States know that they need to address their unserved and underserved areas, but with little or no available budgets and huge potential broadband costs to pay for ‘last mile’ they are challenged and rightly do not want to take on an unfunded mandate. What options do States have to ensure their residents and businesses have the broadband they need? Also, can this be done quickly as those who need broadband the most are often the last to get it.
Business Case vs. Economic Case for Broadband
We already know that digital infrastructure investments can more than pay for themselves – see economic case of Ammon, Idaho. Making an economic case for investing work requires looking beyond the private sector business case to incorporate municipal cost reductions, subscriber savings, economic growth, and smart community service benefits for that community / region. Adding these economic and community benefits together, SNG’s research shows that they can outweigh the costs of digital infrastructure. Additionally, what may not be financially feasible with a private sector expected return rate over 3-5 years may be possible when financing at infrastructure rates over a term of 15-20 years. Taken together, investing in digital infrastructure can become economically feasible – which enables communities and regions to address broadband gaps in ways they could not before.
The same analysis can be applied at a State level to find out which unserved areas would require financing, rather than grants. No State has enough funds to cover last mile costs required to ensure universal broadband access – for example, in Tennessee it was estimated to cost $1.3-1.7 billion to build fiber to achieve the FCC’s broadband definition of 25/3 Mbps. Without such funding, States have turned to private sector providers to incentivize broadband investments with matching funding. While this approach can get service to some unserved and underserved areas, there is still significant capital investment needed and funding one provider risks unbalancing the market and limiting competition.
Helping Communities Take Ownership of their Digital Future
A less costly and more far reaching alternative is for the State to focus on assistance to help communities to take their digital future into their own hands. This starts with understanding whether a digital infrastructure approach can be self-financed by assessing economic feasibility to see whether cost reductions outweigh a ‘build your own’ network approach. If the answer is yes, further assistance to fund technical assistance and support to assess market demand and potential growth enables communities to invest in sustainable digital infrastructure.
Such State investments in communities are a fraction of the potential capital investment in last mile and offers a much bigger return to the State than spending millions in matching funding to cover the same area. By providing technical assistance and funding for planning to uncover where digital infrastructure can be self-financed, the State could get digital infrastructure to many more unserved and underserved areas per State dollar. Furthermore, helping communitiesown the process of digital infrastructure and transformationenables them to own their digital future as compared to simply funding last mile connectivity.
How can municipalities take control of their broadband future?
Many municipalities continue to live with inadequate broadband for their community. Residents and businesses cannot get the quality broadband they need or any broadband at all. Municipalities are impeded in providing new services and the local economy and overall community vitality suffers. Commercial ISPs are unwilling or unable to improve your broadband and yet resist any attempts by municipalities to take control of their broadband future.
Standing still is not an option. The status quo will not change unless municipalities take the initiative. However, the most common approach to solving the problem is for municipalities to build and operate their own municipal broadband network. Credit to those that do this, but in many cases this becomes a continual struggle to avoid operating losses and recover the investment, while operating in the face of strong resistance.
Here is the root problem. Commercial ISPs don’t invest in network expansion or upgrades because there is no business case to do so for your community. They do not see a payback from that investment and they have already captured the most lucrative part of your market. You need to ask yourself …
“Can we really build and operate a profitable, competitive network when the incumbent providers, who already have networks and customers, don’t see the business case to invest any further?”
This model of replicating the traditional ISP model and competing in the free market, albeit with better and more available broadband, is really a backward-looking approach and one that will always be a struggle. Fortunately, there is a better way available to any municipality serious about owning its broadband future. It starts by recognizing and embracing broadband as the essential infrastructure of the 21st century. It is enabled by maturing technologies that allow you to build open access virtualized networks that not only provide the high-speed platform your community needs, but also enables even more competition from internet providers. You put the users within your community in control rather than having them held hostage to whatever is available, and you can do this without becoming an internet service provider yourself.
Let’s go out on a limb and say that there is no municipal leader who wakes up one day and says, “what I really want to do is to become an ISP”. This is only a means to achieve your true goal, which is to ensure that everyone in your community can get affordable, quality broadband if they want it. It is about providing internet access, but it is also much more than that. It is about everything you can do with a high-quality broadband infrastructure that makes your community a desirable place to live and do business.
Report Leverages Survey Results to Uncover the Gaps and Challenges in Broadband Cities are Experiencing, and What They’re Doing About Them
Superior, Colorado – Today in conjunction with its underwriters (Corning, Fujitsu, Henkels & McCoy Group, and Power & Tel); Strategic Networks Group (SNG) released its extensive report on city activity regarding the current state of broadband service, smart city applications in use, and investments being made in its “Aspirational Cities” report available online at sngroup.com/cities. The report is a follow-up to last year’s comprehensive state-level research on broadband research. The cities research report can be found at http://sngroup.com/broadband-sustainable-development/.
“Our research examines, at the city level, the drivers for investment, financing used and needed, perceived current state as well as which broadband activities are being undertaken,” explains Michael Curri, SNG’s president and founder. “The study’s findings can help cities that have already taken steps toward broadband challenges as well as those cities considering upgrading their broadband.”
