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Missouri City Utility to Complete Fiber Build Using Utility Lease Model

Pioneered with city-owned Huntsville Utilities in Alabama and Google Fiber, the utility lease model makes unlit fibers available to others.

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Photo of Jeff Reiman, president of the Broadband Group

September 2, 2022 – Springfield, Missouri, is set to complete the second utility lease model fiber infrastructure build in the United States later this year.

The city announced its plan to enable affordable high-speed internet services citywide via a utility lease model in 2019. The model allows an electric utility company to expand its fiber optic network to improve its own electric and information services without the risk of investing as an internet service provider.

A utility company builds a fiber network on which it builds its services. It will then lease the excess fiber capacity – or dark fiber – to an ISP which, in turn, assumes the responsibility for marketing, operating, and servicing customers.

This model was pioneered by the Broadband Group in 2016 with city-owned Huntsville Utilities in Alabama. Huntsville Utilities primarily leased its unlit fiber to Google Fiber which made high-speed, affordable broadband connection available to every address of the city, reported the Fiber Broadband Association.

Fiber infrastructure is essential for new growth, said Jeff Reiman, principal at the Broadband Group, in an interview. Cities should consider how they can build a platform of high-performance connectivity to ensure that new technologies in the future will not meet bandwidth barriers, said Reiman. “Without fiber infrastructure, you may not have the platform to support new technologies.”

The utility lease model presents a unique opportunity to break down barriers to entry in the fiber space by reducing building and operating costs for both parties, he said.

How it worked in Springfield, Missouri

Springfield’s City Utilities invested $120 million over a four-year period to follow this model. It will lease its unlit fiber network on a nonexclusive basis to internet service provider Lumen Technologies, previously CenturyLink.

Lumen expects to provide Springfield’s 180,000 residents with symmetrical gigabit internet speeds without customer rate increases or cherry picking the wealthier, denser areas of the city. “In fact,” read the project report, “the initial network builds were in low-income neighborhoods.”

Originally planned for completion in Spring 2023, the citywide fiber network is now expected to be complete in October of this year. One hundred percent of the fiber network will be available to Springfield residents at the beginning of next year after quality testing, said Jeff Bertholdi, director of a division of City Utilities, in an interview with Broadband Breakfast.

“We are already seeing real benefits of the system; our tenants are super happy,” said Bertholdi. Springfield is now working to attach to surrounding fiber networks, he added.

The Broadband Group reported that every residential property within the utilities’ service territory is passed by and able to connect to high-speed internet. City Utilities now has a city-wide fiber network that can support grid modernization technologies and other internal operational priorities, TBG reported.

Springfield has a long history of expanding its fiber infrastructure services. In 1991, Springfield established a city-led telecommunications strategy, empowering the municipality’s utility department to offer telecommunications services to county buildings and schools, said Bertholdi. In 2015, the city had close to 600 miles of fiber infrastructure.

The future of the utility lease model

The Broadband Group hopes to expand the utility lease model to other cities. “We are focused on making the current deployments successful,” said Reiman. “The more success we have [with the utility lease model], the more it is going to lead to other utilities adopting this model.”

“It is important to understand, however, that this is not an off-the-shelf approach,” added Reiman. Every market is unique and the utility lease model may not be the right solution for every situation, he said.

It’s important to incentivize the private sector to join up with companies that own the infrastructure and the right-of-way to combat barriers of entry, added Bertholdi, saying that the model will make broadband more accessible and affordable for companies looking to break into the broadband space.

This announcement follows the introduction of the GRID Broadband Act to the Senate earlier this month. The legislation would make grants available to those who can build middle mile fiber infrastructure using existing assets, such as utility structures, to build out broadband infrastructure more quickly.

Scott Pell, vice president of consulting company for electric utilities, said last week that electric utility companies are uniquely suited to use existing structures to carry out new fiber infrastructure. Huntsville, Alabama and Springfield, Missouri remain the sole cities in the United States to use the utility lease model.

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Fiber

New Whitepaper Shows Long Wait Times for Fiber Construction Materials

The Fiber Broadband Association has said there is up-to 60 weeks of wait for materials necessary for fiber deployment.

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Photo of Gary Bolton, president and CEO of the Fiber Broadband Association, via fiberbroadband.org

WASHINGTON, September 20, 2022 – Covid-19 and other supply chain stressors have contributed to lead times of up to 60 weeks for materials necessary for fiber deployment and operation, according to a recent white paper from the Fiber Broadband Association.

Speaking at a web event Thursday, FBA President and CEO Gary Bolton presented some of the report’s findings. The waiting period for fiber optic cabling is 52–60 weeks, the report says, and lead times for other necessary goods – e.g., 10–20 weeks for cabinets and splitters, 20–35 weeks for multiport terminals, and up to six months for home equipment – are also extended. The report also notes shortages or inflated prices of raw goods such as plastics, resins, steel, aluminum, copper, and wood.

Prices in the fiber broadband industry are also affected by the global semiconductor shortage. For instance, the price of neon – necessary for semiconductor production – has spiked in the wake of Russia’s invasion of Ukraine, which halted production from a major neon manufacturer in Mariupol and another in Odesa.

