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Fiber Internet: Cities are doing it for themselves

We ought to treat the facilities that connect us to the Internet as a public utility. So argued Harold Feld, a lawyer for the advocacy group Public Knowledge, in a speech at the recent Personal Democracy Forum.

But what that would that actually look like? Feld’s brief talk left that unspecified – on purpose according to remarks he made in a mailing list I’m on.

Historically we create public utilities when we think a service is so fundamental to citizens’ participation in their economy, government or culture that we want to make sure all citizens have affordable access to it. Feld argues for treating the Net as a public utility so that the government can ensure that the access providers serve the needs of their communities, not just their own desire to maximize profits.

In the United States, much of the discussion on this subject has turned to the role of municipalities. This is consistent with how we treat provisioning other public services, such as natural gas and electricity to households. In February, the Federal Communications Commissions cleared the way for this by preempting state laws that prevented municipalities from competing with private Internet access vendors.

But how would municipalities do this? There are many factors, leading to many permutations. For example:

What counts as broadband? The FCC now counts 25 megabits per second (Mbps) as the minimum speed for anything called broadband. These days 1 gigabit per second (Gbps or just “gigabit”) is the high end benchmark; that’s the speed Google Fiber offers. A gibabit connection is about a thousand times faster than 1 Mbps and so, or four hundred times faster than the FCC’s minimum.

What type of connection? The preferred medium for gigabit connectivity and higher is fiber optic cable.

Who lays the pipes? The municipality might install the infrastructure itself (quite possibly contracting it out) or might have an access provider do it in exchange for some privileges.

Who owns the pipes? The city? The access provider? Or possibly the homeowners?

Who gets to provide access through the pipes? A municipally-owned utility? Any business that wants to? Any business the municipality licenses?

What services are covered? In some models, no services are provided: the municipality provides just the cable connectivity, and businesses are invited to offer services in competition with one another. In other models, the municipality provides Internet access or a “triple play” of landline, Internet, and cable TV.

What is the public guaranteed? Low-cost access at some minimal level of bandwidth, with higher speeds available at a higher price? Uniform access at some baseline level, with higher speeds available through non-municipal offerings?

What is regulated? Price? The roll out of services so that poorer areas don’t get served last? Which services are offered?

What is the roll out plan All at once? Incremental?

Who pays? The citizens through taxes, bonds or other means? The users through fees paid to access and service providers? Sometimes a provider guarantees to pay back the installation costs in return for some term of exclusivity.

To give a sense of the range of options, here are just a few examples of what municipalities are actually doing – although in many of these cases there were special circumstances that led to a tailored solution, and these models may not be easily reproducible. (Disclosure: Ting is now working with municipalities to provide fiber optic connectivity and services. I mention Ting briefly below.)

Lafayette, LA laid its own fiber optic cable, and then created and now owns LUSFiber, a company that provides “triple play” services to subscribers. Similarly, Chattanooga, TN created and owns a public utility company called the Electric Power Board that built a city-wide fiber optic network. It also offers triple play, and competes with Comcast.

In Eugene, Oregon, the Eugene Water & Electric Board partnered with the Lane Council of Governments to pull fiber-optic cable through the existing underground infrastructure. The fiber is open to private ISPs who can then offer access. The project is now just a pilot, connecting two buildings in the city’s core, with a third building in the offing. The city hopes to find funding sources to expand this network substantially.

Los Angeles CityLinkLA RFP is offering “an attractive package of assets and incentives” to entice private companies to build gigabit networks. This package includes expedited permitting, bulk rate prices for city assets such as access to storm drain systems and street light poles, and use of the Department of Public Works existing optical cable. As part of the deal, providers are asked to provide free access to some level of broadband and to target services for low income areas.

Danville, VA has taken an incremental approach that is already paying off in increased economic development. The city deployed more than 135 miles of fiber, initially to business locations. This is “open-access fiber,” owned by the city but available to ISPs that then sell access to customers. The network has begun a pilot program to connect residents as well as businesses.

OpenCape got $40M in grants from the National Telecommunications and Information Administration, the Commonwealth of Massachusetts, private construction/operating partners, and Barnstable County. With this it built a network of 350 miles of fiber optic cable. Other companies can offer services over this network.

To build its own optical fiber network while minimizing its risk, Powell, Wyoming offered six years of exclusive access to that network to providers willing to put up a sufficient guarantee of revenues back to the city. Powell funded and owns the fiber; revenues are split between the city and the service providers. This is very close to Ting’s arrangement with Westminster, MD.

Stockholm owns Stokab [pdf], a company that lays “dark fiber” that anyone can use, including businesses for their own communication, access providers, and service providers. Stoklab refers to this as a “competition-neutral infrastructure.”

Cities such as Kansas City, MO and Portland, OR have granted Google the right to lay fiber. Google Fiber builds and owns the infrastructure. But because communities have to reach a predetermined level of resident sign-ups before they get access to it, Google Fiber probably should not count as providing a public utility.

These models are each sensitive to local conditions, and those conditions have been changing rapidly over the years. For example, in some cases the available commercial services were so inadequate that the municipality felt great urgency – and had great public support. But with changes in technology and market conditions, the adequacy of commercial services can change rapidly. And the same is true for just about all the factors that affect how municipalities decide to get affordable Internet access to their residents.

So there is no one cutter for all the cookies. We’re in a period of fruitful experimentation and discovery. One thing seems clear, though: the Internet is only becoming more important to local economies and cultures, increasing the pressure to treat broadband access as an essential public utility.

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