Local Government Broadband Initiatives

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1 Local Government Broadband Initiatives Effectiveness, E-government, and Economic Development Sharon Eisner Gillett Executive Director MIT Program on Internet & Telecoms Convergence January 2003 with research assistance from Carlos Osorio

Gillett Executive Director MIT Program on Internet &

2 Motivations Broadband access: A critical component of a healthy ICT value chain Access is local (network edge) Local governments are important players Crafting effective solutions requires careful integration of technical, economic, organizational and political considerations 2

important players Crafting effective solutions requires careful

3 Goals Project is not An endorsement of public sector competition against the private sector A search for one right action for local governments to stimulate broadband Rather, goal is to analyze what local governments have done and what effects it has had, in community context. An interdisciplinary analysis of what kinds of public-private partnerships work (and don t work), where and why? Outcomes: Focus on e-government and economic development effects. 3

and what effects it has had, in community context.

4 Timeline July 02 Nov 02 Winter 03 July 03 Began initial data gathering Submitted proposal to US NSF Digital Government program Expected notification Proposed start of grant June 06 Proposed end of grant White paper available on ITC web site 4

program Expected notification Proposed start of grant June

5 Project Team: University MIT David Clark, MIT Principal Investigator Sharon Gillett, co-pi and Project Director William Lehr Carlos Osorio Carnegie Mellon University Marvin Sirbu, CMU PI Harvard Kennedy School of Govt. Jane Fountain, Harvard PI 5

William Lehr Carlos Osorio Carnegie Mellon University Marvin

6 Project Team: Government Advisory Board Practitioners: Rowe, Varn, Brady, Morris Partners (Access) NATOA: Municipal ICT staffers & advisors NARUC/NRRI: State-level data UTOPIA: Interlocal government agency deploying networks (17 communities in Utah) Case study sites To be determined as project progresses 6

NARUC/NRRI: State-level data UTOPIA: Interlocal government agency deploying

7 Community Motivations Broadband is (perceived as) critical to economic development and civic life Traditional concerns of local government Cases of (perceived) market failure No service High cost or poor quality service Long-term investments vs. short-term business needs (e.g. FTTH) Local problems, local solutions U.S. cultural history 7

failure No service High cost or poor quality service Long-term investments vs.

8 Potential Range of Initiatives Reduce barriers to private investment (rights of way, permits, tax credits ) Partner with private sector (lease conduit, town-owned fiber ) Private Public Aggregate demand (local government as anchor customer) Finance, build &/or operate facilities (municipal networks for town &/or residents; neutral interconnection points; 2 nd mile links) 8

Aggregate demand (local government as anchor customer) Finance, build &/or operate facilities

9 Reduce Barriers: Michigan Engler: "Fast Lane to Future is Now Open" Governor Signs Bills to Speed Broadband Deployment March 14, 2002 SB 880 creates a statewide right-of-way authority, eliminating excessive fees and permit delays and leveling the field for all service providers. SB 881 creates a broadband finance authority that will provide low interest loans to expand broadband access in areas across the state that are underserved. SB 999 provides tax credits to telecommunications providers who invest in new broadband infrastructure, and provides, upon certification of the state Public Service Commission, for a dollarfor-dollar tax credit for right-of-way fees paid under SB

SB 881 creates a broadband finance authority that will provide low interest loans to expand broadband access in areas across the state that are underserved.

10 Aggregate Demand and Partner: Chicago CivicNet (last update May 2001) CivicNet aggregates the business of all the City agencies, including the Schools, City Colleges, Park District, Housing Authority and Transit Authority, and positions their $32 million annual spending for voice and data communications in the role of anchor tenant. The City also owns or has access to valuable resources such as tunnels and conduits that can dramatically lower the cost of bringing high-speed fiber to City neighborhoods. when streets are resurfaced or new water mains are installed, [conduits] can then be added at the same time. Space inside City buildings will be made available for node sites." 10

Authority, and positions their $32 million annual spending for voice and data communications in the role of anchor tenant.

