1. Why Broadband Matters

Options for States to Address Broadband Gaps

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 communities own the process of digital infrastructure and transformation enables them to own their digital future as compared to simply funding last mile connectivity.

FEATURE ARTICLE – Taking Control of your Broadband Future

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.

It is time for a new approach … to change the paradigm based on a broader vision. To find out more read the full article “How can municipalities take control of their broadband future?