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.
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, Google+ 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.
Google Fiber Says it Welcomes Overbuilding, Competition for Lower Prices and Better Services
Comments were made at the Fiber Connect conference last week.
NASHVILLE, June 21, 2022 – A representative from Google Fiber said Wednesday at the Fiber Connect conference that the company is encouraged by competition in the fiber space because it leads to partnerships, lower costs for consumers and greater coverage.
Jessica George said that more partners and more people working in the broadband space will encourage more competition, which will drop prices and increase speeds.
She added that Google has been a long-time proponent for overbuilding, where providers build their infrastructure in areas already covered. More competition in the fiber space promotes overbuilding, which ensures greater coverage and connectivity for consumers in that area, she said.
Jay Winn, chief customer officer at fiber provider Lumos Networks, added that Lumos’s strategy is to be “first with fiber” by connecting all homes and businesses in its territory to fiber – at the cost of occasional overbuilding.
Ultimately, the conflict lies between companies that oppose greater competition in favor of protecting their territory and those that encourage competition in favor of creating more opportunities for their consumers, said George.
“What do [ISPs] really believe makes this industry, makes our world, makes our communities better?” asked George.
Leaders of Broadband Industry Trade Groups Are Bullish on Fiber, With Some Caveats
Fiber networks have a unique capacity to keep broadband prices low for low-income communities, proponents say.
NASHVILLE, June 16, 2022 – Leaders of the broadband industry concurred that because fiber delivers fast, affordable broadband connectivity for generations, almost all new broadband deployments will be delivered with the technology.
Speaking on a panel on the closing day of Fiber Connect on Wednesday, however, this group of trade association leaders differed with each other on how quickly cable and wireless providers would pivot away from those technologies and to all-fiber deployments.
Bringing rival groups together, including the National Rural Electric Cooperative Association, the rural broadband telecom association NTCA and the cable industry group ACA Connects, Fiber Broadband Association CEO Gary Bolton said the purpose was to “unite everyone in the industry to do things for generations to come.”
Fiber networks are uniquely positioned for investing in the future as they have capacity to support higher speeds without replacement or upgrades to the infrastructure, Bolton said. That can keep costs low for customers in future generations. He was not contradicted on the essence of those points by this cohort of trade group leaders.
He also said that fiber will help solve the affordability barrier that exists for low-income families, and the future investments were essential as demands for speed will increase.
Shirley Bloomfield, CEO of NTCA, agreed that the Biden administration’s decision to favor fiber in broadband investment was appropriate.
“There is still some competitiveness among technologies,” she said. “Even after the [Notice of Funding Opportunity] on the [Broadband Equity, Access and Deployment program], I still got some kind of snarky comments from other folks in the industry” who believe that it is not right to push fiber everywhere.
ACA Connect leader differed slightly with the everything-must-be-fiber approach
America’s Communications Association Connects CEO Matt Polka differed a bit with Bolton’s everything-must-be-fiber approach.
Cable industry providers have demonstrated during the pandemic “the ability to keep this country connected with broadband with capacity to spare because of the prior investment that occurred in the four to five years before that.”
Cognizant that he was speaking at Fiber Connect, Polka said, “there is a bias toward fiber.”
But he instead urged that “whatever the technology is needed in that community, we will find a way to” provide it, he said.
“Oftentimes [Internet Service Providers] will increase speeds to customers without raising prices,” added Paul Breakman, vice president of business and technology strategies at the National Rural Electric Cooperative Association. Giving customers more speed makes the cost of broadband come down everywhere.
“That’s the kind of thing that we can do with this [fiber] technology with greater capacity,” he said.
“We have proved that you cannot, in many ways, survive unless you have broadband in the home,” Breakman continued, adding that affordability is essential for low-income families who need the benefits of broadband connection but could not otherwise afford it.
Reporter Teralyn Whipple contributed to this article.
AT&T Says Gigabit Download Speed Demand Continues to Grow
‘We’re projecting a 5x increase in data consumption from 2021 to 2025.’
NASHVILLE, June 15, 2022 – The demand for gigabit-speed fiber connectivity continues to grow, said company representatives during a Fiber Connect conference session on Tuesday, as some companies are testing download speeds beyond what’s currently available.
“We’re projecting a 5x increase in data consumption from 2021 to 2025,” said Chris Altomari, vice president of broadband network product management for AT&T. “There’s no evidence that suggests it’s going to slow down in the next couple of years.”
The comments come after AT&T announced Friday that it has reached 20 Gigabits per second symmetric speeds on its network in a test. The company said in a press release that the speeds were achieved with “minimal infrastructure upgrades” and runs on the same fiber optic cables that it currently uses.
“Fiber is the answer and multi-gigabit speeds are the answer,” Altomari added. “I’m seeing the need for multi-gig and maybe not just the need, but reliance.”
The comments also come after an official from the Commerce Department’s National Telecommunications and Information Administration said the agency, which is handling $42.5 billion in broadband infrastructure funds to give to the states, has a preference for fiber infrastructure versus other technologies, such as wireless or fixed-wireless.
Ashley Church, a general manager at Google Fiber, added that fiber demand is increasing as customers find innovative ways to use the internet that require the faster speeds that fiber can provide. “The internet has become what it has become because of these increasing speeds.”
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