11 Partnerships: Variety Los Angeles, California Dept of Water & Power operates optical network as wholesale carriers carrier Leases dark fiber, wireless site+backhaul, etc. Lynchburg, Virginia Built fiber for town offices and schools Sought partners to use excess capacity to offer commercial services La Grange, Georgia Bought private cable system, invested in broadband upgrade and leased video capacity back to Charter Communications 11

Lynchburg, Virginia Built fiber for town offices and schools Sought partners to use excess capacity to offer

12 Municipal Networks: Algona, Iowa Population 5,741 Algona Municipal Utilities Water and electricity (100 years) 74% voted for move into communications, 11/97 Constructed HFC network starting 2000 Now offering cable TV and broadband Internet Plans for phone service 12

communications, 11/97 Constructed HFC network starting 2000 Now

13 Data Gathering: Status Secondary research in progress Over 400 community leads 82 validated entries, mainly municipal networks Validation and expansion of data set continues NSF grant would support primary research, especially needed to understand outcomes. Telephone interviews Survey On-site case studies 13

expansion of data set continues NSF grant would support primary research,

14 Analysis and Results Multi-disciplinary classification of initiatives Statistical Results to date Not enough validated entries for statistical significance yet, but Communities appear smaller but otherwise demographically similar to rest of U.S. 14

entries for statistical significance yet, but Communities

15 Relative Importance (as % of Total Sample) 60% 50% 40% 30% 20% 10% 0% 61.0% Distribution of Community Size: 25.6% 82 Communities vs. U.S. Averages 17.4% 17.1% 11.9% 20.7% 7.9% 25.6% US Total Above 1,000, N=15,075 BB Sample Above 1,000, N=82 1,000 to 4,999 5,000 to 10,999 11,000 to 25,999 26,000 to 99, ,000 to 999,999 More than 1,000, % 8.5% 0.1% 2.4% No. Cities / Towns 9200 in US 2619 in US 1795 in US 1189 in US 255 in US 17 in US 21 in BB Sample 14 in BB Sample 17 in BB Sample 21 in BB Sample 7 in BB Sample 2 in BB Sample Type of Town by Population (Inhabitants) 15

6% US Total Above 1,000, N=15,075 BB Sample Above 1,000, N=82 1,000 to 4,999 5,000 to 10,999 11,000 to 25,999 26,000 to 99,999 100,000 to 999,999

16 25,000 Income and Density: 82 Communities vs. U.S. Averages N BB Sample =82 N US =15,075 12,000 Income per capita ($) 20,000 15,000 10,000 5,000 Income per capita Housing Density BB Sample BB Sample US US 10,000 8,000 6,000 4,000 2,000 Housing Density (units/sq. mi) 0 1,000 to 5,000 to 11,000 to 26,000 to 100,000 to More than 0 U.S. Data from 2000 Census 4,999 10,999 25,999 99, ,999 1,000,000 Type of Town by Population (Inhabitants) 16

Housing Density BB Sample BB Sample US US 10,000 8,000 6,000 4,000 2,000 Housing Density (units/sq.

17 Success Hypothesis Remote Major Metro Area Large Private Small Public 17

18 Learning Hypothesis Greatest variety (and ways to go wrong) here Public Public-Private Private 18

19 Impacts Illuminate what does and doesn t work in particular contexts Government audience Save time and otherwise misspent resources Database front end to help communities find others like me or other instances of particular approaches Industry Preserve appropriate role for private sector Roadmap for broadband future Business development For residents of unserved areas Get more broadband! 19

other instances of particular approaches Industry Preserve appropriate role for private sector

20 For More Information White paper available on ITC web site (Home Research Papers) Center for ebusiness lunch seminar April 30,

mit.edu/itel/docs/2002/white_paper_nsf_diggov.

21 Income per Capita BB Sample and Cities and Towns above 1,000 inhabitants 40,000 35,000 BB Sample (N=82) US (N=15,075) Including Standard Deviation 30,000 Income per Capita ($) 25,000 20,000 15,000 10,000 5, ,000 to 4,999 5,000 to 10,999 11,000 to 25,999 26,000 to 99, ,000 to 999,999 More than 1,000,000 Size of Town 21

22 Housing Density BB Sample and Cities and Towns above 1,000 inhabitants BB Sample (N=82) US (N=15,075) Including Standard Deviation 19,000 Housing Units/Sq. Mile 14,000 9,000 4,000-1,000 1,000 to 4,999 5,000 to 10,999 11,000 to 25,999 26,000 to 99, ,000 to 999,999 More than 1,000,000 Size of Town 22

23 Possible Extensions Beyond the U.S. Scandinavia Developing countries? Beyond local government State-level initiatives (NRRI and TechNet) Compare grassroots, community-driven efforts vs. government-led initiatives 23

Taking stock of the digital divide

Taking stock of the digital divide Dr. Sharon Strover University of Texas at Austin Prepared for the Lisbon Research and Policy Workshop: Technologies, contents and services for social inclusion: Facing