Compacts Boost Small Town Broadband Access by F. Garrett Johnston

Transcription

1 Page 1 of 6 September-October 2003 Copyright, 2003, American Public Power Association Compacts Boost Small Town Broadband Access by F. Garrett Johnston A century ago, when communities across the continent clamored for access to central station electricity, small communities were shunned by the private companies out to squeeze big profits from the wonderful new technology. For many small communities today, as Yogi Berra might say, "its deja vu all over again" in the quest to bring broadband communications to small town America. More than 500 public power communities nationwide now operate broadband systems-some solely for utility or city needs, but many provide retail services. Public power utilities in several states-including Georgia, Illinois, Iowa, Minnesota, Oregon and Washington-- have joined forces to share infrastructure and other resources in providing broadband services. Their goals in providing retail broadband services may be simply to assure access or to bring service at a lower price. These efforts are typically successful in places without alternative broadband services, but encounter challenges in areas where a private company is operating. Just as private power companies exert their considerable economic and political muscle to beat back public power utilities, the large, deep-pocketed broadband providers also deploy massive advertising and political efforts aimed at undoing the work of public power broadband providers. Iowa cities were broadband pioneers Public power communities in Iowa were among the first to provide retail cable television and broadband services, with outstanding results. In Cedar Falls, the broadband services provided by the city have been pivotal to the city's economic development success. More than 30 Iowa communities provide retail broadband services. Several communities are exploring ways to share resources to reduce costs or maximize their local investments. Muscatine Power & Water operates a head-end service for other users in the state. The Northwest Iowa cities of Hartley, Paullina, Primghar and Sanborn jointly operate The Community Agency (known familiarly as TCA) to provide cable television, high-speed Internet and telephone. Grundy Center Municipal Light & Power provides retail services for the city of Reinbeck and Spencer Municipal Utilities provides infrastructure or connectivity for private telephone companies. However, cities in other parts of Iowa have found it difficult to justify the cost of linking to a common head-end system.

2 Public Power Magazine, September-October 2003 Page 2 of 6 "The city of Independence is interested in offering service to another community, but the cost of constructing the fiber connection is an issue," said Doris Kelley, telecom coordinator for the Iowa Association of Municipal Utilities. "however, if we can lease capacity instead of constructing 10 miles of fiber, we are much closer to having a business case," she said. IAMU is exploring opportunities for using private and public fiber infrastructure to connect several rural communities to a centralized head-end or network operating center. "Until recently, it's been very difficult to find fiber that would link municipal utilities so they could share a head-end," said Bob Haug, executive director of the Iowa Association of Municipal Utilities. Minnesota cities ready wireless system Dealings with private organizations have slowed the progress of five small agricultural communities in Southwest Minnesota looking to offer broadband services. But now each participant in the 5Comm (or Five Communities) Project expects to be connected to a wireless system this year. The five communities are Lakefield, with a population of 1,700, Heron Lake (population 700), Brewster (450), Round Lake (450) and Okabena (180). All are within 18 miles or less of each other. The 5Comm Project is working with the Minnesota state government, Proxim Corp., Microsoft, and the nonprofit Blandin Foundation to provide a network capable of linking schools, churches, businesses, farms, medical clinics, governments, law enforcement, homes and individuals. A high speed wireless infrastructure is one aspect of the project. A suite of applications (called Connected Communities) that will grow demand for high speed access and allow people to benefit from that access is under development. 5Comm is installing wireless infrastructure using equipment from Proxim to provide 256k symmetrical Internet service. Voice over Internet protocol and instant messaging video features will be added as the technology matures. Hiawatha had to work through five providers to get the cost of the T- 1 line down to $1,300 a month, according to Lakefield City Administrator Mark Erickson, who is 5Comm project director. The group tried to get the incumbent local telephone company, Century Tel, to provide the line, but the cost was $1,900 a month. "Even if there are folks who want to provide high-speed access to rural areas, the cost of backbone can be prohibitive," Erickson said. Wireless communication systems in the communities will connect with a T1 line in Round Lake. Hiawatha Broadband Communications of Winona, Minn., which helps municipal governments develop broadband infrastructure, provides the high-speed, T1 line, as well as Web and hosting and a help desk. Over the next year, Hiawatha will train the communities to become full service Internet service providers. The wireless system can provide Internet service and the communities are examining a fiber-optics overbuild that could provide cable, phone and Internet services.

