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Fiber to the Home Council Webinar on Municipal Broadband Solutions Focuses on Open Access Opportunities

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WASHINGTON, May 22, 2014 – In a Wednesday webinar, the Fiber to the Home Council invited broadband planning firm Magellan Advisors to discuss their ways of advising communities seeking to build advance broadband networks.

Guest members included Magellan Advisors President John Honkers and Vice President Kyle Hollifeld. They described their firm as a ‘turnkey’ that offers aid from initial planning stages to implementation of networks, and even helping operators manage networks once they’re established.

“We like to think of ourselves as the guys in the field who see what’s happening every day and bring that back to the consulting side,” said Magellan President John Honkers said. “[We look at] what things work, what don’t work, and how to really manage these projects on a long term basis.”

When constructing broadband and fiber networks around the country, Honkers said that municipalities. private operators, and public organizations have to balance sustainability with community needs.

“[Communities] who have longer return of investment are more difficult to achieve,” he said. ”It’s expensive to get into small business because the revenues they generate [are] not significant enough to sustain a project on its own. On the other hand, shorter returns of investment are more sustainable, but we’re missing out on community needs from a public organization’s perspective.”

Honkers stressed the need for a marriage between those two types of projects – and that private sector operators and public organizations have to be in alignment for a project to work. The parties need to consider the needs of service providers, capitalization issues, and access to funding like grant and loan opportunities.

Honkers said: “One of the key things we’ve been witnessing recently is, what existing networks and assets do communities have that can be leveraged to expand fiber and lower the cost of it?”

Hollifield described different types of business models as belonging to “a chain.” The farther up one moves along it, the greater the risks and rewards are for the community. These business models can take on a variety of flavors such as municipal-only, where municipal providers take on sole burden; or municipal-open access, where municipalities or public organizations are negotiating open access requirements with their partners. Those partners can be direct providers or providers coming onto a network as wholesalers or retailers.

Five major business models were discussed, including:

  • “Partner, no assets”
  • “Dark Fiber, single provider”
  • “Dark fiber, open access”
  • “Lit Fiber, open access”
  • “Direct provider”

The first couple of models are less popular and are not very focused on communities taking an active role. The opposite is true for open-access dark fiber and lit fiber, which emphasize cities taking an active role in providing services down to the premises.

“What we see in most communities is cities moving closer to that type of open network by taking an active role in expanding the last mile by bringing it from their backbone,” Honkers said. “Cities are more adept at [reducing costs] if they have existing outside plan operations and are already building last mile operations.”

“They see there’s an obvious advantage because cities and electric utilities have a lower cost of capital that can be used to build and finance this network than could otherwise be done in the private sector,” he added.

He added that public sector network building involves lower costs of capital over a longer period of time. Instead of a three to four-year payback, there’s a 10 to 15-year payback period on municipal financing. This reduces the cost of infrastructure that is later released back out to providers.

Lit fiber networks are also popular in communities that wish to push competition further into their markets, Honkers said. Unlike dark fiber networks, which “partition the network” by only allowing a single provider to service a single customer, lit fiber networks allow multiple providers to serve a network so an end-user – whether a home or a business – can potentially pick whichever service they want through a provider instead of being limited to one.

Hollifeld lastly spoke about direct providers, or municipalities that realize they can provide the greatest service with the greatest benefit all by themselves.

“Their cost of doing business and cost of capitalization is much less expensive than a private enterprise so they can afford to be a direct provider in some cases,” Hollifeld said. “It is a challenge. It has great rewards when it works, and a lot of risk when it doesn’t.”

“Without service providers, there’s not a lot that’s possible,” he said. “When we look at municipal public broadband projects, four out of five are built on an open access, a dark fiber, or some variation of that business model.

Equally important is the political environment.

“We come across this with every project we deal with,” Honkers said. “We’ve gotten to be a lot more political than I ever thought we would be. “Politics plays a huge role in setting policy and also delivering expectations to the community. We have to be wary of how those are going to affect the end results.”

Honkers recounted the story of one of Magellan Advisor’s clients – the city of Palm Coast – which was “pretty underserved when it comes to business broadband service.”

While the city initially began its network building on the premise of telecom cost reduction, the city realized – after building 70 miles worth of fiber throughout town – that a lot of its network resources could be used to advance community benefits.

