Broadband Communities

AUG-SEP 2014

BROADBAND COMMUNITIES is the leading source of information on digital and broadband technologies for buildings and communities. Our editorial aims to accelerate the deployment of Fiber-To-The-Home and Fiber-To-The-Premises.

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38 | BROADBAND COMMUNITIES | www.broadbandcommunities.com | AUGUST/SEPTEMBER 2014 COMMUNITY BROADBAND solution. In 2010, the Renville-Sibley Fiber project (RS Fiber) was born. RS Fiber was originally anticipated to be a joint project of the towns in Sibley County, the county government and a slice of eastern Renville County, including the Fairfax area. Tis area is farm country, with slow broadband access in many towns and dial-up/ satellite access between towns. Te RS Fiber group held more than 100 public meetings to discuss the plan, often spending an entire day in each town and holding morning, afternoon and evening meetings to accommodate people's schedules. Te feasibility study showed that covering only population centers would be less expensive and involve less risk, but the project's leaders remained dedicated to universal access. Tey wanted to build fiber to the farm and not leave anyone behind because they reasoned that the fates of the farms and towns were woven together. After hesitation by the Sibley County Board and some difficulty in arranging preliminary financing for approximately $67 million of debt, RS Fiber decided in July 2013 to form a new cooperative rather than owning the network via a joint powers board. Te cooperative will be owned by all those who take service from it. Historically, the challenge of creating a new Internet service cooperative was raising capital. Few will lend a new entity tens of millions of dollars, especially to fnance a difcult venture. Recognizing that reality, RS Fiber developed an innovative public- private partnership. Local governments will use their bonding authority to provide initial fnancing to the co-op. Investors are far more likely to put their money into a project after it already has attracted signifcant seed funding, particularly if the private investors are the frst in line to be repaid in the event of any fnancial difculty. As of March 2014, the project comprised 10 cities and 21 townships that included 7,200 potential customers (households and businesses, the vast majority of them in Sibley County). Te local governments will together sell $15 million in general obligation tax abatement bonds and make an economic development loan of that amount to the RS Fiber Cooperative. Tat initial financing should allow the co-op to unlock another $42 million from bank sources to build and operate the network. All the borrowing will be repaid by subscribers from the services sold. Te $15 million economic development loan from local governments will be subordinated to loans from private investors. If all goes as planned, the RS Fiber Cooperative will not only connect the 7,200 potential subscribers in the immediate area but could also begin expanding into nearby towns and townships that have no realistic expectation of private-sector investment. Cooperatives, assisted by long-term, low-interest federal loans, were essential in spreading electricity to nearly every home in America. Now they may again fill an important void. MONTICELLO Home to 12,000 people and located on the I-94 corridor 40 miles west of Minneapolis, Monticello is probably the only place on earth served by two competing citywide FTTH networks. One is owned by the city of Monticello; the other is owned by TDS, a private telephone company. Still another company, Charter, ofers cable services, making Monticello one of the most competitive telecommunications environments in the upper Midwest. How did such vigorous competition come about? It began in 2006 when local citizens and businesses began complaining about the inadequate services they were receiving from TDS and Charter. One local businessman told Minnesota Public Radio, "Te service we had in Monticello was horrible. ... My employees would sometimes take the data home, where they had a better Internet connection than we did, and do their uploads at night." When the incumbents refused to upgrade their networks, the city decided to build its own. A referendum held in 2007 resulted in a remarkable 74 percent support for the project. However, when Monticello began selling bonds to finance the network, TDS filed a lawsuit. Te court dismissed the case with prejudice, but TDS appealed, delaying Monticello's fiber network and eventually costing the city millions of dollars. During the delay, TDS, which had argued for years that Monticello did not need a fiber network, decided to build one. Even during the lawsuit, Monticello ofered to do joint trenching with TDS, which would have reduced the cost to both parties to build their respective networks, but TDS refused. Monticello considered ceasing to build its network, but decided that the only way to ensure the community would actually get modern services at a reasonable price was to build a network owned by the community. Monticello started building its network in 2009. Hiawatha Broadband Communications, a well-respected Minnesota company located in Winona, agreed to ofer services over the network. (Tis relationship is no longer in force.) However, the TDS delaying tactic succeeded in harming FiberNet Monticello. Te network had to begin repaying its debt even before Citizens in Renville and Sibley counties formed a new telecom cooperative; in a unique public- private partnership, local governments will provide seed funding for the cooperative.

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