster tiers include $34.95 (6 Mbps / 512 Kbps) and $44.95 (15 Mbps / 1 Mbps). Cable tv rates vary from $15.50 to $62.95 per month and residential phone service starts at $29.95 per month. Thompson notes that, when Monroe added phone service, rates dropped for every one regardless of carrier. 

There are over 100 fiber customers and the network has been critical for economic security. T1 connections for businesses used to go for $1,000 per month; now higher capacity connections cost $250. Notable customers include Minerva, a beauty salon supplier with a large showroom and distribution center in Minerva. The multi-million dollar salon equipment company has headquarters in China but has nearly 30,000 customers in the U.S. Company owners required a fiber connection to communicate with the facility in real time. Monroe was happy to oblige.

Monroe is also home to a Hitachi plant that makes parts for several auto companies. The fiber network allows the plant to communicate efficiently with the Hitachi headquarters located in Harrodsburg, Kentucky. The plant employs about 250 people.

Monroe never borrowed or bonded to build out its network. Thompson tells us the network has always progressed slowly and community leaders leverage partnerships with local interests along the way. The city used its capital investment fund for initial construction and continues to expand slowly with revenue obtained from offering services. Thompson tells us that their approach works for Monroe and shudders at the thought of legislators in Atlanta claiming otherwise.

Monroe's network travels well outside the city limits, over a nine county area, and HB 282 could have put an end to its expansion. Fortunately the bill was defeated on the House floor and for at least one more year, this community does not have to worry that the state will revoke its power to encourage economic development locally.

My presentation from Freedom to Connect on why we should support Community Owned Internet networks. Unfortunately, the video starts about 1 minute into the presentation. Please leave feedback below.

Leverett, Massachusetts' broadband initiative has moved to the next phase in bringing fiber to residents. The town selectboard recently decided on a bidder to build the community owned network. G4S designed the network and also works with the Massachusetts Broadband Institute (MBI) as it brings a middle mile fiber network to towns across the western half of the state [PDF of service area].

An article in The Recorder alerted us to the development. Readers will recall that Leverett townspeople voted to ok a modest property tax increase as a way to help finance the ftth build out. From the article:

Indeed, after years of trying to convince private business to develop and offer high-speed telecommunication service in rural western Massachusetts, Leverett’s first-of-its kind network is being built with the help of a $40 million state bond, $47 million in federal stimulus funding and the town’s willingness to borrow to build infrastructure to attract service.

D’Errico said the cost of the project should be lower than $300 a year per median $278,000 property owner over 20 years.

...

...D’Errico said the $300 annual tax addition for the median value property is likely far lower than what residents are paying for their telephone, satellite dishes and cable service connections, and that having the town own the infrastructure likely means that the service contracts should also be a fraction of what they would cost otherwise.

Before construction can start, utility poles will need to be made ready for placement of the fiber optic cable. While this stage of the prep work is expected to take up to six months, hanging the cable would only take about three months.

Leverett is inspiring other Massachusetts communities, who also want to own the infrastructure that will allow them to connect to MBI's network, MassBroadband 123.

In fact, Montague selectmen on Monday said they support a move by residents of their town’s Chestnut Hill section — which is contiguous to North Leverett — as they seek to connect with Leverett’s network. The North Leverett Firehouse, the connection point for Leverett’s fiber network to plug into MBI’s fiber network, would be the source of the connection into the system the roughly 50 Montague households seek to build.

As more local communities see how Leverett and similar communities overcome obstacles to achieve connectivity, we are confident that municipal networks will be options they consider.

An editorial in the Recorder points out how local leadership has played an instrumental role in the plan to expand connectivity in town and encourage other communities across the state:

However, it’s not only state government that has a role here. Leverett would not be poised to complete access without town officials seeing the role the town must play and an acceptance on the part of a solid majority of residents willing to see taxpayer money go toward this project.

Perhaps as the Massachusetts Broadband Initiative continues its work to provide access elsewhere, other towns will see that they, too, need to be part of the financial solution in wiring their community. Part of any persuasion, we think should start with what the governor said in October 2007. “Today’s global economy requires that every corner of our commonwealth be wired for the 21st century ... The digital divide that persists in too many Massachusetts communities has gone on for long enough.”

Thanks to the citizens of Leverett, we are closer to finally bridging that divide.

We will bring more on Leverett as the project progresses.