More than one hundred American cities participated with some highlights of the findings including:
Most participating cities do not have a broadband office and thus, may not have dedicated personnel that can focus on driving economic development, community vitality, and other strategic initiatives through broadband.
Nearly two-thirds of cities surveyed do not have any of these three key items in place to advance broadband’s benefits in their communities – funding to support broadband, a city broadband office, or broadband adoption and training programs.
Lack of city funding has been the one overwhelming element preventing cities from moving forward with broadband network investments. More than half of the cities surveyed also say a lack of external funding has prevented them from moving forward, suggesting they’re waiting for external solutions that may never come.
Only half of cities consider their broadband speeds excellent or very good.
“It’s apparent from our cross-selection of cities across the nation that leadership, investment, and strategies need to be put in place at the municipal level to ensure the competitiveness and effectiveness of today’s American cities,” said Michael Curri, SNG’s president and founder.
This webinar, held on June 28, 2017, and hosted by Strategic Networks Group, features Bruce Patterson, Technology Director, City of Ammon, Idaho, and Michael Curri, President, Strategic Networks Group, who cover…
The Ammon Fiber Network
– How the network came to be
– The Economic Case for Investing in Broadband
– Ammon’s Economic Benefits
– Uncovering the quantifiable benefits of a build, or debunk a case for broadband – quickly
Our star guest Larry Strickling recently expressed his confidence that broadband service providers will not only provide the detailed supply data requested by his agency (which includes more data elements than has ever been provided for a broadband mapping project), but also that they would waive the confidentially provisions that keep this data from being associated with specific companies. Though we certainly hope Mr. Strickling is correct, we don’t believe this will happen. And, just in case we are right, we recommend that states be ready to gather as much broadband data as they can – without relying too much on carrier cooperation.
We suggest a two-pronged approach. On one hand, states should work closely, in good faith, with carriers to develop ways in which they can provide the data elements set forth in the NOFA while preserving their confidentiality.
However, we warn states against becoming too dependent on carrier cooperation in the design and execution of their broadband mapping programs.
The reason: carriers may perceive the public interest goals of NTIA’s broadband mapping effort as too much at odds with their own self interests. Because the truth is: these companies are run to maximize shareholder value—not the public interest.
On the other hand, states need to build their mapping programs to include a strong multi-source data collection process that not only satisfies NTIA’s requirement for verification of carrier-supplied data, but also can “fill-in” for that data if carriers are either unwilling or unable to provide it. That’s what we call an “augment and verify” strategy.
Isn’t that what Strickling means when he says that if carriers refuse to comply, “There are other ways to collect this [data]: there are survey techniques and other ways to collect this information short of the carrier”? “We have appropriated $350 million” to this task, he continues, and “we are expecting the states to be creative, to be collaborative, to work together, and to find some new ways to collect the data, whether or not it is supplied by the carrier.” And he concludes: “Once that is made clear to [the carriers] at the most senior levels, then this thing will work itself out.”
It’s not so simple…
That’s where we beg to differ. Our guess is that, if we just hope “this thing will work itself out,” it probably won’t – because carriers have decades of practice in stonewalling to get their way. However we agree that, as Strickling suggests, the best way to get carrier cooperation may very well be for each state to gather as much broadband data as it can without relying on them, while continuing to invite their cooperation in a shared national effort to serve the public interest.
We strongly believe that if we heed Strickling’s invitation to be creative and collaborative and “work together… to find… new ways to collect the data,” things may work out just fine mapping efforts can succeed. The choice is up to state decision makers as they evaluate their options in the next two weeks. Our suggestion: work respectfully with carriers to obtain their data on mutually acceptable terms, but also augment and verify.
Speaking at the recent Virginia Summit on Broadband Access, NTIA administrator Larry Strickling expressed confidence that broadband service providers will not only provide the detailed supply data requested by his agency, but also that carriers would waive the confidentially provisions that keep this data from being associated with specific companies.That sounds like a pretty “audacious” hope to me, though I certainly hope Mr. Strickling is correct. But, just in case he isn’t, we at SNG suggest that states be ready to put together as much broadband data as they can without relying solely on carrier cooperation.
States and their broadband mapping contractors should, of course, work closely and in good faith with carriers to negotiate agreements and develop systems so carriers can provide the data elements set forth in the NOFA on terms that adhere to the document’s confidentiality provisions and that carriers find acceptable.
But we don’t think it’s wise for states to rely solely on carrier cooperation in the design and execution of their broadband mapping programs. As the NOFA makes clear ( see pg. 45), NTIA is asking for more detailed data than has ever been provided for a broadband mapping project. The extent to which carriers will provide this data remains at best an open question.
NTIA administrator Larry Strickling (again…) is wrong: carriers shouldn’t be trusted – certainly not to share broadband data. That’s because you shouldn’t rely on carriers to agree to serve the public interest. Not that they are inherently bad corporate citizens; but because carriers’ interests and the public’s interest are not aligned. And never will be. Consequently, carriers are never going to take steps that would entail favoring the public’s interest over theirs. It’s just plain logic; economic logic – unencumbered by the hardcore free-market ideology that telecom lobbyists always talk about.Let’s look at the facts. To put it simply, free markets don’t quite work in the broadband world.