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Building Gigabit Networks: Three Powerful New Financing Models in Utah, Mississippi and Texas

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April 29, 2014 – As communities across the country consider ways to build Gigabit Networks, a range of public- and private-financing models are now being considered in geographies as diverse as the Wasatch Front in Utah, rural Mississippi; and College Station, Texas.

Three separate financial models were explored earlier this month at the Broadband Communities Summit in Austin, during a panel on “Public-Private Partnerships for Economic Development.”

The first model, in Utah, involves a private company — Macquarie Capital — entering into partnership with the public sector to complete a fiber build worth more than $300 million. In Mississippi, network builder C Spire Fiber put out a “reverse Request for Proposals” in an effort to incent Mississippi communities to invest in fiber.

In the third example, in College Station, Texas, a technology entrepreneur and city council member discussed his efforts to bring Gigabit Networks to the hometown of Texas A&M University.

‘Boring, Low-cost Capital’

Macquarie, a global financial services firm based in Australia, is already a major player in the market for building traditional infrastructure: roads, bridges, tunnels, ports, water and gas utilities.

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“We have always been looking for new ways to apply the model, and when we take a few steps back, fiber to the home looks and smells like a utility,” said Duncan Ramage, company senior vice president responsible for infrastructure advisory and development in North America.

“This is a long-term asset, an essential service, with a certain investment horizon,” he said. “We are looking for opportunities to apply this, particularly in the U.S.” At the moment, Macquarie is focused on efforts that would lead to the completion of the Utah Telecommunications Open Infrastructure Agency (UTOPIA) Gigabit Network.

Although Macquarie is negotiating with UTOPIA, a final agreement to complete the network has not been inked, he said. UTOPIA offers Gigabit broadband services in about ten cities along the Wasatch Front, including Layton and Brigham City north of Salt Lake City, and Lindon and Orem, which are adjacent to the university community of Provo.

In bringing a traditional infrastructure financing model to fiber infrastructure and construction, Ramage acknowledged that Macquarie was attempting to do something unique in the current U.S. communications marketplace.

“Fiber can be good for many, many years, but it is effectively like a gas line into your house,” he said. Macquarie would like to build Gigabit-capable fiber lines into homes, operating network infrastructure — but allowing other companies to provide consumer-facing Gigabit services.

“We are a boring, low-cost capital [company]. We are keen on building the highway so that others may use it,” said Ramage. “In the case of UTOPIA, there is an interesting sub-scale network in need of an injection of capital to complete it, to make it sufficient.”

Under the Macquarie proposal, the company plans to invest more than $300 million of its own capital to build out the network. It would recoup those costs through a municipal utility fee in place over 30 years.

Ramage’s presentation highlighted two key differences between Macquarie’s proposal for UTOPIA and what Google Fiber has done in Provo.

Last April, Google announced an agreement to purchase the assets to the iProvo municipal fiber network. It was subsequently announced that Google’s purchase price for the troubled network was one dollar. The network would revert back to the city if Google doesn’t complete its upgrades within 7 years.

Barring that unlikely event, however, it is Google — not the city of Provo — that now owns iProvo. Additionally, Google’s fiber network follows the closed internet service provider model. That means that competing internet companies are not permitted to offer Gigabit services over Google Fiber’s lines.

By contrast, the proposed Macquarie-UTOPIA deal would put Macquarie in the business of designing, building and operating a wholesale fiber network. But Macquarie also would allow competing companies to offer Gigabit services. Also, at the conclusion of the 30-year leasehold, the 11 UTOPIA cities would retain ownership of their respective Gigabit Networks.

The other two models discussed at the Austin event elaborated on other variations of utility financing.

Reversing the RFP Process

The Mississippi-based telecommunications company C Spire Fiber has a 4,000-mile fiber network throughout the state, and has provided a range of transport services for wireless backhaul communications and others since 2006, said Greg Logan, senior vice president at the company.

In 2011, seeking to further exploit its fiber resources, C Spire began offering connectivity for small- and medium-sized businesses. In September 2013 it decided to “turn it up a notch” and issue a “reverse RFP” for Mississippi cities to build Gigabit Networks.

