Research Publication No. 26 December 17, Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts. Susan Crawford Robyn Mohr

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1 Research Publication No. 26 December 17, 2013 Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts Susan Crawford Robyn Mohr This paper can be downloaded without charge at: The Berkman Center for Internet & Society Research Publication Series: The Social Science Research Network Electronic Paper Collection: Available at SSRN: 2 3 E v e r e t t S t r e e t S e c o n d F l o o r C amb r i d g e, Ma s s a c h u s e t t s ( f a x ) h t t p : / / c y b e r. l aw. h a r v a r d. e d u c y b e a w. h a r v a r d. e d u Electronic copy available at:

2 Bringing Municipal High- Speed Internet Access to Leverett, Massachusetts Case Study By Susan Crawford and Robyn Mohr November 20, 2013 Berkman Center for Internet & Society Co-Director Susan Crawford and Benjamin N. Cardozo School of Law Research Assistant Robyn Mohr prepared this case study, supported by the Roosevelt Institute. Thanks to John Randall and John Carbone. Electronic copy available at:

3 Executive Summary This report provides a detailed account of the development of LeverettNet, Leverett, Massachusetts municipal fiber optic network. (Exhibit A is a list of interviewees.) It includes information about the extensive planning and outreach activities carried out by Leverett from 2011 through 2013, as well as details of the technical and operational characteristics of LeverettNet. Leverett has been successful in mobilizing support for LeverettNet, and the network is being built on schedule with full deployment planned for Our hope is that this report will be helpful to other cities that are considering launching fiber optic networks. Key Findings LeverettNet is a last- mile fiber to the home network that will be operated by a publicly controlled Municipal Light Plant entity. The MLP will operate independently of Leverett's political infrastructure, but will be required by state law to charge subscribers no more than the cost of providing service. The network will connect every household in a sparsely populated small town in Western Massachusetts that is currently underserved by private Internet access providers. Although every residence and business will be linked to LeverettNet, individual homeowners will have the discretion to decide whether to subscribe. LeverettNet was planned to take advantage of MassBroadband 123, a publicly funded fiber network recently built to connect towns (but not individual homes and businesses) in Massachusetts. (Exhibit B is a map showing the progress of the MassBroadband 123, as of February 2013.) Long- term leadership, planning, and community engagement by Leverett's public officials prompted the citizens of Leverett to approve a modest property tax increase in return for the long- term benefits of a FTTH network. Although LeverettNet has opted for a tiered set of access plans, had it decided to deliver 1Gbps to every home and business in Leverett the cost of service to subscribers including Internet access and phone service, state and local taxes, access fees, network operation fees, and maintenance fees would have been $61.30 per household per month. 2

4 Table of Contents I. Introduction and Context, p. 3 II. The Town of Leverett, p. 5 III. Lack of Internet Access Leaves Leverett Disconnected, p. 9 IV. Bringing Internet Access to Western Massachusetts: The Middle Mile, p. 11 V. Bringing Internet Access to Leverett: The Last Mile, p. 11 VI. Building and Maintaining LeverettNet, p. 16 Exhibit A: Interviewees, p. 22 Exhibit B: MassBroadband 123 Progress as of February 2013, p. 23 Exhibit C: Broadband Committee Members, p. 24 Exhibit D: Governor Deval Patrick s August 2008 Press Release, p. 25 Exhibit E: Overview Presentation of the Massachusetts Broadband Institute s Middle Mile Network Project, p. 28 Exhibit F: LeverettNet September 4, 2012 RFI, p. 39 Exhibit G: Leverett Fiber-Optic Presentation from the April 28, 2012 Annual Town Meeting, p. 49 3

5 I. Introduction and Context Telecommunications reaches almost every aspect of our daily lives. A robust high- speed Internet connection is quickly becoming an essential utility for modern life. However, over 100 million Americans do not have a wired Internet connection in their home. For 19 million Americans, mostly in rural areas, an Internet connection is not available at any price, primarily because the required infrastructure simply does not exist (FCC, 2012). Connections using fiber- optic technology to carry data are available to only 19% of American homes (Little, 2013). America is without a substantive plan to upgrade existing network infrastructure to fiber. It has become increasingly clear that current market- based solutions have not been successful at closing these gaps. As a result, many municipalities have endeavored to build their own networks. There are nearly 400 communities in the United States with municipal networks, and 89 of them have fiber- to- the- home (FTTH) networks reaching all or most of the community. A. Internet Access Basics An Internet access network is a series of tubes that provides a high- speed connection to the Internet. These tubes are made of copper wire, coaxial, or fiber- optic cabling, or a combination of the three. Speed on a high- speed Internet access network is measured in terms of the number of kilo-, mega-, or gigabits of data that can be transferred either uploaded or downloaded per second. Historically, the upload speed and the download speed of a residential network have differed because of the characteristics of the network's architecture, resulting in connections that have faster download speeds than upload speeds. When the upload speed and the download speed are the same, however, the network is said to provide a symmetrical connection. Of the three types of cabling commonly used for high- speed Internet connections, optical fiber is known for its ability to provide a symmetrical connection, as well as providing for higher upload and download speeds which result in a faster Internet connection. The cables that make up a telecommunications network are often characterized by their physical proximity to a core point or central network. In broad strokes, different portions of infrastructure are referred to as providing backbone, middle mile, and last mile connections. The last mile, running between homes and intermediate nodes, has historically been the most expensive to build and the most likely to be the subject of bottleneck control by providers. B. About Municipal Networks Unable to attract private Internet Service Providers (ISPs), or dissatisfied with their options, almost 400 communities in the United States have built or are building their own networks. Eighty- nine of these new networks are modern, fiber- to- the- home (FTTH) networks that use fiber optic cabling, and are capable of providing ultra- high- speed symmetric connections. These community networks, also referred to as municipal networks when associated with a municipality, are directly accountable to residents and local businesses. Communities investing in building their own telecommunications networks cite a variety of reasons for undertaking this endeavor, including economic development, improving access to 4

