WASHINGTON, September 4, 2023 – Cooperatives and coalitions between utility providers will be essential for expanding rural broadband access, said Sachin Gupta, director of government business and economic development at Centranet, on Friday.

Centranet, a member of the Cooperative Broadband Coalition of Oklahoma, is entering the final stage of building over 4,000 miles of fiber-optic infrastructure to serve about 17,000 households, all two years ahead of schedule.

“I’d say a lot of that is down to the effort of the cooperative,” Gupta said at an Ask Me Anything event in the broadband community.

The cooperative is collectively owned by its member organizations, and does not operate for profit. This frees members to share resources and work to provide broadband service to areas too sparsely populated for traditional providers to invest in, Gupta said.

Gupta pointed to two factors that make electrical cooperatives like his well-suited to provide broadband in rural areas.

First, they have existing grids under their ownership, many of which are already equipped with fiber. This gives them a base to expand on, and removes the red tape involved in building on poles owned by other companies.

“We’re already an infrastructure company,” Gupta said. “So, building another kind of infrastructure, it’s not that difficult for us.”

And second, they have resources already dedicated to analyzing geographic data. Information about the locations where providers are planning to build is a prerequisite for beginning even a preliminary design process, according to Gupta.

“A strong GIS group is the engine that will accelerate your co-op,” Gupta said. “If you have no GIS people, start with one. If you have one, add another.”

Collaboration between rural providers will also be essential for bridging middle-mile gaps in networks, according to Gupta. He said broadband providers with small footprints working to connect their networks can make up for the lack of middle mile fiber infrastructure in rural areas.

“Coalition-based middle mile networks, I think those are the future,” Gupta said. “Those are the things that allow these rural networks to flourish.”

For over 20 years, the city of Palo Alto, the “Birthplace of Silicon Valley,” has flirted with the idea of building a city-owned municipal fiber network. Now after years of debate, numerous studies, several false starts, and many unfulfilled RFPs, city officials say they’re finally moving forward with a city-owned fiber network they hope will transform affordable broadband connectivity citywide.

Palo Alto officials tell ILSR that the project will be spearheaded by the city-utility, and deployed in coordination with a major upgrade of the city’s electrical systems. Phase One of the city’s planned fiber deployment should begin later this year, delivering fiber access to around 20 percent of the city–or 6,500 homes and businesses.

Phase One will be funded entirely from the utility’s existing cash reserves. Profits from that deployment will then be used to expand affordable, multi-gigabit fiber access to all of the city’s 63,210 residents. Though no shortage of challenges remain.

A long time coming

That Palo Alto residents have been clamoring for better, more affordable alternatives to regional telecom monopolies for 25 straight years speaks for itself. The high costs, slow speeds, and abysmal customer service of regional telecom giants AT&T and Comcast have long driven the public’s unflagging interest in better, cheaper connectivity options.

Palo Alto officials have been talking about building such a network since at least 1998. In 2001, the city conducted a small network trial that was not expanded due to cost. In 2006, the city issued an RFP that eyed a public-private partnership (P3) to expand fiber access, but says it terminated this effort “due to the lack of financial resources of the private firms.”

In the years’ since, the city has issued several additional RFPs with an eye on P3s, but consistently found that providers weren’t keen on spending the kind of money necessary to ensure even, equitable access to affordable fiber. Under the P3 model, cities generally don’t have much control over the contours, details, and pricing of the finished network.

“[Major ISPs] were looking to pick and choose where they wanted to go within the city,” Palo Alto Director of Utilities Dean Batchelor told ILSR. “They want to go to a lot of the MDUs, multiple dwelling units, large complexes, things like that. And the goal from the council was that they wanted to build the entire city out. There was not going to be a partnership that would agree to build 100 percent of the last mile.”

Officials determined that a PPP wouldn’t provide the kind of uniform affordability the city was aiming for, while an immediate citywide build would be too cost prohibitive.

Ultimately, last winter city leaders decided that an incremental build–starting with the least competitive and most vocally underserved parts of the city–would make the most financial sense.

“We gave the city council three options,” David Yuan, strategic planning manager at the Utilities Department, told ILSR. “The first was a citywide build starting right away, but we would have to bond finance like a hundred million dollars. And then the second option, the one that they chose, was to do an incremental build with the twenty million dollars that we have available.”

COVID, needed electrical utility upgrades change the calculus

Palo Alto is currently the only major city in California that owns and operates its own municipal utility providing residents with electricity, natural gas, water, sewer and limited fiber optic services. As part of the city’s pledge to become carbon neutral by 2030, Palo Alto is conducting a major upgrade of the city’s electrical grid.

That upgrade is expected to cost somewhere between $220 million and $306 million, and take the better part of seven years to complete. A key component of those upgrades is the $26 million expansion of the city’s existing fiber backbone; to be used primarily for utility maintenance, including the management of city smart meters and municipal services.

Last December, city officials voted to approve plans to spend another $20 million to extend access to that network to local residents and businesses. Phase One of the deployment is expected to provide affordable access to around 7,160 homes and 875 businesses, paid for by the city utility’s existing fiber and electric reserves.

