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In Danville, Virginia, an Early Adopter of Open Access Seeks to Prove the Business Model

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Postcard depicting Danville, Va. from the Boston Public Library used with permission

July 14, 2020 — The United States’ first municipally owned open-access fiber network continues to revitalize the business sector of Danville, Virginia.

Opportunities exist today in Danville and surrounding counties that never could have before, thanks to the city’s open access network, known as Network Danville or nDanville for short.

nDanville is a city-owned open access network consisting of approximately 150 miles of fiber optic cables, which provide Gigabit service to three communities in southern Virginia.

As a result of the network, Danville has transitioned from being known for having the highest unemployment rate in Virginia to being ranked as one of the top digital cities and business destinations in the nation.

“Today, the nDanville network connects hundreds of businesses, has sharply reduced costs for local government, health care providers and local schools, and has introduced more competition into the telecommunications marketplace,” said Joe King, city manager of Danville until 2015, in an interview with Community Networks.

Danville paved the way for open access

At the time of its development in the early 2000s, “nDanville was a visionary project,” according to the network’s designer Andrew Cohill, CEO of consulting firm Design Nine.

In the 1990s, Danville’s economy began to stagnate as the city’s two primary industries, textiles and tobacco, faced adversities. The use of tobacco declined and textile manufacturers began outsourcing labor to save money.

Postcard depicting tobacco auction in Danville, Va. from the Boston Public Library used with permission

The city was stuck in a duopoly, dictated by two incumbent providers: Verizon and Comcast.

City leaders, economic developers and regional organizations were tasked with creating a model for a public network that would not compete with the private sector.

Other Virginia cities were struggling with lawsuits at the time for this very reason, as Virginia is one of many states that have laws imposing some form of restrictions against municipal broadband.

After much deliberation, leaders decided to utilize an open access model.

nDanville paved the way at a time when open access networks were an untried model in America.

Proponents see open access as a better business model

Open access networks utilize an alternative business model than traditional telecommunications networks, aiming to generate competition to better serve users and overcome incumbent monopoly control.

Unlike more common vertically integrated network arrangements, meaning that one company owns, operates and provides services on the network, an open access network utilizes a horizontally layered business model.

In an open access network, the owner or manager of the network does not supply services for the network. Instead, services are supplied by independent internet service providers.

There are two different models utilized by open access networks: a two-layer model or a three-layer model.

In the two-layer open access model, one entity is the network owner and operator, while multiple service providers deliver services over the network.

nDanville utilizes the three-layer open access model, in which the network infrastructure is owned by one entity such as a company, community-owned enterprise or municipality, the operations and maintenance of services are run by a second company, and the internet service providers selling their services to subscribers compromise a separate third company. In almost all cases, multiple companies operate in the services layer.

Generally, the network owner funds the construction of the infrastructure, the operator oversees construction and maintenance and the providers provide internet service to end users.

The open access network owner remains neutral and offers standard pricing to internet service providers on its network.

Unlike other broadband business models, open access networks offer unique opportunities to benefit all stakeholders and most importantly customers, as competition generated between independent service providers ensures lower prices and higher quality of service for subscribers.

Building open access networks benefits incumbents and internet service providers by lowering the barrier for entry into the market, alleviating the capital heavy infrastructure building process.

Utilizing an alternative business model to the one utilized by incumbents alters the underlying costs, revenue and income potential for the network.

nDanville’s slow and steady growth has proven successful

Because Danville already had ownership of a municipal electric plant, nDanville’s fiber network is operated as a city-owned utility.

This gave the city an advantage to transition with ease, eliminating the negotiation process necessary for pole attachment fees and minimizing overall costs.

Postcard depicting a mill in Danville, Va. from the Boston Public Library used with permission

The city loaned itself enough capital to build a municipally-owned open access fiber network, borrowing a $2.5 million loan from the Danville’s electric utility fund.

The original loan borrowed to initiate building the network was paid off in three years, with 6 percent interest by revenue generated by the network, nDanville then-Network Manager Jason Grey said in an interview with Muni Networks

No Danville taxpayer money has been collected for the construction of Danville’s open access network, he said.

The network was rolled out in three phases to gradually begin serving the city.

The first phase, which launched in 2004, connected 17 Danville public schools to the fiber network to ensure students and teachers had necessary digital technology resources and skills.

The second phase began in 2007 and brought greater bandwidth, speeds and accessibility to businesses located in Danville.

“School and business connections were instrumental in showing that the network over time could pay for itself,” Cohill said.

Today, nDanville passes more than 1,000 business locations. Current customers have access to 100 Mbps fiber connections, capable of delivering up to 10 Gbps connections upon request, according to Cohill.

nDanville is now in its third and final phase, aimed at bringing fiber to the home. As the COVID-19 pandemic forces many individuals to complete work and school from home, supplying fiber to the home is more necessary than ever.