6 education, enabling next- generation health care, and cost savings. Many of these networks have transformed local economies, and are thus thought to be great successes. On the other hand, some are less successful, and a handful have been considered failures. Municipal networks vary greatly in size, scope, services offered, funding methods, timescale of build, and ownership structure. Given this variability, best practices are difficult to discern and vary by circumstance. Although community networks may be bringing Internet access to underserved areas, the movement to build community networks is under attack. Incumbent Internet Service Providers are lobbying state lawmakers to either ban these networks outright or to pass legislation that would complicate the building of such networks. Some entities have engaged in misleading campaigns that criticize the effectiveness of community- built or community- managed networks (Scott, et al., 2005). Critics argue that private telecommunications companies should not have to compete with public networks that are subsidized by public funds. They also argue that community networks can drain public resources, particularly if the resulting network is either not profitable or deemed a failure. Many argue that the risk of failure is an unacceptable consequence for these communities to bear. On the other hand, however, proponents stress the virtues of local self- reliance, and assert that networks can be profitable or at least self- sustaining in a short period of time. Proponents also point to the indirect benefits of economic development, increase in jobs, improvements in quality of life, and additional educational opportunities that may justify the expense. Currently, many states have some sort of state law that obstructs or complicates the building of a community- owned network (MuniNetworks, 2013). The American Legislative Exchange Council ( ALEC ), a 501(c)(3) organization that promotes free- market enterprise, limited government, and federalism, (ALEC, 2013) has provided model legislation to prevent the growth of community- owned networks, in tandem with the lobbying efforts of many incumbent Internet service providers. However, local governments and constituents have fought these efforts. In 2013, an anti- municipal network bill was defeated in Georgia despite strong support from ALEC. ALEC s efforts have also caught the attention of federal agencies. The Federal Communications Commission has spoken in support of municipal networks as well as against anti- municipal network state laws (Clyburn, 2011). However, the Supreme Court has held that the FCC does not have the power to preempt anti- municipal network state laws under the Telecommunications Act (Telecommunications Act, 1996). Therefore, it may take an Act of Congress to expand the FCC s power to include the preemption of anti- municipal laws ratified by individual states (Crawford, 2013). Over the next year, anti- municipal network bills are likely to be considered in Minnesota, Massachusetts, and again in Georgia. There is also the possibility that Congress could pass a law that would strengthen the FCC s authority to preempt state anti- muni network laws. As they make plans to expand the high- speed Internet connectivity that is available to their citizens, municipalities could benefit from in- depth analyses of past efforts. This case study adds to a small, but growing, collection of similar studies, which, together, are beginning to document the municipal high- speed Internet access story. 1 1 Prior case studies focused on municipal networks include: 5

7 II. The Town of Leverett Leverett is a small, rural town, located in Western Massachusetts, with a diverse population of nearly 2,000 people (Leverett, 2013). Leverett spans 23 square miles and is home to more than 630 households (Leverett, 2013). The town attracts a number of artists, writers, teachers, and business professionals. Those who live in Leverett describe it as somewhat isolated, yet picturesque complete with thick woods, glacial ravines, and historic mills. A few properties in Leverett are second homes for those who live outside of Massachusetts, and there are also a number of family- owned farms. Located on the southern edge of Franklin County, Leverett neighbors the Five Colleges region Amherst, Hampshire, Smith, Mt. Holyoke, and the University of Massachusetts. That said, very few college students decide to live in Leverett, in part because of the lack of availability of reliable Internet access. Many members of the Leverett community work for these surrounding colleges and universities, although the relatively low prices their homes command reflect the absence of reliable high- speed Internet access in Leverett. Since Leverett is both very hilly and sparsely populated, it is challenging and expensive to build and maintain power lines, phone lines, and other infrastructure essential to telecommunications networks. Many service providers are unwilling to make a large capital investment in Leverett s infrastructure, leaving the town without reliable phone or Internet service. A. Market Failure: Essential Telecommunications Services Are Not Available in Leverett Burlington Telecom Case Study Institute for Local Self- Reliance, telecom- case- study/ Burlington Telecom Fact Sheet Institute for Local Self- Reliance, telecom- fact- sheet/ Faster, Cheaper Broadband in North Carolina Comes From Community Fiber Networks Institute for Local Self- Reliance, cheaper- broadband- north- carolina- comes- community- fiber- networks/ Twin Cities Broadband No Match for Community Networks Institute for Local Self- Reliance, cities- broadband- no- match- community- networks/ Publicly Owned Broadband Networks: Averting the Looming Broadband Monopoly Institute for Local Self- Reliance, owned- broadband- networks- averting- looming- broadband- monopoly/ Learning from Burlington Telecom: Some Lessons for Community Networks Institute for Local Self- Reliance, burlington- telecom- some- lessons- community- networks/ Broadband at the Speed of Light Institute for Local Self- Reliance, speed- light/ Florida Fiber: How Martin County Saves Big with Gigabit Network Institute for Local Self- Reliance, fiber- gigabit/ In Kansas, Rural Chanute Built Its Own Gigabit Fiber and Wireless Network Institute for Local Self- Reliance, rural- gigabit/ Report: Community Network Leads North Carolina to Fast Internet Future Institute for Local Self- Reliance, fiber- greenlight/ Municipal Broadband: History s Guide, Eric Null, I/S: A Journal of Law and Policy for the Information Society, 9 ISJLP 21 (2013). 6

