Broadband Communities

JUL 2018

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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J U LY 2 0 1 8 | w w w. b r o a d b a n d c o m m u n i t i e s . c o m | B R O A D B A N D C O M M U N I T I E S | 1 7 already occurred in New York state, where CAF II money was combined with a state bond issue for hard-to- serve districts. John Windhausen of the Schools, Health & Libraries Broadband (SHLB) Coalition has been a strong advocate for the use of FCC Universal Service Fund revenue to fund network deployments for anchor institutions. When it comes to networks for health care, he said, "Many are denied or held up. [e FCC] is using the CAF cost model for E-Rate and denies applications without allowing revision. Rural health care does not have enough money. e $400 million [annual] cap has caused retroactive rate increases in rural telehealth programs. We do see some positive signs out of the FCC from Pai. Wheeler did not act on them." Windhausen persuaded 31 senators to ask for more funding for the program, noting, "We want $800 million, and it would still be the smallest piece of the $8–9 billion in CAF money available" each year. A few weeks after the Fiber Connect conference, the FCC increased the annual cap on program spending by nearly 43 percent, to $571 million. MEASURING ROI ON PUBLIC INVESTMENT Minnesota rural broadband advocates Ann Treacy (a consultant and chief writer at the Blandin on Broadband blog) and Bill Coleman (president, Community Technology Advisors) noted that governments, especially at the state level, are often more willing to fund money-losing tangible investments – things the public can see – with their limited funds than they are to fund long-term moneymakers such as fiber broadband. Minnesota lost money on its Super Bowl investment. e Super Bowl committee spent $60 million in public funds. e new Super Bowl- worthy stadium cost $500 million. Rockport Analytics estimated the long-term return at $336 million. Sports economist Victor Matheson estimated the return at $30 to $130 million. In contrast, broadband investment in the state's smaller communities paid off in new business, population growth and increased property values. e five communities Treacy and Coleman detailed had different returns, but all were in the black. e average annual economic benefit has been $1,850. Average property value increase is about 3 percent. Building their own networks is not the only strategy for communities to benefit from improved broadband. For instance, two exurban counties in Minnesota taxed themselves to subsidize service improvements by CenturyLink. Coleman decried the FCC's vision of satellite service for rural customers: "ere are no happy satellite customers," he said. Even when a community looks at first glance like a good bet for broadband, the numbers don't always work for private providers. Ernie Staten, director of public service for Fairlawn, Ohio, highlighted several issues. Fairlawn is right at the edge of two providers' service districts. When town officials went to Europe on a trade mission, they were told the town was great but had no broadband. A hospital that wanted to build a facility there found that fiber would require $100,000 up front plus $5,000 a month. "Fairlawn was going to try to maintain itself on service fees," said Staten. "We looked at it as a utility, and ROI is tough for that. We put out an RFP and made a mistake in that we did not have a design study on how to build it. at woke us up to realize it was not possible. We chose Fujitsu as the best respondent, and they figured out how to do it." Small municipal governments tend to be fiscally conservative even when they spend money carefully, said Ben Ramirez, business development leader at the Foresite Group. "So we get a lot of feasibility studies. My company does WAN design for large carriers, and even there, there is often a lack of understanding." Government investment in broadband produces greater economic benefit than investment in other local assets, such as stadiums, but is more controversial. All photos by Steven S. Ross Panel on pathways for broadband by electric coops. Left to right: Ron Holcomb, CEO, Tipmont REMC; Dan Rodamaker, Gibson EMC and Gibson Connect LLC; David Callis, Executive VP and general manager, Tennessee Electric Coop Association

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