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Spurning Google Fiber, Portland Suburb of Lake Oswego Pushes Toward Broadband Partnership

LAKE OSWEGO, Oregon, October 14, 2015 – This suburb of Portland, a potential candidate for Google Fiber’s Gigabit-speed internet service, has said it isn’t willing to wait around for the search engine giant.

At a city council meeting here on Tuesday night, elected officials in this city of 37,000 listened, questioned and debated between two proposed public-private partnerships that would result in the construction of Gigabit-speed fiber-optic infrastructure.

City Council Meeting in Lake Oswego, Oregon

Instead of sitting and waiting for Google, the city council members appeared inclined to move forward on a public-private project with city involvement.

“There was a great buzz and excitement when Google announced” the possibility that it would come to Portland, said Councilmember Jon Gustafson during the session — but the city hasn’t wasn’t seen any action since that time.

Last year, Google announced possible expansion to Portland and five suburbs, including Lake Oswego. The company has made commitment, however.

“Google is still at the vapor stage,” added Chip Larouche, chief technology officer for the city. Speaking at the Tuesday meeting, he said that Google is “talking about how ‘we might make you a promise.'”

Instead, City Manager Scott Lazenby said that in June Lake Oswego put out a Request for Proposals to build their own Gigabit Network. The city received two responses from private companies, and one from the City’s own Public Works Department.

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LAKE OSWEGO, Oregon, October 14, 2015 – This suburb of Portland, a potential candidate for Google Fiber’s Gigabit-speed internet service, has said it isn’t willing to wait around for the search engine giant.

At a city council meeting here on Tuesday night, elected officials in this city of 37,000 listened, questioned and debated between two proposed public-private partnerships that would result in the construction of Gigabit-speed fiber-optic infrastructure.

City Council Meeting in Lake Oswego, Oregon

City Council Meeting in Lake Oswego, Oregon

Instead of sitting and waiting for Google, the city council members appeared inclined to move forward on a public-private project with city involvement.

“There was a great buzz and excitement when Google announced” the possibility that it would come to Portland, said Councilmember Jon Gustafson during the session — but the city hasn’t wasn’t seen any action since that time.

Last year, Google announced possible expansion to Portland and five suburbs, including Lake Oswego. The company has made commitment, however.

“Google is still at the vapor stage,” added Chip Larouche, chief technology officer for the city. Speaking at the Tuesday meeting, he said that Google is “talking about how ‘we might make you a promise.'”

Instead, City Manager Scott Lazenby said that in June Lake Oswego put out a Request for Proposals to build their own Gigabit Network. The city received two responses from private companies, and one from the City’s own Public Works Department.

The City requested a comparative response from Public Works to price-check the private companies’ proposals. In an interview, Lazenby said that city staff began to lean toward a public-private partnership “once we saw that the private partners’ costs were not more expensive.”

Tuesday’s meeting was called to review the report about the two leading proposals that were released earlier this month on the city’s web site.

Each of the companies’ proposals take a public-private approach. One was from consortium led by the Oregon-based Sunstone Business Finance, and the other is from British-based SiFi Networks.

If selected, the winning bidder would finance, build and operate a fiber network for the city. It would serve every home and business in Lake Oswego. The city would make annual “lease” payments to cover costs of building and running the network. And after a period of 20 or 30 years, ownership of the fiber network would revert to the City.

Such public-private proposals for last-mile fiber networks are being considered much more frequently by cities across the country. One year-old non-profit group, Next Century Cities, provides information and support to cities that are seeking to consider such partnerships — or the steps necessary to build their own municipal networks.

At Tuesday’s meeting by the Lake Oswego City Council, Chris Mitchell of the Institute for Local Self Reliance offered advice to elected officials on the “hard decision” that they need to make to bring advanced networks to their towns.

Chris Mitchell, Institute for Local Self Reliance and Next Century Cities

Chris Mitchell, Institute for Local Self Reliance and Next Century Cities

“Option one, you don’t do anything, and Google doesn’t do anything and the incumbents don’t, either,” said Mitchell, who is also affiliated with Next Century Cities. “Speeds stay the same, with small upgrades, and it is more expensive over time. This is not an attractive option.”