8 Due to the town s terrain and low population density, providing Internet access is commercially unattractive for large service providers (d Errico, 2013). Mobile voice or data connectivity is scarce in Leverett. There is currently no coaxial cable Internet access available. DSL is available to some residents by way of the town s aging copper telephone network, owned by Verizon New England, Inc., but service is spotty. (At the beginning of Leverett s plan to build a network, DSL was not available at all.) The only current option for most residents looking to access the Internet is a connection via satellite or dial- up technologies that are widely considered too slow for modern applications. B. Voice Service: Mobile Wireless Only a few areas in Leverett receive any kind of mobile phone or data service. There are no existing cell towers in Leverett. Thus entities looking to provide wireless service, whether large carriers or local providers, would be forced to shoulder the cost of building a mobile telecommunications infrastructure, including towers, from the ground up (as opposed to merely leasing space atop existing cell towers as is the common practice in many areas where there is pre- existing infrastructure). Currently, the only way residents can receive mobile cell phone service is if they are physically located in one of the few areas in Leverett where a cell service signal can be picked up from a cell tower located in a neighboring town. In those fringe areas where cell service may be available, mobile devices can connect through LTE, and sometimes 4G, networks. Verizon now has fiber in Leverett providing its DSL backhaul (aggregating traffic coming from last mile connections), but has not built cell towers there. The bottom line is that given Leverett s small potential customer base of only a few hundred subscribers, a large investment in network infrastructure is unattractive for mobile telecommunications carriers. C. Voice Service: Traditional Copper-Based Telephone Although mobile service is unavailable, traditional copper- wire (landline) voice telephone service is provided by Verizon New England, Inc. However, citizens of Leverett have reported that the system is not well maintained and that it is increasingly difficult to place landline calls in certain areas of the town. If it rains or snows, landline phone service is sometimes lost entirely. Citizens have also reported difficulty with Verizon s landline service when trying to contact 911 during an emergency. This is particularly troubling because Verizon s landline service is the only telecommunication service available for the majority of Leverett residents. Residents do not have access to another landline service provider nor do they have reliable Internet access. Traditional landline phone service in Leverett is so poor that the town served as a named complainant in a Department of Telecommunications and Cable proceeding filed against Verizon New England, Inc. (also known as Verizon Massachusetts). The proceeding triggered a two- year negotiating process, during which investigations were held and a settlement was eventually reached. Pursuant to the settlement agreement, Verizon was required to report directly to the Massachusetts s Department of Telecommunications and Cable regarding any network problems. Leverett citizens were also given access to Verizon s corporate offices, outside the normal customer complaint process, to report any recurring quality problems. Some new cabling was installed in town and repairs were carried out. 7

9 D. Internet Access Beyond the lack of mobile service and lackluster wireline phone service, citizens of Leverett have also expressed concerns about the lack of high speed let alone reliable Internet access. E. via DSL Digital Subscriber Line (DSL) high- speed Internet access over copper phone lines was not available in Leverett until As part of a marketing plan, Verizon offered to provide a DSL network to Leverett residents. However, once deployed, the DSL service eventually provided did not offer the expected speeds, was not reliable, and did not serve the entire town. This perceived bait- and- switch left many Leverett residents frustrated and added further friction to their relationship with Verizon. Additionally, Verizon's partial deployment of DSL moved the town from the unserved to underserved category, making it ineligible for some grant opportunities, adding further resentment and hampering the town s willingness to work with Verizon. Twenty percent of residents of Leverett now have in- home Internet connections via DSL provided by Verizon New England, Inc. However, DSL is not available to all homes with existing phone service. DSL signals degrade quickly as distance from the phone company central office increases, resulting in slower speeds and eventually (if a home is sufficiently distant) no data connectivity. Additionally, DSL connections don t work well on poorly maintained copper lines, such as those in Leverett. At some addresses, the DSL connection is so poor that Verizon has declined to provide service to a new homebuyer, even if the former homeowner at the same address previously subscribed to DSL service. F. via Satellite and Dial-up Where DSL is not available, residents of Leverett have only the options of satellite, fixed- wireless, or dial- up Internet access. These technologies are too slow to be considered suitable for many modern applications, and are generally considered unsuitable for 21st century uses. Also, signal degradation from the poor maintenance of the copper- wire infrastructure can be problematic for dial- up connections, and satellite connections are subject to both interference from weather and low usage caps. Currently, 23% of Leverett residents use dial- up, while 37% use satellite Internet (Leverett Broadband Committee, 2012). G. Speeds None of the Internet access technologies available in Leverett is fast enough to provide what we have come to know as a modern Internet experience. Advertised DSL speeds range from 128kbps to 3 Mbps downstream, 2 and DSL is even more sensitive than traditional voice 2 Although the National Broadband Map at service- providers/leverett- ma/lat= /long= /wired/, accessed , claims that mobile wireless is provided to Leverett by Verizon Communications Inc. at speeds of Mbps and by AT&T Inc. at speeds of 3-6 Mbps; and that Verizon Communications Inc. provides wireline speeds at 3-6 Mbps, these speeds are not widely attainable throughout Leverett. The National Broadband Map tends to overstate speed availability. 8