“Areas where we were going to go into the first phase of the fiber is pretty much the first phase of the rebuild on the electric side, so we think that there might be some cost savings and some sharing of the electric utility funds to be able to replace these poles, probably at a much quicker pace than what we would do if we were just doing them on the fiber side,” Batchelor said.

While electrical upgrades were a motivating factor, officials say Palo Alto’s newfound urgency was also driven by the widespread frustration with broadband access many locals experienced during the COVID home education and telecommuting boom.

“COVID definitely played a major role,” Yuan said. “I think during that time span, everyone had to work remotely in both school and for work…Internet basically became an essential service. And then people were having problems at home with their capacity or getting dropped off calls. So I think at that time the Council realized that it should be considered a public utility as well.”

Palo Alto generally sees more broadband competition than many municipalities that eye a municipal network. According to city surveys, Comcast provides service to around 70 percent of the city, while AT&T provides either fiber or aging DSL to around 30 percent. Independent ISP Sonic provides gigabit fiber access to roughly four percent of the city.

But the same survey indicates that 36 percent of city residents are frustrated by substandard customer service from their ISP, and more than 46 percent of locals are dissatisfied or somewhat dissatisfied with the cost of broadband service.

A quest for lower prices was cited as the number one reason residents would be likely to switch to the Palo Alto fiber network.

Data consistently indicates that affordability remains among the top obstacles to widespread broadband adoption. Darren Numoto, director of IT for Palo Alto, told ILSR that while it’s too early to detail tier pricing, officials are keenly interested in leveraging the city’s new fiber build to drive down costs for marginalized populations.

Challenges abound, including potential utility pole standoff with AT&T

Last May, the City Council approved a contract amendment with Magellan for program management, organizational change management, network operations and technical support, as well as the utility pole electric make-ready engineering necessary for Phase One.

But expanding the city’s existing fiber network to every resident and business still faces no shortage of hurdles. Including the need to negotiate pole attachment rates with what will ultimately be a direct competitor for the network in some neighborhoods: AT&T.

Palo Alto and AT&T co-own a significant number of the city’s utilities poles under an agreement that dates back to 1918. Some competitors, like Google Fiber, have faced significant delays due to the difficulty of utility pole negotiations with AT&T, a company that has spent the better part of three decades attempting to undermine the development of community broadband alternatives.

“We definitely have concerns,” Yuan said. “They have been slow to respond to some of our requests. So, we are trying to see what kind of cooperation they’re giving us. And we’re also looking into joining the North California Joint Pole Association (NCJPA) to see if there’s more enforcement on that end.”

The city’s plan requires running 48 miles of new underground line and 35 miles of overhead cable requiring the use of 6,000 existing utility poles. Phase One alone requires passing 1,750 existing poles, the attachment of cable to 1,300 poles, the replacement of 100 poles, and working with third-parties to lower hardware on another 325 poles.

Between ongoing environmental review and negotiations with AT&T, the city has its hands full for the remainder of the year.

“I think the environmental review is expected to take about six months,” Yuan said. “AT&T will be an ongoing discussion for a while, but hopefully we can get them to the table soon.”

Once the environmental review and pole attachment negotiations with AT&T are completed, officials say future deployment phases will be dictated by resident interest gauged by community surveys, the need to minimize disruption, alignment with the city’s electrical system upgrades, and neighborhood proximity to existing fiber huts.

Locals can receive updates via the project website and accompanying blog. Unsurprisingly, city officials are thrilled to see meaningful progress on a project a quarter-century in the making.

“We’re very excited about the project. It’s been 20 plus years and waiting,” Yuan said.

Editor’s Note: This piece was originally published on MuniNetworks.org on August 15, 2023, and is reprinted with permission.

In Cambridge, Massachusetts, digital equity advocates and city leaders have been debating the idea of building a citywide municipal fiber network for years now, mostly over whether the estimated $150 to $200 million it would cost to build the network would be worth it.

In a tech-savvy city, home to Harvard and MIT, the former city manager was resistant to a serious inquiry into municipal broadband. He retired last summer. But before he left, he relented on the broadband question – under pressure from city councilors and a local citizen group advocating for municipal broadband, Upgrade Cambridge.

With many residents weary of being held hostage to the whims and high cost of service from the monopoly provider in town (Comcast), which currently controls 80 percent of the city’s market, in 2021 the city hired the well-regarded Maryland-based consulting firm CTC Technology & Energy to conduct a thorough feasibility study. Now, with a new supportive city manager in office, city leaders have agreed to continue to investigate the options laid out in the recently published study.

‘Significant public support’ even if it requires tax money

The study found that for Cambridge to construct a “financially sustainable” citywide fiber network that passes all 52,300 residences and businesses in the city, “a significant public contribution would be required.”

“In a base-case scenario that applies conservative construction cost assumptions and reasonable revenue projections,” the study says, “the network could require an upfront public capital contribution of $150 million.”

While some city leaders initially balked at the price tag, a market survey conducted by CTC, found “significant public support for the City taking steps to bring about a new FTTP service, even if a public contribution is required.”

