Why Might Public Broadband Be the Solution?

When considering a public network solution, it is critical to remember that the public and private sectors have significantly different decision-making lenses. The private sector, whether publicly traded or privately held, has profit as its prime motivator. The profit and loss statement (P&L) and the balance sheet are the key measures of success. In fact, the leadership of a publicly traded company has a fiduciary responsibility to seek the highest possible return on investment for the shareholders. A privately held company—especially a small, locally owned firm—can consider other factors as well.

On the other hand, a public network has community benefit as its primary purpose. The network’s P&L and balance sheet include additional lines absent from those of private network owners, such as school technology initiatives, public health, and economic development. Budgets are indicative of an organization’s values, and public networks’ budgets clearly express their community-focused priorities.

Fiber-optic cabling, fiber conduit, and network operations centers all have a useful life of at least 25 years. Cities and counties generally use long-term bonds to finance infrastructure, matching the term of the loan to the infrastructure life span. This patient capital increases the network’s financial viability and spreads costs to current and future users. In contrast, private companies and their lenders require a much faster return on the capital investment with shorter borrowing time frames.

In addition to financial sustainability, key community goals might include:

  • Ensuring that all residents have high-quality, affordable access
    • Provide free internet to students
    • Offer pricing to match the benefit of the FCC’s Affordable Connectivity Program (ACP)
  • Spurring economic development
    • Serve on local economic development boards
    • Provide dark fiber as an economic development incentive
    • Promote a tech-savvy community
  • Supporting the local education system
    • Interact with the education system at all grade levels
    • Offer job shadowing/internships
    • Provide connectivity
  • Providing good local jobs
    • Offer full-time jobs with benefits
    • Offer career path ladders
  • Supporting the local health care system
    • Enable telehealth applications
    • Provide tech support to homebound residents
  • Keeping dollars local
    • Ensure that subscriber dollars stay in the community
    • Use local suppliers
  • Improving quality of life
    • Reinforce that all the above make a community a better place to live

Public infrastructure can also be a strong foundation for the more effective delivery of public services, including smart city applications, public safety networks, smart electric and water meters, streetlights, and traffic signals. Local governments can easily try new innovations with little or no cost for connectivity and then broadly deploy successful applications. Imagine the ongoing costs of hundreds or thousands of connections when dependent on a non-public network—that can stop innovation before it even starts.

Another advantage is the ability to deploy public Wi-Fi access points in public buildings, parks, community centers, and targeted residential areas.

Finally, a public network provides a built-in match for grants of all types. By being able to offer free or discounted connectivity, the local government and the community not-for-profit sector become immediately more competitive.

Which Broadband Problem(s) Are You Trying to Solve?

Planning, financing, building, and operating a public broadband network is intense and complex. Success requires a smart blend of community consensus building, engineering, financing, construction management, marketing, and customer service. Understanding why you, as a community leader, would take your citizens down this community decision-making path is critical.

Leaders of successful public networks cite these reasons:

Affordability

Public entities often cite affordability as a driving force for broadband network deployment and Internet service delivery. Public entities have significant cost advantages over the private sector: long-term financing, no requirement for shareholder return on investment (ROI), and no outlandish management salaries. Affordability can be one of the key values of a public utility that can support other community goals of quality education, economic development, community building, and other considerations. In addition, public entities can offer more consistent and transparent pricing schedules so that customers have a clear understanding of the cost of the service.

Universal Service

When considering a broadband deployment, a public entity is likely to set a goal of high-quality broadband that extends equally to all residents and businesses. Community broadband planners often identify wide variations of service availability across their city or county, no matter which technology is in place—fiber, fiber-coax, copper telephone lines, or fixed wireless. Private-sector operators may determine that some community locations are financially unfeasible for new network investment or infrastructure upgrades, leaving customers behind and extremely frustrated. Public entities are likely to be more responsive to these customers’ concerns and complaints.

Lack of Competition

Many communities suffer from a lack of broadband competition. At best, there may be the two legacy incumbent providers—a cable operator and a telephone company. (Cable networks generally have much higher capacity.) In most communities, the cable company dominates the local marketplace. The telephone company’s DSL service generally provides attractive pricing, but at much slower internet speeds. Even where the incumbent telco upgrades its network to fiber-to-the-home (FTTH) or fiber-to-the-curb (FTTC), thus providing two wired options, the nature of the competitive marketplace is unlikely to significantly change.

When communities attract a third wired provider, especially when it is a FTTH network, the local marketplace drastically changes. Providers must compete to maintain the minimum market share necessary for profitability and sustainability. Incumbents generally boost speed and/or cut subscription fees to maintain market share, especially as the new network is being constructed.

Outdated Infrastructure

Historically, legacy cable TV companies use a fiber-coaxial cable network. While these networks can deliver a gigabit download speed, upload speeds are generally in the 40-50 Mbps range. New cable modem technology promises symmetrical speeds in the future, but many legacy cable companies have switched to FTTH technologies in new housing for capacity and cost reasons.

Legacy telephone companies use a fiber/twisted-pair copper network to bring fiber to DSL access nodes. While these companies may market speeds of up to 100 Mbps, speeds vary significantly across neighborhoods due to varying distances from the electronics nodes and the condition of the copper. Communities doing due diligence may find that DSL customers may receive speeds of less than 10 Mbps/1 Mbps. These network shortcomings are exposed in the incumbent company’s own online DSL ordering tools where prospective customers can enter their address and find expected DSL speeds.

Unsatisfactory Customer Service

Many business stories document Americans’ frustrations with large-ISP customer service. From the ordering experience to billing to troubleshooting and repair, these companies often fall far short of customer expectations. Community broadband surveys allow respondents share their stories of slow speeds, outages, and slow response. These surveys can generate page after page of customer tales of woe.

In smaller communities and due to repeated service calls, residents may be on a first-name basis with the repair techs who struggle to keep obsolete networks in working order.

Lack of Community Engagement

Large ISPs often fail to be active community partners. Community engagement is demonstrated through financial support and/or leadership time and talent. Economic development and digital equity initiatives are two areas in which ISPs should have an enlightened self-interest in community participation. Wide-ranging experience with community broadband initiatives shows that many community officials would have no knowledge of even whom to contact at their ISP to discuss their participation.