10 communications to the signal degradation that can result from inadequately maintained copper- wire infrastructure and weather interference. Satellite Internet access is even slower than DSL, and has notoriously slow upload speeds and long latency times, rendering it unusable for any form of real- time audio/video communication. Dial- up access has maximum speeds of only 56kbps, and the noisy lines of a rural copper infrastructure, especially a poorly maintained one, can cripple dial- up connections. III. Lack of Internet Access Leaves Leverett Disconnected The absence of Internet access affects every aspect of life in Leverett. Without it, police officers are unable to access records in the field, including drivers licenses and other information saved in state databases, unlike many other police forces that have unfettered access to the Internet. To use their department- issued laptops in their vehicles, officers must drive to a location where their devices can connect to a local Wi- Fi network. Local fire fighters cannot get directions to emergency response locations or access building floor plans while en route to their destination. Local merchants are forced to use antiquated inventory systems and cannot place or track orders online. Young families with deep roots in the Leverett community are hesitant to return to their hometown to raise the next generation because, without an Internet connection, it is virtually impossible to check or stay in contact with friends outside the town (Mohr, 2013). Grade- school students have difficulty completing their homework because many of them don t have sufficient or reliable Internet access at home (Mohr, 2013). Instead, K- 12 students are forced to complete their homework at the local library, one of the only institutions in Leverett that has reliable Internet connectivity (Mohr, 2013). Internet access is so scarce in Leverett that sometimes citizens will drive to the parking lot of the library and connect to the web through the library s Wi- Fi network just to access the Internet via their cell phones or laptops (Mohr, 2013). The library has DSL service that was originally advertised as standard DSL service with download speeds of 3 Mbps to 4 Mbps and an upload speed of 1.5 Mbps. In addition to DSL, the library also leaves its Wi- Fi network on at all times. The network remains public so citizens can connect to the network outside the building, after traditional business hours. Those who live in Leverett but work or attend school elsewhere describe being uncomfortably aware of the higher level of Internet access commonly available in communities outside of Leverett. Residents of Leverett are concerned that students in the Leverett school district are at a disadvantage when they move on to attend the regional high school, where they will suddenly be competing with students who come from areas such as Amherst, where many students have long had the benefit of high- speed Internet access at home. Having witnessed the uphill battle the town fought to obtain reliable landline phone service, many citizens realized that if Leverett did not take the initiative to obtain its own Internet infrastructure, it might not ever be built by any of the commercial providers. Many citizens, like Peter d Errico, a member of Leverett s Select Board who also oversees the town s Broadband Committee, recognized that if Leverett didn t explore non- traditional options for Internet service, the town was likely to end up on the wrong side of the digital divide (Mohr, 2013). (Exhibit C is a list of Broadband Committee members.) Taking matters into its own hands, Leverett began investigating whether building a municipal broadband network was a viable option. Initial discussions revolved around whether 9

11 Leverett could find a way to finance and build its own fiber network, with the goal of giving each and every citizen the opportunity to purchase fast and reliable Internet access. It is believed that a Fiber- To- The- Home (FTTH) network may increase property values. Homebuyers are currently less eager to purchase property in Leverett where there is no reliable Internet access. In fact, interested homebuyers have contacted members of the Select Board to express their concerns about buying a property not yet connected to the Internet, and to inquire as to when LeverettNet will be up and running. Some Leverett citizens have also had trouble renting their houses, as many renters are not interested in living in a house with no Internet connectivity. IV. Bringing Internet Access to Western Massachusetts: The Middle Mile In 2008, Massachusetts Governor Deval Patrick signed the Broadband Act, creating the Massachusetts Broadband Institute (MBI). (Exhibit D is the August 2008 press release, Governor Deval Patrick Signs Broadband Access Law.) MBI was charged with bringing broadband service to all residents and businesses in Massachusetts, over a three- year period, beginning in August of 2008 (Sullivan, et al., 2008). At the time the Act was signed into law, the Commonwealth of Massachusetts estimated that there were nearly 95 communities that had either limited or no broadband availability whatsoever (Sullivan, et al., 2008). Within those communities were an estimated 220,000 households and more than 25,000 businesses lacking adequate Internet access (Sullivan, et al., 2008). The Act provided MBI with an initial $40 million in state bond funds, earmarking at least $25 million for developing a broadband network in Western Massachusetts, where Leverett is located. In 2010, the federal government recognized that the expansion of broadband infrastructure was critical to economic recovery and awarded MBI an additional $45.4 million in federal funding under the American Reinvestment and Recovery Act of The funds were applied to an MBI program called MassBroadband 123 which will be building out the middle mile for network connectivity in designated 123 communities in western and central Massachusetts. 3 (Exhibit E is an overview of the Massachusetts Broadband Institute s Middle Mile Network Project.) MassBroadband 123 is operated by Axia NGNetworks on an "open- access" basis, which means any Internet Service Provider can purchase wholesale services on the network at the same rates, no matter how big they are or where they are located (Axia, 2012). 3 Generally, the middle mile is defined as the segment of an Internet network that connects a core network to a local network. Here, MBI is building out its fiber from a core network, expanding into areas that do not currently have fiber deployed. MBI s fiber will bring improved Internet service to the immediate area surrounding its core network, but the network build will not reach the remote town of Leverett or its "last mile" connections. Though the MBI initiative has often been criticized for only connecting community anchor institutions, and stopping short of many small towns like Leverett, MBI's MassBroadband 123 program will make it easier for individual towns to build the last piece of the network on their own. But underserved individual homes and businesses that wish to be wired for high- speed Internet access will likely only be able to do so if their town or municipality takes advantage of the MassBroadband 123 program. A map of MBI's planned fiber installations can be found at: gallery/community- network- maps/massbroadband123- network- Leverett.pdf ; Massachusetts Broadband Initiative, MassBroadband 123, network/massbroadband