In other words, instead of waiting for cities to come hire them, C Spire said that it would build network in any cities that responded to its “reverse RFP” and met its selection criteria. Of the applicant cities, nine were selected.

“In our discussions, a few key elements emerged: we did not ask for capital, we did not ask for conduit, we did not ask for [access to telephone] poles” to put fiber infrastructure, said Logan. Rather, “we did ask for a fast-track permitting” in order to locate fiber infrastructure. Under their agreements, permitting issues must be resolved within a total of 30 days.

As part of its interactions with the nine cities, C Spire has prepared maps of “fiberhoods” — much as Google Fiber has done in Kansas City, and now in Provo — and shared those with city managers and city leaders.

“We needed to maintain those communities of interest as best we could,” said Logan. “The municipalities are committed to being very active in helping to identify champions, signups and registrations on the web site. We have been there to engage and to help them.”

In other words, he said, in a very real way it was the cities that took ownership for the networks that C Spire nudged them on to build.

A ‘Sahara Desert’ for Bandwidth

In College Station, it was an emerging core of technology companies and their employees that evidenced demand for Gigabit Networks, recounted James Benham, CEO of JB Knowledge Technologies.

Benham’s company,which specializes in enterprise application and database development for the construction and insurance industries, wasn’t getting the bandwidth that it needed from existing telecommunications carriers.

“We were frustrated in College Station,” Benham recounted. “It is a fascinating and great place, but the equivalent of the Sahara Desert [for bandwidth.] My software and technical people didn’t want to stay around town.”

Deciding to do something about it, Benham ran for the city council in November 2012, where he kick-started an initiative to develop and issue an RFP for the construction of a Gigabit network. After a fast-paced 14 months, the city is close to announcing the winner.

Although Benham wouldn’t discuss applicants, he did say that RFP respondents fell into three main categories:

  • Engineering firms that wanted to be paid to build a network, and which would then be run by the city — something that Benham said was “not palatable politcally.”
  • Private fiber providers who had already built fiber networks without any public-private partnerships.
  • The big incumbent providers were also included and offered responses. The city “did not want to exclude them” because the RFP was “not an anti-incumbent measure.”

The session, at the Broadband Communities Summit, was moderated by Diane Kruse, CEO of NeoFiber.

Education

Metaverse Can Serve as a Supplement, Not Replacement, For Educators: Experts

The virtual world where avatars can meet as if they were in real life can be a companion for education.

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Screenshot of the Brookings event Tuesday

WASHINGTON, June 29, 2022 – Experts said at a Brookings Institution event said Tuesday that while the “metaverse” can go a long way toward improving education for some students, it should serve as a supplement to those educational goals.

The metaverse refers to a platform of 3D virtual worlds where avatars, or virtual characters, meet as if they were in the real world. The concept has been toyed with by Facebook parent Meta and is being used as a test for the educational space.

“The metaverse is a world that is accessible to students and teachers across the globe that allows shared interactions without boundaries in a respectful optimistic way,” Simran Mulchandani, founder of education app Project Rangeet, said at Tuesday’s event.

Panelists stated that as the metaverse and education meet, researchers, educators, policymakers and digital designers should take the lead, so tech platforms do not dictate educational opportunities.

“We have to build classrooms first, not tech first,” said Mulchandani.

Rebecca Kantar, the head of education at Roblox – a video game platform that allows players to program games – added that as the metaverse is still emerging and being constructed, “we can be humble in our attempt to find the highest and best way to bring the metaverse” into the classroom for the best education for the future.

Anant Agarwal, a professor at MIT and chief open education officer for online learning platform edX, stated the technology of the metaverse has the potential to make “quality and deep education accessible to everybody everywhere.”

Not a replacement for real social experiences

Kathy Hirsh-Pasek, senior fellow of the global economy and development at the Center for Universal Education, said that while the metaverse brings potential to improve learning, it is not a complete replacement for the social experience a student has in the classroom.

“The metaverse can’t substitute for social interaction. It can supplement.”

Mulchandani noted the technology of the metaverse cannot replace the teacher, but rather can serve to solve challenges in the classroom.