The network began going residential in 2011. After the city initially rejected a more ambitious plan to expand the network more rapidly, the city began offering residential service by connecting 250 homes.

nDanville’s network is continually expanding, utilizing revenue generated each year to continue to build fiber to the home infrastructure.

Now, more than 16 years later, advocates say that Danville’s slow, steady approach has paid off.

The business sector calls nDanville an asset to local commerce

Serving business was a high priority of nDanville. Danville was hit hard by the demise of the tobacco industry and the loss of manufacturing jobs, which put a strain on the local economy.

City leaders knew the capabilities associated with fiber infrastructure, as fiber was already being deployed to about 500 properties in the city’s business and industrial parks before nDanville was born.

Postcard depicting the central business district in Danville, Va. from the Boston Public Library used with permission

Expanding the network effectively transformed the city from a withering tobacco and textile town to a modern global manufacturer, allowing Danville to make a comeback after losing its traditional economic base.

The network aids local and global businesses alike by dramatically reducing the cost of telecommunications.

On average, open access networks aid businesses by achieving price reductions of up to 70 percent. This allots more capital for entrepreneurs and start-ups to invest in the core of business.

The network is also equipped to handle mounting bandwidth demands, giving businesses growth capacity.

The economic development of Danville may have stalled at the turn of the twenty-first century, if the city had continued to rely on the services of incumbents like Verizon and Comcast. 

“As nDanville grew to connect more businesses, the economy began to rebound as well. The most visible results of the network are the companies and jobs that have come to Danville in the past two years,” Cohill wrote.

The city of Danville was able to curb an oncoming economic slump by building an open access network, which effectively altered industry.

The prowess of nDanville makes Danville an attractive site for global manufacturers, who are impressed with the resources that the city has to offer.

Today, the region is one of the top 25 locations in the country for business, exemplified by Zeyuan Flooring International, a wood floor manufacturer, choosing Danville over Los Angeles for its first U.S. facility in 2013. The arrival of the company produced 100 local jobs.

A growing list of companies have expressed interest in utilizing the city’s broadband since it began the fiber to business push.

Continually expanding network infrastructure will likely continue to create jobs in the city.

Principles of open access networks promote equity

A 2004 Danville briefing paper written by King detailing the goals of nDanville stated that “the private sector should take the lead in deployment and operation of broadband networks and services in Danville.”

“The city should facilitate and support this through policies and regulations that encourage private sector investment, competition, and innovation,” King continued.

Open access networks embody the values of universal service by attempting to offer equitable access to underserved areas

Further, these networks level the playing field, ensuring that small and large providers alike can compete to offer services.

Open access networks represent public-private partnerships, indicating that it will take cooperation and effort from both to close the digital divide.

Open Access

UTOPIA’s Projects Proceeding in California and Montana, CEO Says

Both the GSCA and Yellowstone Fiber are using UTOPIA’s techniques to provide open access broadband over fiber.

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Barbara Hayes (left) and Roger Timmerman (right) speaking at Broadband Communities Summit 2022 on May 4

HOUSTON, May 4, 2022 — UTOPIA Fiber’s open access model has found success in California, Montana, and Idaho as it continues to deploy across Utah, the company’s CEO said Wednesday.

“Right now, we are working with [Golden State Connect Authority] to identify various pilot areas for the project and have started preliminary engineering work to determine the initial project area,” Roger Timmerman said at the Broadband Communities Summit 2022.

During the press conference, Timmerman also pointed to UTOPIA’s expansion into Santa Clara, Utah, and its completion of its original 11 Utah cities by the end of 2022.

Timmerman was joined by partners Barbara Hayes of the Golden State Authority and Yellowstone Fiber CEO Greg Metzger as they delivered remarks on their joint ventures. The partnership will create the largest publicly owned fiber network in the US, and as it stands now, would span 38 of California’s 58 counties.

“California may be the world’s fifth-largest economy, but our state’s connectivity is decades behind,” Hayes said. “Investing in open access fiber will be transformative for California.”

Both Metzger and Hayes emphasized that their decision to partner with UTOPIA was largely informed by the company’s track record.

“We needed to have a partner who was successful and had done it before,” Metzger said. “For Montana, this is going to be a breath of fresh air.”

Yellowstone Fiber, formerly known as Bozeman Fiber, is a not-for-profit that will replicate UTOPIA’s open access model to provide broadband to the greater Bozeman region; it will own and operate the fiber but will rely on UTOPIA for assistance on the backend.