“So the city quickly just realized ‘hey, we can build to the school districts and we can capture E-rate dollars to build out to these schools at a lower cost,” he said. “The city already had most of the backbone network built, just laterals were needed out to the schools.”

The city ended up bringing 17 schools to the network, providing one Gigabit per second capacity to each school. Before long, the concept was expanded to bring hospitals, counties, and public safety buildings onto the network to create a regionalized broadband network, he said.

Eventually, the decision was made to move beyond local government to businesses by adopting an open-access, lit fiber network.

“Instead of partnering directly with providers, they [Palm Coast] did their needs assessment early on to understand exactly what providers could utilize as incumbent assets and the key to that was plenty of backhaul and plenty of backbone.

“Instead of partnering directly with providers, they did the needs assessment early on to understand exactly what providers could utilize as incumbent assets. [The city of Palm Coast] hosted very little fiber in the ground. in terms of local fiber infrastructure, there’s plenty of backhaul, plenty of backbone.”

“They didn’t have the cost of building fiber,'” he added. “No capital [was] required. The city charged very reasonable local loop costs for access to that network and as a result of bringing that cost down for local fiber, businesses pay significantly less. In this case, it was all a matter of negotiating the deal with service providers to understand exactly what they can bring to the table, what their preferences were, making sure there was alignment with the city’s goals for economic development and bringing that network online.”

The results for Palm Coast were very positive, said the Magellan officials. The city significantly reduced its budget. School, business, and hospital costs decreased by 40 percent. Competition has increased.

The lesson to be learned, said Honkers: “Know your customers.”

 

Digital Inclusion

Broadband is Affordable for Middle Class, NCTA Claims

According to analysis, the middle class spends on average $69 per month on internet service.

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Photo of Rick Cimerman, vice president of external and state affairs at NCTA

WASHINGTON, November 22, 2022 – Even as policymakers push initiatives to make broadband less expensive, primarily for low-income Americans, broadband is already generally affordable for the middle class, argued Rick Cimerman, vice president of external and state affairs at industry group NCTA, the internet and television association. 

Availability of broadband is not enough, many politicians and experts argue, if other barriers – e.g., price – prevent widespread adoption. Much focus has been directed toward boosting adoption among low-income Americans through subsidies like the Affordable Connectivity Program, but legally, middle-class adoption must also be considered. In its notice of funding opportunity for the $42.5-billion Broadband Equity, Access, and Deployment program, the National Telecommunications and Information Administration required each state to submit a “middle-class affordability plan.”

During a webinar held earlier this month, Cimerman, who works for an organization that represents cable operators, defined the middle class as those who earn $45,300–$76,200, basing these boundaries on U.S. Bureau of Labor statistics for 2020. And based on the text of an Federal Communications Commission action from 2016, he set the threshold of affordability for broadband service at two percent of monthly household income.

According to his analysis, the middle class, thus defined, spends on average $69 per month on internet service. $69 is about 1.8 percent of monthly income for those at the bottom of Cimerman’s middle class and about 1.1 percent of monthly income for those at the top. Both figures fall within the 2-percent standard, and Cimerman stated that lower earners tended to spend slightly less on internet than the $69-per-month average.

Citing US Telecom’s analysis of the FCC’s Urban Rate Survey, Cimerman presented data that show internet prices dropped substantially from 2015 to 2021 – decreasing about 23 percent, 26 percent, and 39 percent for “entry-level,” “most popular” and “highest-speed” residential plans, respectively. And despite recent price hikes on products such as gas, food, and vehicles, Cimerman said, broadband prices had shrunk 0.1 percent year-over-year as of September 2022.

Widespread adoption is important from a financial as well as an equity perspective, experts say. Speaking at the AnchorNets 2022 conference, Matt Kalmus, managing director and partner at Boston Consulting Group, argued that providers rely on high subscription rates to generate badly needed network revenues.

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Broadband's Impact

Federal Communications Commission Mandates Broadband ‘Nutrition’ Labels

The FCC also mandated that internet service provider labels be machine-readable.

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Federal Communications Commission Chairwoman Jessica Rosenworcel

WASHINGTON, November 18, 2022 – The Federal Communications Commission on Thursday afternoon ordered internet providers to display broadband “nutrition” labels at points of sale that include internet plans’ performance metrics, monthly rates, and other information that may inform consumers’ purchasing decisions.

