Ownership and Operating Models

A wide range of ownership and operating models can be considered in planning a broadband network with public-sector involvement. Network ownership and network operations are flexible categories as well, with different options for community involvement. This is true for both wired and wireless networks.

When deciding to invest in network infrastructure, project planners should decide in advance their strategy for maximizing the value of the network and the community role in service delivery.

There are three primary scenarios with significant differences in community involvement:

• Provide broadband as a public utility whereby the community owns the network and delivers retail services.
• Build and own a network that is leased to:
  • A single provider that will deliver retail services; or
  • Multiple providers that will deliver retail services through an open-access model.
• Incentivize a private provider to own and operate a network that delivers retail services by providing a financial grant or other incentives or by committing to purchase network capacity to connect community facilities, either through dark fiber or lit services.

Network reach options

The community could construct and own the entire network or decide to limit ownership to individual parts of the network. For example, some communities install only conduit or create a middle-mile network that reaches community anchor institutions.

A public entity could own any or all of these fiber network components:

• Network operation center (NOC or “meet me” room) and/or video head-end
• Conduit
• Fiber-to-the-node (middle mile)
• Fiber-to-the-curb (from the node to the front of the home)
• Fiber-to-the-home

In a wireless network scenario, the public sector could own the following components:

• Network operation center
• Middle-mile fiber routes
• Tower sites
• Towers

By installing large conduit or extra fibers, the community can enable private-sector investment by providing conduit access and fiber ownership/Indefeasible Rights of Uses (IRUs) or both. Communities often have existing computer rooms with redundant fiber routes, as well as backup power and cooling equipment. They could lease excess space for a prospective provider’s NOC.

If creating a multi-provider, competitive broadband marketplace is a key goal, an open-access model is a smart strategy. Open access allows multiple providers to enter the market and deliver retail services over the publicly owned network. Some communities choose to begin with a closed model to attract a single provider partner who gains a “first in” advantage and then transition to an open-access model. This can be true with both fiber and wireless network assets. The initial provider may be required to bring financial resources into the project in exchange for that competitive advantage.

An open-access model allows commercial ISPs to use the publicly owned network elements to reach their targeted customer base, ranging from large anchor institutions and business customers to specific neighborhoods to the entire community, depending on their business strategy. The farther the community extends the network into the community absorbing the majority or all of the construction costs, the easier it is for private ISPs to acquire new customers as installation costs are minimized, ensuring maximum customer choice of ISP. By building all the way to the customer, the community is supporting a very competitive marketplace with low barriers to entry for new ISPs.

If the community builds only to the node or curb, competitive providers must bear the cost of connecting each customer to the network, whether it is a significant build or just a 50-foot drop to the home. Smaller ISPs may not have the funds or construction expertise to reach customers, and the fiber termination electronics can be expensive. Once connected, that customer is less likely to have additional provider choices.

Electing to partner with a single provider can also be a good choice, especially in a smaller community. A single provider can make the investment in customer-service staffing that is supported by the customer base that might not be possible in a fragmented marketplace. A single provider might be expected to bring financial participation to the partnership in order to make the project feasible. A single provider also reduces the complexity of financial modeling and ongoing financial management. Some communities prioritize the selection of an existing or nearby well-respected community-centric provider—such as an electric or telephone cooperative—as their first choice.

Operations models

Some communities may decide that a public utility is the best way to provide high-quality, affordable broadband services in their communities. It may have the scale and capacity to maintain and operate the network and thereby meet the needs of the community.

Others may determine that while investing in physical infrastructure is sound policy, delivering ISP services is beyond their capabilities or comfort level and their best approach is to contract with an ISP to manage the delivery of service.

In this case, a community could:

• Contract with a single ISP to operate the network and deliver retail services to consumers. An agreement to sell the network over time to this provider is an option.
• Pursue an open-access model by contracting with a network operator to manage a multi-provider environment.
• Utilize the cooperative model to:
  • Create a new broadband cooperative.
  • Encourage an electric cooperative to become an ISP.
  • Promote cooperation between cooperatives.