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This is part one of a three-part series. This has been taken from my upcoming book, Smart City Use Cases, with Smart City Development Notes.
Smart City Broadband Initiatives
Are you curious about some broadband initiatives that are out there? Some broadband case studies that are have rolled out? What broadband initiatives have been successes and failures? What works better, the city owning it or a public-private partnership or private only?
I am always saying that broadband is the foundation of any smart city. Someone shared the Next Generation Network Connectivity Handbook. It’s publication by Gig.U, and it can be downloaded from http://www.gig-u.org/. Gig.U is a group that encourages the partnerships between cities and universities. They did a great job of putting together this document, published in December of 2016, showing past case studies of gigabit deployments in both wireless and wired. They cover success and failures.
Here is an outline of some of what is in this document, I highly recommend downloading it, after all, it is free!
First off, the make the point that CapEx and OpEx must be lower than the revenues coming in and it should be serving a purpose for the users. Pay attention, Value and Profit make the system sustainable! Value and profit make the system growable! It has to make money! That is something that most cities overlook because they think that the benefit will outweigh the revenue, but it will not. Revenue matters in the long run and the benefits matter up front. Up front we want buy-in and residents to love it. In the long run, we
need sustainability, so it does not bleed money in expenses.
Does it solve a problem for the
residents? So, they see the value in it? Will they pay for it? When you start a business, you need to answer these questions. Figure out the price point. Some cities can put a tax out there to pay for the system, but that is not popular in most cities.
One example that I love in this document is the cable companies. They saw broadband up to 1 Gbps as silly, but they really didn’t want to upgrade their system unless they had too. Guess what? They had to! BUT, after they got competition in first form the likes of Verizon, AT&T, and Google running fiber all over the place for a very reasonable cost to the consumer. It paid off. Now all the cable companies are touting higher speeds. They see value because they were losing market share. That’s amazing when you realize they had a monopoly for years in their neighborhoods. They had no competition, but the need for broadband and cheaper video hurt them. They thought they could control the market, but in the USE the market started swinging back with DirecTV and fiber competitors. They suddenly have to be strategic.
OK, let’s get back to the business of broadband. Once you build it, expect competition! If your business model works then more and more people will do it, just look the cable companies. While they had a monopoly for years, they got lazy. Now they have competition, and it’s hurting them. Not just from fiber, most of the younger generation realized that they have a smartphone that can do anything the cable company can do, so why pay for both? Get the picture? The landscape has changed, and if you just look at other companies that do what you do, then you only see part of the competitive landscape.
This is happening with everything because broadband is the pipe to end all pipes. It could be through fiber or wireless, but the internet has opened doors to everything unless you live in China, then it only has a few open doors and a lot of blocked websites.
There is one thing that almost any city can agree on. You need broadband in your city to compete. The question is, “How do we get it here?” This is where you can look at other examples of successes and failures.
Google Fiber was supposed to be the knight in shining armor, but they stopped. They say they are going to wait for wireless, probably CBRS, but to be honest, there are plenty of bands and products that could deliver broadband now. I think that Google realized the profit model was not what they had hoped for, but they never said that officially, they just stopped, laid off a bunch of people, changed some leadership in the company, and they started saying wireless would save the day.
More on Google fiber stopping http://www.sacbee.com/news/nation-world/national/article110655177.html, this is a great article because they talk about all the pain points that Google saw in the real world. TV is expensive, incumbents have more control of the poles than they ever thought possible, and maybe wireless will be easier. They also say demand is not there. I don’t get that excuse at all! It seems lame. I think they should say competition is fiercer than they thought. That is more like it. For me to sum it up, Google should have cherry-picked markets that didn’t have too much competition. They should have focused on tier 2 cities that would not only have appreciated their presence but don’t have an alternative. I live in Pennsylvania, where the cable companies rule. The rules here don’t make it an ideal state to deploy much of anything, but it has plenty of underserved cities that not only want broadband, but they need it to survive. The smaller cable companies will not make the investment until they have too. They won’t spend the money. This is an ideal target for someone like Google Fiber to deploy. But, alas, I am dreaming.
Where was I? Oh yes, economic development. Broadband is a foundation for economic development. We know that businesses need broadband to survive, but how do they get it? Many cities have a dig once policy, so if someone lays broadband, then many people need to get it in while he or she can. This really helps to get things moving and keep the competition behind you if they are late to the game. Fiber companies and deployment companies win! They can lay out the dark fiber and sell it later, not a bad model.
They also cover the 3 models that cities can look at.
This is where the city takes the lead by using public facilities to roll out the fiber and makes the investment to deploy. They use their assets to mount it. They are the provider. They may partner with someone, but generally, the city runs the business and takes the credit.
An example of this is the Chattanooga, TN, network. In 2010 the city decided to have a gigabit network available for homes. They rolled it out, and since then Volkswagen and Amazon both expanded to that area. We give the broadband credit since it was there and they took a chance to deploy. Their model served other cities like Wilson, NC, and Leverett, Ma.
They also talk about Ammon, Id, who also built the gigabit backbone. They decided to provide the gigabit backbone because the local telco would not spend any money. The city was worried because they would need 50% of the market share to make it pay for itself. Guess what? They got 70% of the market share! When incumbents get lazy, there is a great opportunity!
Huntsville, Al, owns the electric utility. This provided them with the means and foundation to deploy broadband quickly and with an experienced player. They put in the backbone and leased it to Google Fiber. This is a win-win because Google didn’t’ have to deploy the backbone, the fiber is there and ready to use. They could move ahead quickly. The city maintained control and could make money off it right away with a large customer waiting. The negative is that people perceive the fiber being built with city funds, but it worked! They had a utility, an income plan, a customer, so why not do it? They can lease the fiber to anyone, so they are not bound to only one customer, but anyone who wants it or needs it. Awesome! Learn more at https://www.gru.com/GRUComFiberOptics.aspx.
