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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AUGUST/SEPTEMBER 2014 | | BROADBAND COMMUNITIES | 29 Institutional/Middle-Mile Model. In this model, a local government builds a network focused on connecting government and community anchor institutions, including government agencies, schools, libraries and hospitals. It can also lease out excess capacity to private providers that ofer services to the public. Tis model requires a smaller capital investment than does more extensive FTTP deployment. Experience suggests that a community with an institutional network can realize a modest revenue stream by leasing parts of the network and at the same time reduce its own cost of purchasing communications services from private providers. Tis model requires less involvement in operations than does a retail model because it does not require a local government to go into the business of providing communications services. Tough this model has the potential to beneft some business customers, it is unlikely to address the needs of most residents and small businesses. Te model ofers some incentives for a private provider to construct its own infrastructure, but this may not be enough to attract private sector investment in a communitywide FTTP network because it lowers the cost of outside-plant construction by only a few percent. Te following local governments, school districts, or other anchor institutions were able to realize substantial cost savings by shifting their broadband services from private providers to local options. • Santa Monica, Calif., operates its institutional network in conjunction with the school district and a local college. By self-provisioning their bandwidth needs instead of purchasing commercial services, within a few years of operation the three local partners were saving a combined $500,000 annually on their telecommunications service budgets. • Martin County, Fla., operates an institutional network with several local partners. Te school district in Martin County saves more than $82,000 annually by purchasing services from this local network rather than from commercial entities. Once the school district's share of capital investment payments for the local fber network is completed in 2017, the annual IT budget savings is expected to grow to $340,000 annually. In addition to enabling substantial savings, the local network provides the school system with superior networking speeds of 1 Gbps. • Martinsville, Va., saves approximately $140,000 on telephone services alone by self- provisioning services over the local fber network rather than leasing from a private provider. • Te City of Greenacres, Fla., saves more than $24,000 a year while increasing bandwidth capacity sixfold by switching service from a commercial provider to a locally owned county fber network. • Highland Public School system in Medina County, Ohio, saves $82,000 a year after switching broadband service to a local municipal network. • In Royal Oak, Mich., a suburb of Detroit, the municipal government and school district are partnering on the construction of a local fber network to serve their sites. Te school district estimates that self- provisioning its broadband will save it more than $114,000 annually. Infrastructure Participation. Most local governments own assets in key locations that could reduce FTTP deployment costs for private providers. Construction costs could be reduced through use of such assets as fber optics, communications conduit and facilities. In this model, the public sector makes selected assets available for lease to a private sector entity, enabling the private entity to more efciently and expeditiously build and operate a network. Extending fber into business parks and selected neighborhoods could provide some attraction to a private sector investor or operator. Tis model seeks to encourage private investment. However, to attract an investment, public fnancing guarantees may be required, entailing public risk with limited control. As government leaders evaluate their options, it is important that they focus on developing the most appropriate network model to meet the goals of the community while accounting for fscal realities and associated risks. Tere is no one-size-fts-all approach. A government can utilize any number of diferent permutations for a public project that ofer diferent benefts and trade-ofs. Taking the time to perform the proper due diligence on any broadband project is critical to developing a successful, sustainable and scalable project. v Ben Lennett is a senior research fellow at the Open Technology Institute, Patrick Lucey is a policy program associate at the Open Technology Institute, Joanne Hovis is president of CTC and Andrew Aferbach is CEO and director of engineering of CTC. Hibah Hussain and Nick Russo also contributed to this report. New America Foundation's Open Technology Institute promotes afordable, universal and ubiquitous communications networks by providng in-depth, objective research, analysis and fndings for policy decision makers and the general public. CTC Technology & Energy is an independent communications and IT engineering consulting frm. A community with an institutional network can realize a modest revenue stream by leasing parts of the network and at the same time reduce its costs for communications services.

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