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Financing Public-Private Fiber Networks Becoming a Reality, Say Experts at Broadband Communities Summit

Panel on Municipal Debt Financing and Public-Private Partnerships

Editor’s Note: This is one of several wrap-up articles about the 2015 Broadband Communities Summit earlier this month in Austin, Texas. For the complete list of articles from the summit, visit https://broadbandbreakfast.com/2015/04/articles-from-the-2015-broadband-communities-summit-in-austin/

AUSTIN, April 27, 2015 – Raising funds to build high-speed internet infrastructure through municipal debt financing is finally becoming a reality, according to a panel of financiers and broadband builders speaking earlier this month here at the Broadband Communities Summit.

Members of the panel, “Municipal Debt Financing and Public-Private Partnerships,” surveyed the landscape of typical municipal bond financing — traditionally used to build transportation infrastructure — and discussed how it applies in the broadband space.

While the financiers on the panel eagerly posed questions, some of the practitioners eagerly showcased models of bank-worthiness for building open-access fiber networks. […]

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Editor’s Note: This is one of several wrap-up articles about the 2015 Broadband Communities Summit earlier this month in Austin, Texas. For the complete list of articles from the summit, visit https://broadbandbreakfast.com/2015/04/articles-from-the-2015-broadband-communities-summit-in-austin/

AUSTIN, April 27, 2015 – Raising funds to build high-speed internet infrastructure through municipal debt financing is finally becoming a reality, according to a panel of financiers and broadband builders speaking earlier this month here at the Broadband Communities Summit.

Members of the panel, “Municipal Debt Financing and Public-Private Partnerships,” surveyed the landscape of typical municipal bond financing — traditionally used to build transportation infrastructure — and discussed how it applies in the broadband space.

While the financiers on the panel eagerly posed questions, some of the practitioners eagerly showcased models of bank-worthiness for building open-access fiber networks.

Panel on Municipal Debt Financing and Public-Private Partnerships

Panel on Municipal Debt Financing and Public-Private Partnerships

Brian Garcia, managing director of municipal debt financings at Aegis Capital Corp., said that the finance sector was finally paying attention to the bond market for broadband builds.

By contrast, in the typical vertically integrated telecommunications company broadband build, a single company — such as a Comcast, an AT&T, or a lower-tier communications company — is responsible for capital investments, for design and building of the network, and for its marketing and operations. Although some of these networks resell capacity, that’s been an adjunct to the core operations.

New investment in open-access fiber networks is beginning to change that paradigm. Still, there are still many unique aspects about broadband financing, Garcia said, including the fact that the market is not known as well as, for example, the transportation financing sector.

Fred Cornwall, president of Municipal Capital Markets Group, outlined the differing costs of financing under a general obligation bond, a revenue bond, or a non-rated revenue bond. Provided that network builders are willing to pledge cash flows and offer some equity in the system, he said investors will finance the construction of such open access systems.

The network builders — Fletcher Kittredge, CEO of GWI in Maine; Mark Erickson, the Economic Development Administration director for the City of Winthrop, Minn., and Nicholas Hamm, senior managing director of Macquarie Capital — eagerly showcased how they were building their respective networks.

Kittredge highlighted four fiber-optic networks in Maine, each of which operated under a different financial model. Having received a $25 million grant under the American Recovery and Reinvestment Act to build a middle-mile network known as the “Three-Ring Binder,” GWI was able to leverage the investment in building out to Rockport, Maine, a harbor town not far from the footprint of the fiber network.

Before the fiber network, the 40-year old Maine Media Workshop out of Rockport was considering moving because of the difficult of purchasing bandwidth for its video programs, he said. “We came up with a public-private partnership business model, where the open access dark fiber network is owned by the town, and GWI agreed to be the default let service operator with defined service levels.”

“The [workshop] agreed to be the anchor tenant guaranteeing cash flow, buying a 20-year indefeasible right of use [IRU] for $30,000; GWI provided $40,000 worth of design and engineering; and the town paid $30,000 out of tax increment funds,” recounted Kittredge.

Under the public-private partnerships, GWI offers residential services at $70/month for a Gigabit of symmetrical broadband (download and upload), and commercial services at $200/month for 100 Megabits per second (Mbps) symmetrical broadband.

“Immediately, many people said, ‘we will pay to have [the fiber network] build out to our area,’ and the town has received incredible feedback,” said Kittredge.

Each of the other cities or towns in Maine used different models, however. In South Portland, GWI owns the open network, which was built by bank financing. On the island of Isleboro, the town levered an undersea cable from the electric company to build fiber out to the island. Without it, “they were at risk of loosing the year-round community by loosing the school,” he said.