President Joe Biden last month signed the Chips and Science Act into law, which includes $52 billion to incentivize domestic manufacturing of semiconductor chips.

In addition, logistical bottlenecks still plague the supply chains, the report said: “COVID shutdowns continue in waves around the globe, with Chinese ports particularly hard hit this year. In April 2022, up to 20% of the 9,000 globally active container ships were stuck outside backed-up ports in various parts of the world. Almost a full 30% of that backlog was created by shutdowns in Chinese ports alone.”

Supply chain disruptions have contributed to the inflation currently disrupting the broadband industry. To avoid such disruptions, the FBA report recommends a series of strategies, including increased domestic sourcing of materials, supply chain diversification, and the utilization of AI technology.

“AI can help companies make short term, reactive decisions about how to source components, and it can also help them make longer-term planning decisions about where they will manufacture their goods,” the report says.

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North Carolina Officials Tout Recent Investments in Rural Fiber

North Carolina hopes to achieve 80 percent subscription to broadband services among its citizens.

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Screenshot of Nate Denny, deputy secretary of the North Carolina Department of Information Technology’s Broadband and Digital Equity Division

September 9, 2022 – With $260 million being awarded by North Carolina to several fiber deployments, a key state official highlighted his strategy toward broadband infrastructure, community engagement, mapping and digital literacy initiatives.

Speaking on Wednesday at the Fiber Broadband Association’s Fiber for Breakfast event, Nate Denny, deputy secretary of the North Carolina Department of Information Technology’s Broadband and Digital Equity Division, said that the Tar Heel State allocated more than $1 billion from its American Rescue Plan funding for different facets of broadband deployment.

Dubbed the Growing Rural Economies with Access to Technology, $260 million of an anticipated $380 million is to be awarded, including $206 on August 31, 2022.

According to Denny, the $260 million already allocated will span 92 counties and connect more than 115,000 new homes and businesses.

Additionally, the private sector has provided $120 million in matching funds to the $260 million in public funds already spent, Denny said.

GREAT is a reimbursement program, Denny explained, and grantees have two years to complete projects under state supervision. Grantees thus far include major national companies – including AT&T and Charter – as well as small regional providers and cooperatives.

Beneficiaries of GREAT funding are expected to participate in the Federal Communications Commission’s Affordable Connectivity Program, which provides discounts on monthly internet bills and eligible device purchases to low-income households.

Denny said that North Carolina hopes to achieve 80 percent subscription to broadband services among its citizens in the next few years. Besides GREAT, the state’s American Rescue Plan–funded broadband programming includes the Stop Gap Solutions program, which provides targeted solutions such as satellite coverage to hard-to-reach locations. It also includes a broadband mapping initiative and a $50 million digital literacy effort.

In addition to current funding programs, Denny expects North Carolina to be the recipient of more than $800 million in upcoming Broadband Equity, Access, and Deployment program grants. He said that the state plans to funnel BEAD moneys into existing programs that have proven themselves effective.

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Fiber Providers Feeling the Heat of Inflation as Cost of Materials, Labor Rise

One fiber tools company says inflation is hitting broadband developers hard.

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Photo of Sam Pratt, CEO of Render Networks, from his Twitter account

September 8, 2022 – Inflation-driven high prices for materials and labor are putting significant economic pressure on builders of fiber networks, Render Networks CEO Sam Pratt told Broadband Breakfast Tuesday.

Inflation woes have gripped America for almost a year and a half. The latest consumer price index report has year-over-year inflation at 8.5 percent. According to the Federal Reserve Bank of Atlanta’s data for August 2022, the median hourly wage jumped 6.7 percent quarter-over-quarter.

The fiber industry is feeling the effects of inflation like all others. Pratt, who runs the software company that assists fiber construction companies, said that fiber developers that already submitted cost estimates in their government funding applications but haven’t yet ordered supplies or contracted for labor will likely run over budget due to inflation.

Consulting firm Dgtl Infra estimates that fiber optic cables cost $60,000–$80,000 per miles buried, up to sixty percent of which pays for labor. Taking the average of Dgtl Infra’s estimate – $70,000 per mile – as current, and if quarter-over-quarter wage growth remains at 6.7 percent – as it has since June 2022 – each new mile of fiber laid will cost an additional $4,814 in labor costs come November.

For a fiber deployment of 7,000 miles – the length of Google Fi’s project in Kansas City – the next three months would bring a labor-cost increase of $33,698,000.

Government officials warned last summer that the inflation problem could make closing the digital divide more challenging. One official from Minnesota said the increased cost of deployments could even be pushed onto consumers, raising their monthly bills.

Streamlining production

Inflationary pressures make efficiency in the construction process incredibly important, Pratt said he believes, adding construction costs make up the vast majority of broadband funding. He said his company offers tools to allow users to digitally map all progress and to streamline workflows. Pratt said that extensive geospatial data allows builders to better identify and eliminate inefficiencies in the construction process.

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