3 Public Power Magazine, September-October 2003 Page 3 of 6 Despite a lack of advertising, about 50 people in Round Lake (pop. 450) signed up for service. "We need about 200 to break even it on it," said "It's a risk, but the real risk is to do nothing and wait for the phone companies." Initial funding for 5Comm was depleted during protracted negotiations with phone companies. The original plan called for a Multipoint Microwave Distribution System, but after 18 months of negotiations, 5Comm officials could not reach an agreement with Sprint. Initially, the company refused to lease spectrum to 5Comm and later offered it for sale at an inflated price, Erickson said. After a regional cellular company nixed a potential deal following eight months of negotiations, the 5Comm participants opted to build their own network. Round Lake took the lead on the project and built out a Proxim network. Round Lake will provide highspeed Internet for $ about $20 less than the comparable charge in Lakefield, said Erickson. More consumers will be willing to pay for broadband at the lower price, he said, adding that many people could not afford $50 a month. Because the cost of customer-premise equipment has decreased, system installation can be done for $150,000--far less than the $1.5 million estimated two years ago, said Erickson. Thanks to the 5Comm project, several hundred residents have taken basic e-commerce classes on Microsoft software, and the Internet at a private technology center. Advanced courses are also expected to be offered. Georgia consortium has 32 municipal members Georgia Public Web is one of the most successful joint broadband efforts. David Muschamp, is president and CEO of Georgia Public Web, which was formed in late Georgia Public Web's members include 32 of the 49 public power communities that are part of MEAG Power. Many of Georgia Public Web's customers include municipalities that have deployed community networks that provide retail cable, Internet or data transport services. Georgia Public Web provides broadband services to the public for hire and operates a network that interconnects statewide with other broadband networks. "It's difficult to gauge success in today's business environment. The recession has especially impacted the telecom market," said Muschamp. "We basically see a depressed market, but we're pleased with our progress. We're not where we hoped we would be or where want to be, but we're pleased with the path we're taking. If we look at the industry across the board, most would tell you revenues are not up substantially year over year. In some cases, they're down. Our revenues are up." By using Georgia Public Web's statewide network, the city of Thomasville, Ga., reduced the network costs paid by one of its local businesses for two dedicated T-1 circuits to the Internet by about $43,000 per year. The presence of the fully redundant network also attracted new businesses, including a Fortune 500 company that decided to locate its national data center in Thomasville. The city of LaGrange, Ga., used the Georgia Public Web network to expand residents' access to advanced services. Although a regional broadband data provider served the city, that provider generally offered only T-1 lines or much more expensive DS-3 circuits. Each