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Digital Inclusion

FCC Chairwoman Jessica Rosenworcel Emphasizes 100 Percent Broadband Adoption

‘It’s about making sure wireless connections are available in 100 percent of rural America,’ said the chairwoman.

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Photo of Kelley Dunne, CEO of AmeriCrew, leading panel on workforce issues at the Rural Wireless Infrastructure Summit by Drew Clark

PARK CITY, Utah, June 28, 2022 – The Federal Communications Commission is making progress towards bringing “affordable, reliable, high-speed broadband to 100 percent of the country,” Chairwoman Jessica Rosenworcel said at the Rural Wireless Infrastructure Summit here on Tuesday.

Rosenworcel pointed to the $65 billion Infrastructure Investment and Jobs Act now being deployed across the country, with a particular focus on unconnected rural and tribal areas.

Although the Commerce Department’s National Telecommunications and Information Administration will take the lead with these funds, the FCC’s new broadband coverage maps will be important in implementing state digital equity plans.

In her remarks, Rosenworcel also discussed how the upcoming 2.5 GigaHertz spectrum auction will involve licensing spectrum primarily to rural areas.

At the July FCC open meeting, said Rosenworcel, the agency is scheduled to establish a new program to help enhance wireless competition. It is called the Enhanced Competition Incentive Program.

The program aims to build incentives for existing carriers to build opportunities for smaller carriers and tribal nations through leasing or partitioning spectrum. Existing carriers will be rewarded with longer license terms, extensions on build-out obligations, and more flexibility in construction requirements.

“It’s about making sure wireless connections are available in 100 percent of rural America,” she said.

She also indicated her commitment to work with Congress to fund the FCC’s “rip and replace” program to reimburse many rural operators’ transitions from Chinese-manufactured telecommunications equipment. She also touted the role that open radio access networks can plan in more secure telecommunications infrastructure.

In other news at the conference, FCC Commissioner Brendan Carr addressed the role of funding broadband operations in rural America, the challenges of workforce training, and ensuring that rural carriers have access to high-cost universal service support.

In a session moderated by AmeriCrew CEO Kelley Dunne, panelists from the U.S. Labor Department, the Wireless Infrastructure Association and Texas A&M Extension Education Services addressed the need to offer a vocational career path for individuals for whom a four-year degree may not be the right choice. AmeriCrew helps U.S. military veterans obtain careers in building fiber, wireless and electric vehicle charging infrastructure.

Broadband Breakfast Editor and Publisher Drew Clark contributed to this report.

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Broadband's Impact

Broadband Speeds Have Significant Impact on Economy, Research Director Says

From 2010 to 2020, a 10.9 percent growth in broadband penetration drove .04 percent increase in GDP, the study found.

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Photo of Alan Davidson of the NTIA, Caroline Kitchens of Shopify, Raul Katz of Columbia University (left to right)

WASHINGTON, June 28, 2022 – Broadband and higher speeds have made significant contributions to economic growth over the last decade, according to a study discussed at a Network On conference Tuesday.

Raul Katz, director of business strategy research at Columbia University, conducted his research to determine where the United States economy would be if broadband had not evolved since 2010. He developed four models to explain the economic contribution of broadband, and all found support to suggest that broadband development has contributed to substantial economic growth.

The long-run economic growth model showed that between 2010 and 2020, a 10.9 percent growth in broadband penetration drove a .04 percent increase in gross domestic product – the measure of the value of goods and services produced in the nation. States with higher speed broadband had an economic impact of an additional 11.5 percent.

“States with higher speeds of broadband have a higher economic effect,” said Katz. “Not only is there penetration as a driver, but there’s also… return to speed. At faster speeds, the economy tends to be more efficient.”

The study found that if broadband adoption and speed had remained unchanged since 2010, the 2020 GDP would have been 6.27 percent lower, said Katz.

Caroline Kitchens, a representative for ecommerce platform Shopify, said Tuesday that there’s been great growth in the ecommerce business, which relies entirely on a broadband connection. “Worldwide, Shopify merchants create 3.5 million jobs and have an economic impact of more than $307 billion. It goes without saying that none of this is possible without broadband access.”

“We have really seen firsthand how broadband access promotes entrepreneurship,” said Kitchens, indicating that this has promoted a growing economy in over 100 countries.

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