“The summer community didn’t want the year-round community shut down,” he said. As a result, the city is preparing to vote for a general obligation fund to fund the system directly.

The fourth city Kittredge discussed, Sanford, is not on the fiber network, and is hence at a competitive disadvantage. “They decided they needed a spur off the Three-Ring Binder, so they can get all the broadband competition, and a fiber network through the core of the town.”

Erickson of Winthrop, Minn., said that the first effort to build a fiber network with which he was involved attempted a municipally-owned network financed by revenue bonds. But with a rich tradition of co-operative institutions in Minnesota, last year this joint powers board handed off the project to a newly-formed cooperative entity, which is building the fiber network in two phases.

Also speaking on the panel was Hamm of Macquarie, an Australian company with significant experience in building public-private transportation systems, such as the Chicago Skyway toll highway. He discussed the way that a public-private partnership enables government to transfer risk to the private sector, and contrasted the different financial aspects of building middle-mile networks and last-mile networks.

The panel was part of a special “Financing Fiber Networks” session at this year’s Broadband Communities Summit.

Drew Clark is the Chairman of the Broadband Breakfast Club. He tracks the development of Gigabit Networks, broadband usage, the universal service fund and wireless policy @BroadbandCensus. He is also Of Counsel with the firm of Kirton McConkie, based in Salt Lake City, Utah, which enhances clients’ ability to construct and operate high-speed broadband networks in public-private partnerships. You can find him on LinkedIN and Twitter. The articles and posts on BroadbandBreakfast.com and affiliated social media are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors. Clark brings experts and practitioners together to advance the benefits provided by broadband: job creation, telemedicine, online learning, public safety, energy, transportation and eGovernment. 

Drew Clark is the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney at The CommLaw Group. He has closely tracked the trends in and mechanics of digital infrastructure for 20 years, and has helped fiber-based and fixed wireless providers navigate coverage, identify markets, broker infrastructure, and operate in the public right of way. The articles and posts on Broadband Breakfast and affiliated social media, including the BroadbandCensus Twitter feed, are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors.

Open Access

British Telecoms Are Aligning with Emerging U.S. Position on Open RAN Adoption

Open RAN adoption is said to save telecoms money and boost security, as providers are forced to move off Huawei.

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Howard Watson, chief technology officer of BT Group

October 18, 2021 – Howard Watson, chief technology officer of telecommunications company BT Group, spoke on Wednesday at the Broadband World Forum about the future of the UK’s network infrastructure, including removing Huawei’s equipment from their networks and developing open radio access networks for wider use.

Speaking at the opening session titled “Building an innovative converged network infrastructure for the UK,” Watson discussed the challenges and possibilities for offering fast, secure broadband and offered O-RAN as a solution for wider connectivity.

Watson discussed utilizing open RAN to facilitate greater interoperability between vendors’ equipment, as it opens the market to more technologies due to its open configuration. The concept advocates for a more open radio access network than provided today, which is held by fewer vendors.

The Federal Communications Commission has pushed for ways to develop open RAN to minimize network security risk, as the movement has gained significant momentum since Huawei was banned over the past 18 months. FCC Acting Commissioner Jessica Rosenworcel has described open RAN as having “extraordinary potential for our economy and national security.”

“When customers go back into the office, the infrastructure they left behind must have key growth” Watson said, referencing the shift in office culture toward remote work during the COVID-19 pandemic.

“Expectations of customers change,” Watson said, adding that “they expect broadband to be always on, they expect high bandwidth.” Above all, “they expect investment no matter the cost.”

BT is seeking to deploy to 90 percent coverage in the UK by 2028.

On the sidelines of his keynote address, Watson noted BT’s progress in limiting Huawei products to 35 percent of an operator’s fiber access footprint by 2023. The UK government requires that Huawei’s equipment must be removed entirely by the end of 2027. The UK considers Huawei a “high risk” vendor for its network infrastructure.

However, BT is waiting for Huawei’s equipment to grow old before replacing it, Watson said. “Our intention is to ensure that we get the full economic life out of the Huawei [products] that we have deployed,” he said. He said BT believes the products can be used until 2031 or later.

“We’re in talks with government about that timeline” Watson said.

Panel discussion about European fiber investment

Watson said that “densification” happens in areas that are fiber rich, so “providing fiber to smaller cell sites is naturally an evolution.”

He said that BT is looking at a range of alternatives including Wi-Fi solutions to getting 1 Gigabit per second (Gbps) capability to household through open architecture-based solutions.

In addition to Watson, a panel focused on the investment parameters for fiber investment featuring officials from Macquarie Group and Eurofiber.