“Option two, you do something and take on some risk, and the response from the other providers is to cut prices and invest in higher speeds. You have to struggle to make your investment whole because now, you are not fighting against incumbents with high prices and slow speeds.”

But, said Mitchell, this Hobson’s choice provides an opportunity for forward-looking cities.

Because they are not as concerned as private companies about their return on investment, but are more focused on the benefits of better broadband, such cities can succeed by making investments — as long as they can stomach the risk.

Public-private partnership such as those offered by Sunstone and SiFi Networks can help cities mitigate these risks, he said. Referring to the experience being assembled among more than the 115 cities that make up Next Century Cities, Mitchell said that “we are seeing a lot of different approaches.”

Most cities find that fiber-built networks can succeed, over time, so long as between 30 and 35 percent of households migrate to the new network, he said. The nearby town of Sandy recently built its own network, he said, and is enjoying such success.

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Council members reviewed the relative advantages of the proposals from Sunstone and SiFi Networks.

The staff report released by the city is recommending Sunstone over SiFi Networks on the basis of a lower cost over the life of the broadband project.

This is principally due to the fact that SiFi Networks’ proposal would finance the construction of the network over 30 years, while Sunstone’s proposal financed it over 19 years.

Other differences between the companies include SiFi Networks’ proposal for underground construction versus Sunstone’s proposal for aerial construction. Additionally, said Larouche, Sunstone is proposing putting more of its telecommunications equipment within a central office location. By contrast, he said, SiFi Networks would use fiber cabinets in the city’s rights of way to locate the bulk of its telecom equipment.

Although the council took no action on Tuesday, Lazenby said that a vote to begin negotiating with the selected entity would be put on the council’s agenda for its meeting on Tuesday, October 20.

 

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 Best Best & Krieger LLP, with offices in California and Washington, DC. He works with cities, special districts and private companies on planning, financing and coordinating efforts of the many partners necessary to construct broadband infrastructure and deploy “Smart City” applications. 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.

Breakfast Media LLC CEO Drew Clark has led the Broadband Breakfast community since 2008. An early proponent of better broadband, better lives, he initially founded the Broadband Census crowdsourcing campaign for broadband data. As Editor and Publisher, Clark presides over the leading media company advocating for higher-capacity internet everywhere through topical, timely and intelligent coverage. Clark also served as head of the Partnership for a Connected Illinois, a state broadband initiative.

Fiber

Utah City Approves UTOPIA Fiber Build

UTOPIA continues to expand open access model builds.

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Photo of Bountiful City Hall

BOUNTIFUL, May 24, 2023 – The city council in Bountiful, Utah, voted unanimously to approve the building of a city-owned fiber network by Utah-based service provider UTOPIA Fiber Tuesday. 

The open access fiber infrastructure will be owned by the city but operated by UTOPIA Fiber, which will then lease the fiber to internet service providers. 

City council members expressed their resounding support for the program. We believe that the estimates of take rates are conservative and reasonable when compared to like communities, said City Manager Gary Hill, pointing to neighboring town Centerville that has 49 percent take rate on its city-owned network. 

Bountiful will issue $43 million in bonds to fund the program, announced the city. The debt service for the bond will be paid for using system revenues with any excess revenue invested into affordability assistance, city council members said.  

The initial contract term is 10 years with buildout expected to take 2-3 years. The city anticipates that it will make profit on the investment within four to five years of operation. 

In 2022, at the request of residents, the city issued a request for proposals that were released to potential fiber providers to build and operate a city-owned network. In January, Bountiful officials began contract negotiations with UTOPIA. 

“The purpose of the City’s involvement with fiber is to provide a competitive marketplace for internet service providers through an open access network,” read the city’s statement.  

The announcement comes months after West Haven, Utah announced its contract with UTOPIA Fiber for a city-wide network. 

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Open Access

AT&T Closes Open Access Fiber Deal With BlackRock

In a new joint venture, AT&T will expand its fiber network across the nation.