The agency released the requirement less than 24 hours before it released the first draft of its updated broadband map.

The FCC mandated that labels be machine-readable, which is designed to facilitate third-party data-gathering and analysis. The commission also requires that the labels to be made available in customers’ online portals with the provide the and “accessible” to non-English speakers.

In addition to the broadband speeds promised by the providers, the new labels must also display typical latency, time-of-purchase fees, discount information, data limits, and provider-contact information.

“Broadband is an essential service, for everyone, everywhere. Because of this, consumers need to know what they are paying for, and how it compares with other service offerings,”  FCC Chairwoman Jessica Rosenworcel said in a statement. 

“For over 25 years, consumers have enjoyed the convenience of nutrition labels on food products.  We’re now requiring internet service providers to display broadband labels for both wireless and wired services.  Consumers deserve to get accurate information about price, speed, data allowances, and other terms of service up front.”

Industry players robustly debated the proper parameters for broadband labels in a flurry of filings with the FCC. Free Press, an advocacy group, argued for machine-readable labels and accommodations for non-English speakers, measures which were largely opposed by trade groups. Free Press also advocated a requirement that labels to be included on monthly internet bills, without which the FCC “risks merely replicating the status quo wherein consumers must navigate fine print, poorly designed websites, and byzantine hyperlinks,” group wrote.

“The failure to require the label’s display on a customer’s monthly bill is a disappointing concession to monopolist ISPs like AT&T and Comcast and a big loss for consumers,” Joshua Stager, policy director of Free Press, said Friday.

The Wireless Internet Service Providers Association clashed with Free Press in its FCC filing and supported the point-of-sale requirement.

“WISPA welcomes today’s release of the FCC’s new broadband label,” said Vice President of Policy Louis Peraertz. “It will help consumers better understand their internet access purchases, enabling them to quickly see ‘under the hood,’ and allow for an effective apples-to-apples comparison tool when shopping for services in the marketplace.”

Image of the FCC’s sample broadband nutrition label

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Broadband's Impact

Midterm Control of Congress Remains Uncertain, But States Got Answers to Broadband Votes

Alabama, Colorado, New Mexico, New York, Kansas and Pennsylvania had broadband-related measures on the ballot.

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Photo of an Ohio voter on November 8, 2022, by Marshall Gorby of the Dayton Daily News

As voters went to the polls on Tuesday, November 8, 2022, broadband-focused initiatives and candidates could be found up and down the ballot all across the country.

Alabama

Alabama voters cast their ballots to decide on a state Constitutional amendment known as the Broadband Internet Infrastructure Funding Amendment. The measure sought to amend the state’s constitution “to allow local governments to use funding provided for broadband internet infrastructure under the American Rescue Plan Act (ARPA) and award such funds to public or private entities.”

That measure passed, garnering a “Yes” vote from nearly 80 percent of Alabama voters. With 73 percent of the vote counted late last night, 922,145 “Yes” votes had been tallied with 251,441 “No” votes.

Also in Alabama, Democratic U.S. Rep. Terri Sewell won her re-election bid to represent Alabama’s 7th congressional district. Sewell, whose district covers a large swath of the Alabama Black Belt, “spent much of her past two years in office bringing American Rescue Plan Act funds to rural Alabama, dedicated to healthcare, broadband access and infrastructure building,” as noted by The Montgomery Advertiser.

Colorado

The Centennial State is not listed as one of 17 states in the nation with preemption laws that erect barriers to municipal broadband because nearly every community that had a vote has passed it to nullify it. But more communities had to go through that unnecessary process yesterday due to the law known as SB-152 that bans local governments in the state from establishing municipal broadband service absent a referendum.

As of spring 2022, 118 Colorado municipalities, 40 counties and several school districts have opted out of SB-152.

Now Colorado can add to that list.

In Pueblo County, nearly 48,000 ballots were cast with 34,457 or 72 percent, voting yes to opt out of SB 152 while 13,087 (28 percent) cast a “No” vote.

In the City of Pueblo, the county seat, Mayor Nick Gradisar told The Pueblo Chieftain that his city was not looking to build a municipal broadband network but rather to pursue a public-private partnership to bring ubiquitous high-speed Internet service to the city in a way that does not “just allow (broadband companies) to cherry pick the ones that can pay the most.”