The panel focused on investment challenges and strategies for broadband infrastructure investment and  discussed an opportunistic vision for broadband deployment. Speaking of more mature market with a history of broadband adoption, Macquarie Managing Director Oliver Bradley asked how providers could transition to more efficiency and maximizing the value of an existing network.

Among the principal drivers for investment include co-investing and deregulation, he said.

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Open Access

UTOPIA Fiber Goes to Court in Utah Over American Fork’s Build Permit Refusals

Fiber builder says it has been denied permits that have harmed it and its customers, despite an existing city agreement.

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Photo of Twin Peaks in American Fork, Utah, by Bryant Olsen used with permission

October 13, 2021 – UTOPIA Fiber filed a lawsuit Wednesday against the city of American Fork in Utah for breach of contract after the city allegedly denied build permits to the fiber builder despite there being an existing contract between the two parties.

The fiber provider, which runs an open network on which private telecoms rent space on to provide services, alleges the city had approved some permits that only allowed it to construct backbone transport lines through the city connecting other cities, but denied it key permits that would have allowed it to extend services to UTOPIA Fiber customers inside the city. Those services include connections to American Fork’s public schools.

In July 2020, the city allegedly terminated the 2018 rights-of-way agreement with no explanation, the lawsuit claims. It also alleges that the city specifically discriminated against UTOPIA Fiber by adding additional scrutiny to its permit requests when it believed no such scrutiny existed for other providers.

Broadband Breakfast attempted to make contact with the city, but a phone call was not answered and a voicemail message was not returned by the time of publication.

“American Fork’s refusal to approve permit requests by or for UTOPIA for service laterals for customers within American Fork has harmed UTOPIA, its customers, and the private ISPs who wish to offer services within American Fork using UTOPIA’s Network,” the lawsuit said. “In some cases, UTOPIA has been forced to buy capacity from other network providers that are allowed to install infrastructure in American Fork, so that UTOPIA can fulfill existing contracts with its customers.

“In other cases, UTOPIA has been forced to cancel existing customer orders for connections within American Fork and has lost significant revenues as a result,” the suit added. “UTOPIA has also recently been forced to cancel or reject over a dozen additional customer orders because UTOPIA is unable, due to American Fork’s conduct, to obtain the permits needed to fulfill those orders, and again lost significant revenues as a result.”

In a press release, UTOPIA’s executive director Roger Timmerman said the lawsuit was a “last resort and not an easy decision to make.

“It is our hope that with judicial review, American Fork City will reverse its policies, work within the boundaries of the law, and ultimately, act in the best interest of the people and businesses in American Fork City by allowing them access to the increased options UTOPIA Fiber provides,” Timmerman added.

UTOPIA Fiber is asking the U.S. District Court for the District of Utah to force the city to pay the company damages sustained as a result of the alleged actions, to find the city violated the law with respect to its actions, and to force the city to cease the alleged “discriminatory and preferential actions” against the company.

UTOPIA Fiber, a sponsor of Broadband Breakfast, has designed, built, and operated more than $330 million worth of fiber projects in the state since 2009.

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Fiber

Comcast Business Says It’s Expanding Into Fiber Builds in Greater Washington Area

The company is putting millions more into fiber infrastructure in the Delaware, Maryland, Virginia and West Virginia areas.

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William Stemper, president of Comcast Business

WASHINGTON, October 6, 2021 – Comcast’s business division announced a two-year, $28-million investment to expand fiber through the beltway region of Delaware, Maryland, Virginia, Washington D.C., and West Virginia.

The company said in a press release Wednesday that $13 million of that was invested last year and $15 million have gone into projects that are underway or planned for this year. It is expected to connect nearly 7,000 additional businesses to speeds of up to 100 Gigabits per second for large businesses, it said, adding it’s all part of the $110 million Comcast Business has spent in the area since 2015.

The expansion is part of a larger effort by telecommunications companies in this country to drive fiber to the premises, and to get ahead of the next generation 5G networks. As this is happening, more federal and state dollars are being plowed into broadband infrastructure as President Joe Biden sets his sights on providing access to high-speed internet to 100 percent of the country by the end of the decade.

“The ability to offer both diversity of network and carrier is becoming increasingly important to help drive economic development and transformation,” Ed Rowan, senior director of Comcast Business sales operations in the region, said in the release.

“Connectivity is at the core of this and, more than ever, is an integral factor as businesses expand and prepare for what’s next. Our network expansions across Comcast’s Beltway Region are the latest example of the significant technology investments we’ve made to increase the availability of our multi-Gigabit Ethernet services,” he added. “These investments will help foster economic development, transform our local communities, and better meet next-generation capacity needs across the region.”

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