12 When complete, the MassBroadband 123 middle mile open access network will connect more than 120 communities in Western Massachusetts with over 1,300 miles of fiber infrastructure, and will connect directly to 1,400 anchor institutions public safety entities, community colleges, libraries, medical facilities, and town meetings (Ciena, 2013). The network will also provide the middle- mile backhaul for participating service providers (last- mile retailers), which are predicted to serve 333,500 households and 44,000 businesses over a geographic area covering over one- third of Massachusetts an area with more than one million residents (Axia, 2012). Massachusetts hopes that the presence of this network will stimulate economic growth, improve health care and education, and strengthen public safety. Under the MBI plan, 97% percent of new fiber will be added to existing poles, 2% will be installed underground, and 1% will be wired through newly constructed poles (Axia, 2012). Construction of this middle mile network was planned for completion by June The goal was to lay fiber within three miles of 98% of the households and businesses located in the 120+ designated communities (Axia, 2012). As of November 15, 2013, MBI says that it has achieved 99% of its goals. (MBI, 2013 [ newsletters/mbi- newsletter- 09- october- november pdf] According to Jason Whittet, Deputy Director of MBI, the hope is that the work of MassBroadband 123 will attract more last mile providers so that residents of smaller towns like Leverett will become a more attractive population to serve as much of the network infrastructure will already be in place (Whittet, 2013). Earlier this year, MBI lit (installed fiber and electronics in) the first portion of its middle mile network, connecting nearly 50 of 120 targeted anchor institutions schools, libraries, municipal buildings, public safety, and healthcare facilities (Leverett, 2013). For the first time, anchor institutions in towns from Springfield to Sandisfield, Massachusetts will have high- speed, reliable Internet access. 4 Leverett signed on as a Participating Town in the MassBroadband 123 project early on and became a strong supporter of MBI in the process. Several town residents attended information meetings, wrote letters of support, and assisted MBI s efforts to obtain federal funding. Leverett s enthusiasm contributed to the grass- roots support that the MBI effort needed to be politically viable. Over time, the Leverett network planners developed a close working relationship with MBI. Leverett became an asset to MBI as a good source of local information and as an example that other towns could follow. Observing the decision- making and bid processes in MBI s broadband program proved to be a valuable experience when the town decided to establish its own municipal broadband network. As Jason Whittet, the Deputy Director of the MassBroadband Institute, envisioned, Leverett is now positioned to greatly benefit from the MassBroadband 123 program. Through the state- level program, many of the town s community anchor institutions including schools, emergency services, and library will be wired for faster Internet access. The 4 To commemorate the official lighting of the network, Governor Patrick visited Farmington River Elementary School in Otis, Massachusetts. At the commemoration ceremony, students from Farmington River used the school s new broadband internet connection to Skype with students in Colombia and the NASA Goddard Space Fight Center in maryland lights- first- section- of.html 11

13 MassBroadband 123 middle mile backhaul connection is now available on an open- access basis, enabling LeverettNet to connect homes to the Internet without shouldering the expense of building its own backhaul. MBI is currently developing an online tool to facilitate information sharing and a mapping tool that will show what locations in Western Massachusetts have or need access. Leverett will be part of the beta test of those tools, and will be providing documentation and advice to other towns. V. Bringing Internet Access to Leverett: The Last Mile Sufficient middle mile infrastructure is now being built in Western Massachusetts through the MassBroadband123 project, bringing a fiber Internet infrastructure closer to Leverett than ever before and lowering the cost of providing last mile service to Leverett. However, commercial Internet access providers are not significantly more eager to build the last mile connections that are needed to connect Leverett. Recognizing that Leverett s small population and rugged terrain made it an unattractive market for service providers, the town decided to take matters into its own hands. Leverett kept a close watch on MBI s MassBroadband123 initiative with an eye toward building on the Institute s progress, and then set a goal of building its own last mile network to offer each individual Leverett home and business a 1Gbps symmetrical Internet connection. For Leverett s citizens, the LeverettNet last mile network will bridge the remaining distance. The decision- making process began with Leverett s Select Board, which consists of three elected members and functions as the executive branch of the town s local government. The Select Board s responsibilities include authorizing the spending of town funds, approving the budget created by the Leverett Finance Committee, and overseeing all of the town s high- speed Internet access policy decisions and regulations (Leverett, 2013). Members of the current Select Board include a civil engineer, an accountant, and an attorney backgrounds that have proved to be assets for spearheading the LeverettNet planning and the build (Leverett, 2013). The Select Board appointed a six- member Broadband Committee, and selected members with an array of experiences and knowledge appropriate for advising LeverettNet. Members of the Broadband Committee include a software engineer, a database engineer, a network engineer, a capital projects manager, and a former research and development executive (Mohr, 2013). The attorney member of the Select Board and the Town Administrator are also on the Committee. Typically, the Broadband Committee does most of the research and investigative work regarding proposals and decisions for the technical infrastructure. The Broadband Committee then makes recommendations to the Select Board, which either makes the decisions exclusively or presents options to the town citizens, when appropriate. The members of the Select Board are also the initial Directors of the Municipal Light Plant (discussed below), a municipal entity created pursuant to Massachusetts law, with power to build and operate a telecommunications network. 12