Santa Monica, Ca built out their network without a municipal department. They did it by connecting public facilities then expanding from there. They have a dig once policy, and when someone would dig, they would lay fiber. Learn more at http://ilsr.org/wp-content/uploads/2014/03/santa-monica-city-net-fiber-2014-2.pdf. They took the slow approach, one that would not have any upfront costs but would remain steady and efficient.
Usually a public-private partnership, PPP, that the city supports and endorses, but the private partner will be the one doing the heavy lifting and running the business. This would rely heavily on the partner, and the city would give complete support and take some of the credit, but the private business would take the profits. Partnerships matter here more than anywhere. If the partner is an ISP (Internet Service Provider) or a nonprofit, they need to be sure they can do what they say they can do. It matters big time and reputations are key.
ISPs are everywhere, not all of them look good, but many of them provide broadband to the home or local business. They often are rooted in the community if they are local and they want to succeed. However, not all of them do, I’ll point that out farther down.
If you wonder about the nonprofit, I will give you an example of one that I worked on personally. In York, Pa, there is an organization called Crispus Attucks Association that sponsored an initiative to connect the local schools up to wireless broadband. While it went well, they are a shining example of a roll out to the schools in York County. This was one of the first of its kind. While it was later replaced with fiber, it’s an example of how a nonprofit took the lead to deploy broadband. This was over 10 years ago. Gigabit was not thought to be cost-effective back then.
Westminster, Md, is an example of how the community knew they need to do something to attract people from the cities of DC and Baltimore out to their rural area. Beautiful and scenic, but far from major highways. They knew they needed broadband, and decided on fiber.They hooked up with Ting, https://ting.com/blog/next-ting-town-westminster-md/, who was a smaller ISP eager to roll out fiber. The city looked at the fiber as infrastructure, like a building or bridge, seeing it as a city asset and letting Ting manage the operations and customer service and sales. The city has an asset, but little risk and they are not running the day-to-day business, Ting is.
South Portland, Me, laid out $150,000 upfront (http://www.southportland.org/files/7514/0682/8622/06_-_ORDER_12_-_Bid_for_dark_fiber_infrastructure.pdf) to build fiber and chose GWI, https://www.gwi.net/about/ to build it. GWI will build it and run it and give 5% of the revenue back to the city.
Cleveland, Oh, decided to work with a nonprofit called OneCommunity, http://www.onecommunity.org/big-changes-onecommunity-evolves/ who is rolled out the network and is continuing to expand into other communities to increase the reach of broadband across Ohio. They are receiving support from the US Economic Development (EDA) Grant, https://www.eda.gov/grants/, continuing the work.
Where the city supports the rollout, maybe offers some rules and regulations that make it easier to get started and deploy, but otherwise, it hands off. Cities can still play a part in broadband development if they have companies in their area willing to take charge and make things happen.
East Lansing, Mi, has created the “Gigabit Ready” project which pulled in many groups like Michigan State University, Lansing Economic Act Partnership, various nonprofits, commercial property managers, and anyone else who would sign up. The goal was to roll out gigabit broadband, rather obvious, right? What did they do? They looked at the LEED program and thought, let’s do that for gigabit access. This lead to the creation of the Gigabit Certified Building Program, http://statenews.com/index.php/article/2012/07/msu_lansing_on_track_for_high_speed_internet, to set guidelines and requirements for buildings to add gigabit broadband. This helped Spartan-Net, (taken from the Michigan State Spartans I assume), to partner with DTN Management Co so they could roll out broadband across East Lansing and beyond!
Louisville, KY, worked with Louisville Fiber to create a website that allowed people to request gigabit service across Louisville. Why? So that lawmakers could see the need for speed, and it worked! Using the addresses they gathered, they built a layout of where the heaviest concentration was showing local officials the need. Louisville gave 20-year franchise agreements to BGN Networks, SiFi, and FiberTech. It also helped Louisville to be chosen as a potential Google Fiber City, (which means very little now).
College Station, TX, took a different approach. They put out an RFP to test the market. I personally hate this because when you’re on the other side, you do a lot of work that goes nowhere, but it served the city well because they got what they wanted. Suddenlink responded by promising to put in $250,000,000 into upgrading their network to make it gigabit capable, http://www.kbtx.com/home/headlines/GigaSpeed-Internet-Soon-to-be-Offered-in-BCS-276059641.html. Suddenlink got scared of having the government compete, so they got off their lazy ass and did something. College Station could motivate these guys into action! It all worked out for the residents.
In North Carolina, the NCNGN, North Carolina Next Generation Network, formed a group of universities and cities. Wake Forest, University of North Carolina, Duke, and North Carolina State got together to work with Carrboro, Cary, Winston-Salem, Chapel Hill, Durham, and Raleigh to make this happen. This is a large group and has deep resources in knowledge, data, and money. Who saw this as an opportunity? AT&T moved in and started deploying fiber. Then, not to be left behind, Frontier Communications started their deployment. Finally, RST Fiber got rolling as well. Then Google started to deploy. Now you have all the competition to make it happen and affordable.
Connecticut did something similar where 46 communities all got together to host a gigabit conference to share their vision to become the first Gigabit state, https://yaledailynews.com/blog/2015/01/16/connecticut-could-be-first-gigabit-state2/.
To be continued!
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