UTOPIA’s model of open access has long been a point of interest in the telecom industry. While some claim it will be a solution to the digital divide, other assert that it has merely created a “race to the bottom” where internet service providers are constantly pushed to undercut their completion. Timmerman and others have pushed back against the “race to the bottom” assertion, claiming that providers can find ways other than price to distinguish themselves from their competition, such as superior customer service. Additionally, they point to their recent track record as evidence that critics’ concerns that they can maintain a positive cash flow are unfounded.

Though UTOPIA, a sponsor of Broadband Breakfast, now has positive revenue and has served as a model for open access projects around the country, critics still point toward its more than $300 million in outstanding debt it accrued in its early days, before Timmerman was at the helm.

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Open Access

‘Worst Broadband City’ Brownsville Approves Open Access Fiber Project with Lit Communities

Lit Communities will operate the network, with subsidiary BTX Fiber as the last-mile provider. HMI Utilities is prime contractor.

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Photo of Elizabeth Walker and Andres Carvallo at the city council meeting.

BROWNSVILLE, Texas, April 1, 2022 — During a special city commission meeting on Wednesday, council members voted to approve a fiber project that will bring high-speed broadband to 100% of its citizens.

Elizabeth Walker, Brownsville assistant city manager, and Andres Carvallo, CEO and founder of CMG Consulting LLC, recommended that the council authorize two respondents, HMI Utilities with Lit Communities, for a combined proposal to maximize technical and financial capacity.

Brownsville, Texas, is a city of more than 182,000 people and is one of the cities with some have called the worst broadband city in the country.  The National Digital Inclusion Alliance in 2018 listed Brownsville and a neighboring community as one of the top two worst connected cities in the country with a population of more than 65,000. For Brownsville, 47.1% of households do not have broadband of any type, NDIA found

Lit Communities, a fiber-builder that partners with municipal, county and other government entities, will operate the network, with HMI Utilities as the prime contractor. Lit Communities subsidiary BTX Fiber will be the last-mile provider on the network. However, the project will be an open network with multiple internet service providers.

Standard service on the network will be at least 100 Megabits per second (Mbps) symmetrical.

The research for this project began nearly a year ago in April 2021 when Walker and Carvallo looked at different business models, like public policy only, public services, open access, infrastructure, municipal retail (business only and residential). They looked at these models in similar projects in Texas and across the country, including in places like Knoxville and Santa Cruz County. Eventually, they decided on an open access model.

Specifics of the Brownsville network

All citizens will have access to this broadband. “It is eight middle-mile fiber rings to address the full geography of Brownsville,” said Walker.

The city will own 100% of the middle mile and will be able to license it out in private-public partnerships to create revenue, as well as revenue from the last mile connectivity. To ensure affordability, there will be a cap on what providers can charge.

Affordability “is very important,” said Walker. “The crux of the consideration is just to not deliver access, but to make it affordable.”

This infrastructure will have a life expectancy of 50 to 100 years, said Walker.

Walker said that “evidence suggests that broadband services have a net positive economic and social impact to communities by enhancing key functions such as economic competitiveness, workforce development, training, educational capabilities, municipal operations, and smart city developments.”

This is part of the private-public partnership model of Lit Communities. The company recently partnered with Ohio’s Lorain-Medina Rural Electric Cooperative to install fiber on existing utility poles. In these projects, the municipality in question provides the capital necessary to build a middle mile or backbone network.

“We are not stopping with these initial groups of towns that we are looking at and working into right now,” said Rene Gonzalez, Lit Communities’ chief strategy officer. “It is just the beginning.”

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Open Access

Construction of Yelllowstone Fiber Network in Montana Begins Ahead of Schedule

The project will be Montana’s first open-access fiber-to-the-home network.

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Photo of Bozeman, Mont., from January 2011 by Mike Cline used with permission

WASHINGTON, March 24, 2022 ­– Montana fiber provider Yellowstone Fiber announced Wednesday that construction has begun on a $65-million network based in Bozeman, well ahead of anticipated pace.

The network, operated in partnership with large Utah-based open-access network UTOPIA Fiber (a sponsor of Broadband Breakfast), will be Montana’s first high-speed all-fiber internet network as well as its first open-access fiber-to-the-home network.

The start of construction for the privately-funded network comes only six months after initial announcement of the project.

Not only will the network connect every address in Bozeman, but it will also extend “deep into Gallatin County,” according to the developer.

Businesses are expected to receive speeds of up to 100 Gigabits per second and residential properties will experience up to 10 Gbps to create what the city of Bozeman has called “the first true gigabit city in the state of Montana.” Pricing plans are expected to be announced this spring.

The first six internet service providers to provide services on the network will be Blackfoot, Global Net, Hoplite Industries, Skynet, Tri-County Telephone Associates, and XMission.

Montana is one of the least-connected states in the U.S. About a third of residents in Gallatin County, in which Bozeman is a city, lacks internet access.

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