14 A. Network Design Decisions On May 18, 2011, the Town of Leverett, in collaboration with Crocker Communications, applied for a grant from the Massachusetts Broadband Initiative (MBI) to help the town plan a municipal network. In June of 2011, the $40,000 grant was awarded (Ciena, 2013). In December 2011, Leverett put the $40,000 grant to work and hired G4S, a fiber- optic network design contractor, to draft design schematics for the town s potential broadband network. At this early stage, the tentative plan was to build a fiber- to- the- curb (FTTC) network, but through consultation with G4S, the plan became to build a fiber- to- the- home (FTTH) network. While an FTTC network would put much of the fiber- optic infrastructure in place, residents and businesses would then have been responsible for taking the initiative to make the final last 100 feet connection (typically over Ethernet) and shouldering the additional costs after the FTTC build- out. In contrast, in an FTTH network, each house and business will be wired and the network will be about ready to operate from the start. The only elements required from the individual property owners will be simple internal wiring within a building, or perhaps just the provision of a consumer wireless access point (d Errico, 2013). Because the FTTH model allows for all the necessary engineering, design, and construction to be done all at once and requires less of property owners (which should lead to higher adoption percentages or "take- rates") the Broadband Committee decided that the FTTH network was a better option, despite the additional expense (Mohr, 2013). Though each home and business will have the immediate ability to connect to the network, each individual will be empowered to decide whether they want to activate and use the Internet access service available to them (Mohr, 2013). Although Leverett was eager to move forward quickly with its project, at the request of MBI the Leverett Broadband Committee issued a Request for Information (RFI) on September 4, 2012 to help inform its planning process for building, operating, and servicing a fiber- optic network. (Exhibit F is the September 4, 2012 RFI.) The thinking was that the responses to the RFI would help not only Leverett but would also provide information useful to other Massachusetts towns exploring the idea of building a municipal network. Thirteen firms responded to the RFI. The Committee made all of the responses available online. The information and feedback gained through the RFI process helped guide the town s subsequent Request for Proposal (RFP) process in February of According to the RFI, the fiber to the home network will be an active Ethernet architecture connected directly to approximately 700 households. With an active Ethernet connection, each household or business will have a direct fiber connection to the LeverettNet hub. This active Ethernet connection is a kind of Active Optical Network (AON), as opposed to a Passive Optical Network (PON), which consists of fiber aggregation points shared by a neighborhood of houses or businesses this is typical of Verizon FiOS and similar deployments (RFI, 2102). The direct connection provided by the AON architecture is superior to the PON architecture. The throughput (amount of data shipped through the network) the connection provides need not be shared, and therefore AON, although it typically costs 10% 5 The responses to the RFI are available online at 13

15 more to deploy, is considered an investment in the future that may avoid a costly re- build down the line (Keymile, 2008). The RFI also specifies that the FTTH network is to be built with the capacity to serve mobile wireless towers which could eventually be built near the network. The hope is that the capacity LeverettNet offers will lower the initial build cost of mobile providers who would otherwise need to provide their own backhaul, and entice mobile providers to sell mobile service in the area (d Errico, 2013). Additionally, the Town plans to provide a 1 Gbps symmetrical connection to every customer. The network will also be capable of supporting an electric smart grid, medical monitoring operations, and other high- bandwidth/high- availability operations (Mohr, 2013). At this point, Leverett is most interested in providing its citizens with phone service and fiber Internet access it is not interested in providing video service. According to d Errico, the video business is changing rapidly and the town did not want to commit itself to a service or delivery model that might be obsolete a few years later. On January 16, 2013, the Broadband Committee issued an Invitation For Bid (IFB) regarding the construction and maintenance of Leverett s FTTH network. Responses to the IFB were due on February 22 and the Broadband Committee recommended to the Select Board that G4S, the company that operated as a consultant early on in the process, be awarded the contract to build and maintain the fiber optic network. On March 5, the Select Board unanimously approved the Committee s recommendation and awarded the contract to G4S. A losing bidder protested this award to the Attorney General's office, which set the IFB aside for technical reasons. The Committee issued a second IFB in May, and recommended an award in July to Millennium Communications Group, which the Select Board approved. Initial construction began almost immediately, with the goal of having Leverett s FTTH network up and running by the end of So far, the effort is on schedule. B. Building Consensus and Reaching Out to the Community Leverett, like many other towns in Massachusetts, holds traditional town meetings where all citizens are invited to vote on agenda items. Pursuant to state law, a tax bond for the LeverettNet initiative required a popular vote to proceed past the design phase. A vote on the bonding issue was scheduled for April 28, Prior to the vote, the Select Board and the specialized Broadband Committee worked tirelessly on a public outreach program. This program aimed to inform Leverett citizens of the need for, and benefits of, a municipal broadband network (Mohr, 2013). The Committee held four community meetings. The Board s members made themselves available to answer questions whenever and wherever citizens wanted to discuss the initiative (Mohr, 2013). The Broadband Committee placed advertisements in the community newspaper and hung posters at the local solid waste transfer station, which functions as an informal town square. Committee members wrote articles in a number of local newsletters (Mohr, 2013). The Committee knew that it was under tremendous pressure to present the case for the broadband network to their community in a way that would help people understand and vote in favor of the municipal, community- owned network. Many citizens supported the proposal for a municipally- owned network, but there were a few persistent dissenters. The opposition argued that Internet access service was something best left to private companies and was not an endeavor that the local government 14