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Photo of Christopher Sambar of AT&T

NEW ORLEANS, May 12, 2023 – AT&T is set to invest several million dollars of capital into fiber builds across the country as it announces the closing of its joint venture deal with fund manager BlackRock, the company said.  

In December, AT&T and BlackRock announced the formation of their joint venture, Gigapower LLC, to operate and deploy a fiber network to 1.5 million customers using a commercial open access platform.  

The deal between the companies closed Thursday. According to the press release, the new company’s goal is to “create the United States’ largest commercial wholesale open access fiber network to bring high-speed connectivity to more Americans.” 

“We believe fiber connectivity changes everything. That’s why we’re already one of the biggest investors in fiber in the United States,” said John Stankey, CEO of AT&T in a statement.  

“The demand for high-speed connectivity is unprecedented, and through this innovative partnership with BlackRock, one of the world’s foremost investors in infrastructure, we’re able to connect even more people and businesses, accelerating our efforts to help close the digital divide,” he said. 

Gigapower will enable AT&T to expand its fiber reach beyond its traditional areas and spread across the country, read the press release. BlackRock brings significant expertise and capital to support the buildout. 

The company expects to expand into Las Vegas, Nevada and areas of Arizona as well as Northeastern Pennsylvania and parts of Alabama and Florida that are currently outside of AT&T’s service areas. 

Christopher Sambar, executive vice president of AT&T, said in a Connect (X) event Wednesday that the company has already invested millions of dollars to build the most expansive fiber network in America.  

Between 2018 and 2022, AT&T invested $120 billion into the US economy via capital expenditures, he said, making the company one of the largest capital investors in America. 

Fiber is the backbone of wireless and 5G technology, he said. It is essential that the industry builds the foundation of fiber to support 5G and enable further innovations in the technology. 

According to Sambar, well over 170 million customers are being serviced with high-speed 5G networks and close to 300 million are serviced with speeds close to 5G.  

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Open Access

Utility-Based Broadband Touted as Solution for Addressing Digital Divide

Broadband infrastructure can be seen as a fourth utility after water, gas and electricity.

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Photo Sean Stokes from Keller and Heckman

HOUSTON, May 5, 2023 – A utility-based broadband model is the only solution to bridge the digital divide, panel heard at the Broadband Communities Summit Thursday. 

“If we’re going to solve the digital divide, we need to use the utility model,” stated Josh Leonard from engineering company Burns and McDonalds. 

A utility model, sometimes dubbed municipal broadband, is broadband infrastructure owned by public entities. Service is provided to residents by service providers that lease publicly owned networks in an open-access system.  

Following the COVID-19 pandemic, most state and city officials understand that broadband needs to be the fourth utility – after water, gas and electricity – said Leonard, but they do not treat it as such. 

Utilities understand how to operate large infrastructure projects that connect hundreds and thousands of homes, said Sean Stokes, partner at Keller and Heckman law firm. Utilities already have a core internal communication capability and already have essential infrastructure in place such as utility poles. 

Although utilities rarely want to be an internet service provider, Stokes continued, they are uniquely positioned to effectively run the network and lease it to providers. Open access enables partnerships with entities that want to be investors but don’t want to operate or be a provider, said Ashley Poling of fiber network software company COS Systems. 

Building single-use fiber, as many ISPs do when connecting communities, harms communities by requiring multiple digs in the future. The goal is to build capacity for all current and futures once, said Franciso Arbide of NextEra Infrastructure Solutions 

Does so allows more flexibility to add providers, eliminates issues if providers have poor service, and put pressure on non-performing providers, said Arbide. 

Entities looking to invest in large-scale infrastructure investments are not making realistic assessments of the actual cost of deploying infrastructure, cost and time to access utility poles, increased cost and delay in supply chains, and labor shortages, said Stokes. The best solution is to utilize the assets that utilities already have in their toolbelt, he said. 

Experience is the number-one priority when looking to build a broadband project, agreed Seema Patel of Chapman and Cutler. “Having experience in the industry is really going to be critical,” she said. 

“This infrastructure-based utility model is what succeeds,” said Poling. “The states that understand this will really achieve almost 100 percent digital equity. Others will not.”

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