Meanwhile, in the City of Lone Tree, one of about a dozen communities located in Douglas County, voters there overwhelmingly approved opting out of SB-152 with over 83 percent of voters casting a “Yes” ballot.

According to the city’s website, the ballot question was put to voters to enable the county to extend broadband infrastructure into Lone Tree. The website goes on to explain what opting out of SB-152 would mean for city residents and businesses:

  • Along with providing support for the County’s efforts, voter approval opens a range of opportunities to improve broadband access or services. Approval would allow the conversation to begin, while not binding the City to any specific actions or timelines.

New Mexico

Similar to the Constitutional question voters decided in Alabama, a ballot question in New Mexico asked voters to modify the New Mexico Constitution to ensure the easy flow of broadband funding. A 1900s era portion of the state’s constitution restricts “lending, pledging credit, or donating to any person, association, or public or private corporation.”

The proposal, which was approved by the New Mexico state legislature last February, passed with a 65 to 35 percent split in favor of adding an exception to the state’s anti-donation clause that will allow the state legislature to appropriate state funds through a majority vote in each chamber for infrastructure that provides essential services such as water, sewer, electricity, and broadband.

Bipartisan Support for Expanding Broadband Access

Yes, one day after the election and it was still unclear which party will control Congress, even as political analysts pontificate on what happened to the “Red Wave.” But, this much is clear: for successful candidates in both parties, at the federal and state-level, expanding access to broadband has become a bipartisan issue.

In New York, Republican State Sen. Dan Stec won his bid re-election, building on his first victory in 2020 when he campaigned for better broadband and mobile phone service. In North Carolina, Renée Price, a Democratic state representative, was elected by a wide margin. During the campaign, Price said her priorities are funding a range of initiatives and that she was particularly focused on increasing access to broadband.

Meanwhile, Republican Congressman Rick Allen was re-elected to represent Georgia’s 12th Congressional District. Allen said he would “continue to fight for the priorities of the 12th District like securing funding for Fort Gordon and the Savannah River Site, expanding rural broadband, and supporting our farmers and rural America.”

In Kansas, where Republican Congressman Mark Alford was elected to represent Missouri’s staunchly conservative 4th Congressional District, Alford told The Kansas City Star that as he campaigned “’on just about every back road of the district, all 24 counties,’ he heard that the No. 1 issue in the district is lack of rural broadband access.”

Over in Pennsylvania, where Democratic candidate Josh Shapiro won the race to be that battleground state’s next Governor, Shapiro’s campaign told Spotlight PA “he will prioritize expanding quality and affordable access to broadband in rural regions of the state by supporting the newly created Pennsylvania Broadband Development Authority, and establishing comprehensive subsidies for low-income households with high [I]nternet prices.”

And finally, in Texas, where Republican Gov. Greg Abbott fended off a challenge from Beto O’Rourke, in the less sexy race for State Comptroller, Republican incumbent Glenn Hegar won his re-election bid in which he touted his record championing the expansion of broadband in the Lone Star State.

Eye On State Legislatures

States are now beefing up or establishing state broadband offices to award billions of dollars for the deployment of new or expanded broadband infrastructure thanks to an historic infusion of federal funds from the American Rescue Plan Act (ARPA) and the Infrastructure Investment and Jobs Act (IIJA). With those bills already passed and the midterm elections behind us, most of the action on the broadband front will rest in the hands of state lawmakers.

The National Conference of State Legislatures notes that “with roughly 9 out of 10 adults in America using the Internet, many consider it to be a necessity of modern life,” which is why there are numerous pieces of broadband-related legislation that was enacted or is pending in the 2022 legislative session.

  • In the 2022 legislative session, 43 states, the District of Columbia and Puerto Rico have pending and enacted legislation addressing broadband in issue areas such as educational institutions and schools, dig once, funding, governance authorities and commissions, infrastructure, municipal-run broadband networks, rural and underserved communities, smart communities and taxes. Twenty-six jurisdictions enacted legislation or adopted resolutions: Alabama, Alaska, Arizona, California, Colorado, Hawaii, Idaho, Illinois, Kentucky, Louisiana, Maine, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, New York, Oklahoma, Oregon, South Dakota, Tennessee, Utah, Virginia, Washington and West Virginia.

Authored by Sean Gonsalves, this article originally appeared on the web site of the Institute for Local Self Reliance’s Community Broadband Broadband Networks Project on November 9, 2022, and is reprinted with permission.

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