16 should be involved in (Mohr, 2013). The opposition also expressed concern over how Leverett was going to pay for the network and subsequent maintenance if the town went through with building the infrastructure for LeverettNet. The Committee made it a point to directly address these concerns by creating detailed presentations and drafting responses to individual questions. Broadband Committee members encouraged citizens to both ask them questions and to explain their concerns about the potential new network (Mohr, 2013). (Exhibit G is the Leverett Fiber- Optic Presentation given at the April 28, 2012 Annual Town Meeting.) Members of the Broadband Committee also continually sought feedback on their presentations and strove to continually refine their message to the general public. They carefully considered the feedback they received and thoughtfully tailored their final presentation for the April Town Meeting, where a general revenue municipal tax bond to build the broadband project was put to a vote. To move forward, at least two- thirds of the voters in attendance needed to vote in favor of the initiative. C. The First Vote The April 28, 2012 town meeting was one of the most heavily attended town meetings in Leverett to date. The Broadband Committee made its case for why Leverett desperately needed a municipally- owned fiber optic network, opening its presentation with a powerful statistic: Only 20% of Leverett residents have DSL, which by today s FCC standards is not even considered high- speed Internet (Leverett, 2012). The Select Board made it clear that if the Town did not act and build its own network, it would be left behind in the digital divide. The presentation highlighted the many benefits of bringing high- speed Internet access to Leverett and how Internet access could improve the lives of all of its citizens children, adults, and senior citizens, alike (Leverett, 2012). The Broadband Committee stressed that although a municipally- owned broadband network would require raising taxes to fund the project, the network would increase local property values, enhance educational opportunities, make local businesses more competitive, and improve access to telemedicine and new public safety programs. The tax increase and the final retail cost of connectivity were of major concern to many attendees. Under the Committee s municipal broadband plan, every single household in Leverett would be wired with FTTH (Leverett, 2012). Individual households would not be required to buy phone or Internet service, but property taxes would rise for every property owner (Williams, 2013). The increase in taxes would pay for the construction and the first year s maintenance fees associated with the fiber- optic network. The amount of the bond proposed by the Committee was $3.6 million, to be paid over 20 years. If Leverett built its network for less than $3.6 million, the property tax increase would be lower, because the amount bonded would be lower. Individual households that did decide to purchase phone or Internet service from LeverettNet would be charged for their use of the service. All users would also be charged a flat fee for services like network upkeep and maintenance. Any subsequent costs associated with maintaining the town s fiber network that might arise in the future would be funded through these subscriber fees and would not burden households that chose not to subscribe (Williams, 2013). 15

17 Using what the Broadband Committee considered fairly conservative projections, it estimated that the monthly retail cost of service, including Internet access and phone service, state and local taxes, access fees, network operation fees, and maintenance fees, would be $61.30 per household (Leverett, 2012). However, the Broadband Committee explained, the network would save the median satellite user $528 annually, the median DSL user $66 annually and the median wireless user $408 annually (Leverett, 2012). When the municipal broadband initiative was put to a vote after the Committee s presentation, it passed, receiving 90% of the vote in a formal secret ballot. The Committee believes that under the proposed plan, nearly all Leverett citizens will benefit financially from the broadband initiative. The only households that may be worse off are those that currently do not have Internet access and have no desire to use the new fiber- optic network for phone service. For example, one elderly citizen of Leverett complained that she does not own a computer nor does she have a desire to own one (d Errico, 2013). She lives on a small budget and prefers to keep her expenses at a minimum. She does not view Internet access as an expense that she is willing to incur and is not interested in subscribing to phone service through the network (d Errico, 2013). Though she may choose not to purchase phone or Internet service through LeverettNet, her house will still be wired for access and her property taxes will still increase. D. The Second Vote: The Debt Exclusion Override Although the municipal broadband initiative received an overwhelming majority of the vote at the April 28th town meeting, the financing plan for the network required an additional, separately scheduled ballot vote to approve a debt exclusion override. As a municipality, the town of Leverett is subject to what is commonly referred to as Proposition 2½ of the Massachusetts General Law, which regulates the rate at which a town may raise local property taxes (188th General Court). Proposition 2½ states that a town may raise its property taxes only by an amount less than or equal to 2.5% of the budget from the previous fiscal year. In order to pay the debt service costs associated with the approved bond, the town would have to raise property taxes by almost double the statute s 2.5% limit (Mohr, 2013). Once the bond was repaid after 20 years, the property tax associated with the bond would terminate. The bond costs are thus segregated from the general town budget and do not become part of the year- to- year calculation of the 2 ½% cap on the general budget. To proceed with the financing for the municipal broadband network, Leverett needed to hold an additional vote, on a later date, to exclude the bond debt from the strictures of Proposition 2 ½. The debt exclusion override vote was held on June 2, 2012, and the proposition was approved by 83.5% of voters (Long, 2012). Nearly 39% of the Town s 1,405 registered voters cast ballots, surpassing the voter turnout of the prior April 28th meeting (Long, 2012). Leverett Assistant Town Clerk, D Ann Kelty, who oversaw the June 2nd special election, reported that this was an almost unprecedented turnout (Long, 2012). This shows that the town is really invested in this, she said (Long, 2012). Leverett s municipal debt process associated with the FTTH project was lauded in local press as being one of the most thoughtful and transparent bond approval processes in recent memory (Long, 2012). 16