“Eighty-seven percent of respondents agreed that Cambridge needs an additional Internet service provider. When asked if they support City facilitation even if it required a contribution, two-thirds of respondents strongly agreed (40 percent) or agreed (26 percent) the City should facilitate building a fiber broadband network that allows for high-speed service and competition, even if this requires a tax subsidy.”

And when asked if they would be willing to purchase services from a new provider, 58 percent of survey respondents who now get service from Comcast said they would be “very or extremely likely” to subscribe to new Internet service.

Early on, the study seeks to disabuse councilors of the notion that municipal broadband means the city must go it alone and “be the only entity that builds, operates, maintains, and directly markets and offers retail services.”

The city has options, which may involve public-private partnerships. In fact, the study says, “there exists a strong likelihood of private interest in a partnership with the City on a broadband network.”

From there, the study lays out four models the city could pursue and includes a detailed analysis of the risks and trade-offs associated with each: a network fully owned and operated by the city; one where the city builds and owns the infrastructure and then contracts with a private ISP to offer retail service; an open access network in which the city builds and owns the infrastructure and then leases the network to multiple private providers; or one that is largely funded and operated by a private provider.

Cost assumptions and architecture

The construction cost estimates were based on several assumptions, namely that the network would consist of “62 percent aerial construction using existing utility poles and 38 percent underground construction” with an estimated construction timeline of about five years.

Additionally, the cost estimate assumes a 40 percent take-rate that would generate $70 per month, per user “with prices increasing by 3 percent per year.”

As for network architecture, the study advises the city seek to build a network “based on a Gigabit Passive Optical Network (GPON) architecture, which is the most commonly provisioned fiber-to-the-premises service” – the same kind of architecture used by the AT&T, Verizon Fios and Google Fiber, which could be “easily leveraged by triple-play carriers for voice, video, and data services.”

All told, the study envisions deploying 130 miles of fiber both aerially and underground that “will vary between 12- and 288-count based on the projected need in the area,” with a backbone that ranges from 144- to 288-count cables.

City councilors debate familiar questions, skepticism recedes

When CTC presented the results of the feasibility study in March, it proved to be a real eye-opener for one skeptical City Councilor.

As reported by Cambridge Day, Councilor Burhan Azeem said, “it doesn’t sound like it would be as big of a construction project as I was initially worried about.”

“I was a little bit skeptical of municipal broadband because of the cost of $200 million and all this time and energy and effort. And the benefits weren’t clear to me. This conversation has been really helpful in convincing me otherwise.”

When councilors asked about whether it was worth the investment in light of other challenges the city faced such as housing, CTC President Joanne Hovis laid out the variety of community benefits such networks provide in terms of improving economic vitality and quality-of-life – including the ability “to deliver services that we can’t imagine right now.”

It led Councilor Quinton Zondervan to observe that robust high-speed Internet infrastructure is as vital as roads, further noting: “If we went back in time 100 years, we would be debating whether to pave the roads in Cambridge. In the case of broadband, it’s creating potential new business opportunities, learning opportunities and economic opportunities for our residents.”

What’s next?

Should City Councilors decide to move forward, the study provides a “roadmap” for next steps, which includes meeting with and researching potential partners; selecting a business model; issuing an RFI; preparing and launching a procurement process; evaluating bids and selecting partner(s); conducting final negotiations; and awarding a contract.

As for CTC’s recommendation on which business model to pursue, the study says that should the city decide to move forward, CTC recommended the city pursue either building an open-access dark fiber network and lease it to multiple private providers, or enter into a public-private partnership where the private provider shoulders most of the financial risks while allowing the city to retain “long-term ownership” of the network.

Roy Russell, founding member of Upgrade Cambridge, told ILSR he was pleased with the study and the progress city leaders seem to be making to explore how they can bring more reliable and affordable competition to the market.

“One reason municipal broadband runs into trouble, in the few that have had problems, is because they either underestimated the costs or overestimated the revenue,” Russell said. “That’s why I think this study is great because it’s a conservative analysis with plenty of contingencies built in.”

Should the city be successful in building a citywide fiber network, “even for the people who wouldn’t switch (to a new provider), they still benefit greatly from competitive pressure – better service, cheaper rates. Now, there’s no way for the city to monetize that. But, it benefits everyone. So the city should see that, and not look at this as a business proposition in terms of: how are we going to make money off of this,” Russell said.

“The city should see this as infrastructure investment the same way we invest in schools, roads, and sewers. It’s about providing services. I mean, we’ve spent somewhere around $500 million renovating our schools. And the schools are great. So I see this (construction cost) as the price to get competition in the city. The phrase ‘Feasibility Study’ implies: can we do this? There isn’t any question about the technical feasibility. That’s well known. It’s entirely feasible. So the question is: what is the cost and how much value does it brings the city?”

Now that the study has been completed, Russell says his group has a simple ask – that city leaders “proceed in an open and deliberate manner to better understand the alternatives and the decisions that need to be made. We believe if they look at the value it brings, the answer will be to definitely move ahead.”

This article originally appeared on the Institute for Local Self Reliance’s Community Broadband Networks project on May 30, 2023, and is reprinted with permission.