Broadband Communities

MAY-JUN 2019

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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SUMMIT COVERAGE 3 6 | B R O A D B A N D C O M M U N I T I E S | 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 | M AY / J U N E 2 0 1 9 Run Muni Networks Like Businesses, Not Like City Hall A community that wants to run a network business must realize that good business practices, not politics, should rule decision-making. In other words, municipal network operators must have clearly developed operational plans. Panelists in the Lessons Learned From Turnaround Communities session agreed that to overcome the perception that municipal networks are not feasible, community leaders must be willing to listen to new points of view. Consider Highland, Illinois-based Highland Communication Services, a provider that o•ers residential customers 1 Gbps service for $70 a month. When Angela Imming became director of technology and innovation for the city of Highland, the municipal service provider faced the challenges of …at ARPU and in…ated video fees. Imming said what kept Highland from moving forward was a lack of focus. "Our take rate was …at because we had not convinced people to leave the perch of Charter Communications," she said. "‹e big question was, why were we doing this? As soon as we were able to 'nd the answer, we refocused." NETWORKS ARE DIFFERENT Municipal providers must also learn that running a network e•ectively di•ers from running other town or city operations. Before hiring Don Patten as the general manager in 2014, MINET, a municipal provider that serves the cities of Monmouth and Independence, Oregon, faced issues with operations, billing, documentation and marketing. Patten's 'rst order of business was to analyze how the business could be realigned and persuade the board to listen to new ideas. "After realizing that MINET could be salvaged, one commitment I had to get from everybody involved was that members would be willing to listen to adult conversations and make the place ešcient so we could get on with running the business," Patten said. A six-member board, three from each community, runs the municipal provider. "Unfortunately, whenever you have government involved in something, you have politics involved in it," Patten said. "When you have politics involved in it, you have the need to candy coat everything. When you candy coat everything, that is the recipe for failure in our business." Imming noted that, besides getting its operations in order, Highland Communication Services had to persuade others that running a network is not like running a water department. "For the city of Highland, one of the toughest barriers to overcome is that municipalities can build and operate a network, but it can't be operated like city hall or the other utilities," she said. In Salisbury, North Carolina, network organizers had to overcome not only state legislature leaders but also incumbent providers that did not want a new competitor. "We had signi'cant areas of the business population saying, 'You don't need to do this,'" said David Post, mayor pro tem for the city of Salisbury. "We also faced a massive PR campaign against us." FOCUS ON OVERSIGHT, EXPERTISE Politics is only one challenge for municipal providers. Creating tight cost controls and marketing services correctly are also requirements for success. To avoid problems, municipal providers need to exercise oversight of their 'nancial processes and spending. Utah-based open-access operator UTOPIA, which has seen its share of ups and downs throughout its existence, has found solid new ground and embarked on a new life, adding cities, retail providers and subscribers. In its early years, UTOPIA, one of the 'rst U.S. municipal networks, made mistakes caused by lack of experience. In addition, it was hampered by the state legislature and by a lawsuit from Qwest, now CenturyLink. Qwest accused UTOPIA of creating unfair competition that allowed its contractors to sell services at below-market prices. Roger Timmerman, executive director and CEO of UTOPIA Fiber, said, "We got a lot of good people with good intentions, and the economics did not pan out. I would encourage any community embarking on a 'ber project to do its homework. ‹en, have a level of in-house expertise to scrutinize the spending and purchasing decisions." Timmerman added "If you go and just 'll your shopping cart, you're toast. But if you pick the right partners that are ešcient, you will have a successful project." In Salisbury, network builders had to face o• against anti-municipal broadband marketing campaigns. "We found ourselves having to compete with big boys that were spending more marketing dollars to have people not use us than our entire revenue base," Post said. HEDGING AGAINST UNCERTAINTY Bryan Rader, UpStream Network: The multifamily industry always oversupplies housing, and eventually it will have to lower rents. The best strategy for broadband providers is a long-term bulk internet contract. That has a guaranteed rate of return. It's bankable. No one knows what will happen over 10 years, so a bulk platform is a vehicle for predictability. Bryan Rader, UpStream Network

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