18 VI. Building and Maintaining LeverettNet A. Municipal Lighting Plants: Independence and Contractual Leverage Under Massachusetts law, towns and municipalities of the Commonwealth are eligible to form their own gas and electric companies by a majority vote. Originally, towns created these entities to keep the cost of gas and electricity affordable for citizens, but anything that qualifies as an offshoot of electricity can be provided through a Municipal Lighting Plant (MLP) entity. The MLPs are then given custody of the network assets and infrastructure used to deliver services, but the town or municipality retains title ownership. One of the first steps taken by the town toward the broadband project was to create an MLP to own and operate LeverettNet. Going forward, the MLP will also serve a contracting function, negotiating with construction companies, maintenance companies, network operators, and service providers. Throughout Massachusetts, many previously established MLPs have now broadened their scope of services, providing Internet access service to citizens in addition to electricity and/or gas. The City of Holyoke has the aptly named Holyoke Gas & Electric MLP that has provided business- class Internet access for 15 years. When creating the Leverett MLP, the Select Board and Broadband Committee sought advice from Holyoke Gas & Electric as well as counsel from a number of other neighboring towns with similar arrangements (Mohr, 2013). Once the network is built, the MLP will be entirely separate from Leverett s town government. The Town of Leverett elected the original MLP Board, which consists of the current members of the Select Board (d Errico, 2013). A warrant article passed at the 2013 Annual Town Meeting authorized the Select Board to appoint a successor MLP Board (d Errico, 2013). As independent governmental entities, Leverett s town government cannot compel the MLP to act, and the MLP will enjoy the ability to make decisions somewhat insulated from the winds of local politics. The MLP and the town governing entities work in tandem, but their finances remain separate. The MLP, like the Leverett town government, is subject to open meeting laws, enabling citizens to hear discussions and partake in decisions regarding the municipally- owned fiber network (d Errico, 2013). Though the MLP will be autonomous, it is required by state law to charge its customers (and owners) the citizens of Leverett no more than the cost of providing service. The MLP cannot play favorites with customers and must serve all customers equally. Money that is collected by MLP for subscriber fees passes through the town s Treasury and will be deposited into an account where the funds are separately tracked. Monies deposited into the MLP s account can only be spent by the MLP itself. The town cannot touch the funds that come in through the MLP and the MLP cannot spend more money than has been earmarked by the town Treasurer. If the town or the MLP wants to move money between the two entities, the MLP and the town of Leverett will be required to enter into a contract the entities will be dealing with each other at arm s length. In those potential negotiations, the Select Board will represent the interests of all Leverett residents and the MLP board members will represent the interests of the MLP and LeverettNet subscribers. According to the Broadband Committee, there is no expectation that Leverett s MLP will pay back individual taxpayers with any revenue the MLP might generate; however, pursuant to state law, the MLP s revenue will be reinvested into the MLP to ensure that the network is maintained. Though the MLP structure is fairly rigid in terms of financing and 17

19 funding, members of the Broadband Committee prefer having the MLP govern the business of providing and maintaining LeverettNet as opposed to bestowing that responsibility upon the existing town government (Mohr, 2013). The town's aspirations for the network can only be realized if the network entices service providers to sell access to residents. By providing broadband through the MLP, Leverett has set up a unique bargaining situation (Mohr, 2013). The potential service provider will be bargaining directly with the MLP, which is wholly owned by the citizens of Leverett. In essence, the service provider is bargaining directly with a group of customers who will be able to negotiate as a unit. Normally, customers don t bargain as a unit and do not have much bargaining power when it comes to negotiating the price of service. If the citizens of Leverett (as customers or as owners of the MLP) have issues with the service being provided, the MLP can go directly to the provider to have the issues resolved or even terminate the contract. Typically, service providers offer tiered service plans where subscribers pay a premium for more bandwidth which results in faster download speeds (Mohr, 2013). Originally, Leverett had no interest in offering such a tiered plan (Mohr, 2013). The goal was not to differentiate price and maximize profit, but to provide each and every citizen with 1Gbps of symmetrical bandwidth, for the same flat rate the cost of providing service (Mohr, 2013). However, the town now believes that the access- fee model is the simplest way to recover costs of operation (d Errico, 2013). Because one of Leverett's goals is to maximize use of its new network, thus driving down costs for everyone, Leverett may want to revisit the access- fee issue in the future. B. Understanding Leverett s Success Once high- speed Internet access finally reaches every household and business in Leverett, everyone will likely wonder how they lived so long without it. The police and fire departments will be able to do their jobs more effectively. Families that once fled from the area because of the lack of Internet connectivity will take a second look at settling down in the town they grew up in. Businesses will be enabled to better sell their products online. Students will no longer need to flock to the local library to finish their homework. College students may even begin to move into the area and rent rooms in buildings that were once considered unlivable because of the lack of reliable Internet access. Leverett may be the Internet equivalent of baseball s Field of Dreams build it, and they will come. Although Leverett s network is not yet deployed, there is no question but that the town is already a municipal high- speed Internet access success story. Early on, Leverett s governing body recognized the importance of high- speed Internet access and the significant improvement it would make in the lives of its citizens. The Select Board was able to harness the skills and expertise of the greater Leverett community by appointing a highly qualified Broadband Committee. Together, the Select Board and the Broadband Committee envisioned the possibilities of municipal broadband access and were instrumental in making that vision a reality. The town of Leverett also benefited tremendously from MBI s middle mile MassBroadband123 project which built out a fiber- optic network to many of the town s community anchor institutions and provided Leverett with an affordable way to connect its local municipal network to the Internet. MBI also provided a significant amount of funding 18

20 and expertise, guiding the Select Board and Broadband Committee through various aspects of the information gathering and bidding processes. Though MBI has been criticized for stopping its middle mile network just shy of the last mile, some members of Leverett now see that as a blessing in disguise. The town has the chance to build and operate its own network according to its specific needs and qualifications. Because Leverett is building its own network it is also able to choose its own service provider. Through the MLP, Leverett is now responsible for the last mile and creating its own FTTH network. With the MLP, Leverett will be able to provide its citizens with service that is far superior to that previously offered by any other private company in Leverett. Since the MLP will own the network and infrastructure, citizens will no longer be held captive by incumbent service providers. The MLP can choose to change service providers if (and when) it feels the quality of service is suffering. Members of the Leverett town government are also grateful for the respect the Commonwealth of Massachusetts has given to long- standing laws that permit the creation of municipally owned public utilities. Many states don t have such enabling legislation. Nineteen states have passed laws creating significant barriers to or even prohibiting municipally funded public utilities (Mohr, 2013). According to the Broadband Committee, so many communities throughout Massachusetts have long- established MLPs that it would be unthinkable for the state legislature to ban municipally owned utility companies (Mohr, 2013). Thanks to John Carbone, Robyn Mohr, and John Randall for their assistance with this report. 19

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