Missouri City Utility to Complete Fiber Build Using Utility Lease Model

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.