4 Public Power Magazine, September-October 2003 Page 4 of 6 T-1 line has capacity of 1.54 megabytes per second. The DS-3 lines have Mbps capacity. By leveraging the scalability of the statewide broadband network, LaGrange could offer local businesses a wider variety of advanced services, scalable to capacities between the T-1 and DS-3 levels, at prices substantially below the cost of a DS-3 circuit. As a result, LaGrange attracted new high-tech businesses to the city and enabled several companies to deliver Internet services to rural areas. Illinois cities regroup after defeat of referenda In Illinois, referendums to enable three communities to offer broadband services were voted down last April. St. Charles, Geneva and Batavia are neighboring communities along the Fox River about 35 miles west of Chicago's loop. St. Charles currently has about 50 miles of operational fiber and connections to more than 50 city and school district buildings and facilities. Batavia also has a small fiber system for internal use. Geneva is building a system similar to Batavia. These Illinois cities formed Tri-City Broadband in 2001 to explore linking the three systems together and providing services. They began discussions about potential broadband applications with interested parties, including hospitals, clinics, retirement homes, commercial/industrial customers, county offices and others. They developed a business plan to offer cable TV, Internet and telephone services in the three communities to serve all homes and businesses utilizing "fiber to the home/business" technology. The motivation for this action was repeat citizen complaints about poor quality from the cable TV supplier, inadequate customer service from both cable TV and phone, and limited options for high-speed Internet access. Geneva and Batavia are not home-rule communities and state law requires they pass referendums before offering services not specifically identified in state statutes. Although not required by law due to its home rule status, St. Charles decided to put the matter to the voters by referendum. Each referendum failed by a vote. "The referendums failed mostly because public power utilities, by law, cannot compete with aggressive marketing campaigns of local telecommunications incumbents," said Glynn Amburgey, superintendent of St. Charles Municipal Electric Utility. "City employees are not allowed to participate in any endorsement, or opposition, to a ballot referendum." Comcast--the local cable provider--and SBC--the local telephone provider--deluged residents with information, including full-page newspaper ads and glossy flyers. The message they sent was that the venture by the cities was "risky" and was doomed to failure. Comcast and SBC said a failed municipal telecommunication program would lead to higher property taxes to pay for the bonds. SBC said the plan would cost the jobs of SBC employees in the cities. The ads also raised concerns about whether public power utilities can keep pace with rapidly advancing technology or had the expertise to operate a communications system, said Amburgey. "In actuality, the bonds we would have floated for the program would have been backed by the system, and yes, if the system had failed, there could be a hit on tax dollars. However, if it ever appeared to not be going according to plan, we just wouldn't borrow, or spend, more money," said Amburgey. "But, regardless, we were confident that our plan was conservative enough to assure success and long-range benefit to all citizens of our communities. And, concerning our expertise, St. Charles has been providing phone,

5 Public Power Magazine, September-October 2003 Page 5 of 6 computer wide-area network, Internet access and SCADA [supervisory control and data acquisition] communications through our fiber for several years less expensively and more reliably than other providers." "Tri-City Broadband was, in fact, looking at a five- to seven- year payback for its $62 million investment. From that point forward, it's a gold mine," said Amburgey. "Our business plan showed not too far down the road, with competitive rates, we could actually see an excess of funds from the communications utility which could be available to reduce rates or assist other city funds." But local broadband needs are still unmet and St. Charles and the other cities are now considering another business plan that would offer broadband telephone and Internet access to businesses by a means that would not require a referendum. NoaNet members in Washington, Oregon use Bonneville infrastructure The Pacific Northwest is home to a collaborative network system that uses fiber capacity leased from the Bonneville Power Administration. In 2000, the Washington Public Utility Districts Association founded Northwest Open Access Network (NoaNet), a mutual nonprofit organization, and committed to a 20-year lease for use of the 2,300-mile fiber network to provide advanced communications services in the rural areas of the Pacific Northwest. NoaNet has 16 PUD members dedicated to the idea of open access to advanced services. The PUDs provide water and power to numerous counties in Washington. NoaNet members sell capacity to wholesalers and value-added resellers, such as cable, telephone or Internet providers. "NoaNet's services are essential for many rural areas of the Northwest; without NoaNet, many residents would not have access to broadband, telecommunications, or other services readily available in metro areas," said Tom Villani, strategic accounts manager for NoaNet. Several member utilities use the fiber capacity for real-time metering, energy management, load control and networking of remote utility facilities. "NoaNet's vision of open access has attracted tremendous interest from Internet and application service providers as well as incumbent and competitive local exchange carriers who make up a majority of the NoaNet customers," Villani said. "The NoaNet vision allows member organizations to focus its sales and infrastructure development on consumer markets." "It's working here. We're pleased and it's working for our members and the communities we serve," Villani said. In 2002, NoaNet Oregon was founded and subsequently became a separate operating company with separate members in Oregon. The NoaNet Oregon telecom providers include cooperatives, which sell to end-users and resellers. NoaNet Oregon members build the last mile and develop a deployment model. As of March 2002, NoaNet Oregon's members, included six electric cooperatives, one

6 Public Power Magazine, September-October 2003 Page 6 of 6 public power utility and one intergovernmental agency comprised of three eastern Oregon counties. NoaNet Oregon has already established 900 miles of network access across Oregon and linked into NoaNet Washington's 1,400-mile network. Last March, as part of an agreement with PacifiCorp, NoaNet Oregon extended its network an additional 273 miles through southern Oregon.