Communities all over the world are exploring different ways of delivering fiber optic communication technology to their residents and businesses. Although a majority still rely on private Internet Service Providers (ISPs), there are many communities today that are investing in “municipal fiber networks” for various reasons. When executed well, municipal fiber networks offer unique advantages, especially for areas with limited ISP coverage.
As a fiber network developer, it’s important to understand how municipal fiber network deployments differ from traditional ISP deployments. You should know both the pros and cons involved so that you can serve your community’s internet needs effectively over the long term.
Below, we share everything you need to know about municipal fiber networks and how you can optimize them with sophisticated fiber network management technology.
Today, many communities throughout the country are investing in their own publicly owned telecommunications networks. Rather than rely on external developers and private internet service providers (ISPs), local governments are building their own “municipal fiber networks.”
In many cases, municipal fiber networks provide residents and businesses with quality broadband services at lower annual costs. Through these networks, communities are able to deliver high-speed internet directly to homes, spark regional innovation, and jumpstart economic development. They can also encourage healthy competition amongst ISPs if they choose to open their networks and lease capacity to different providers.
Local governments deploy municipal networks for various reasons. Many cities build networks to attract talent and tech pioneers to certain areas. Others must invest in their own infrastructure to have access to high-speed internet at all. Whatever the motivation, communities retain ownership and accountability over their municipal networks.
There are multiple ways that municipalities approach fiber network deployment. For some, it is important that the city owns every aspect of the network, from installation to management. Many other communities prefer to build the infrastructure and then lease capacity to private ISPs. The best path forward depends on the goals, resources, and preferences of the local governments. Currently, more than 600 communities have active municipal networks.
Municipal fiber networks can be an effective solution for closing “digital divides” that exist between different parts of the country. For a number of reasons, private ISPs are not able to deliver quality broadband in every market. Communities that lack access to high-speed internet continue to fall further and further behind in today’s rapidly changing world. With municipal fiber networks, smaller cities can close the connectivity gap and keep pace with larger urban centers.
There are pros and cons to municipal fiber networks.
In markets with sparse ISP coverage, municipal networks can be a viable solution for providing high-speed internet to residents and businesses. However, building municipal networks can be very expensive and difficult to manage.
It is important for communities to understand both the advantages and disadvantages of fiber networks before pursuing large-scale projects.
One of the primary benefits of municipal networks is that they help “level the playing field.” Through municipal fiber networks, communities can encourage healthy competition among private ISPs or deliver high-quality, cost-effective broadband themselves. When done well, residents and businesses benefit from increased internet access without having to pay exorbitant rates.
Additionally, municipal networks can minimize the “digital divide” that exists between more rural areas and larger urban centers as people have equitable access to next-generation innovation and information. For example, residents can transform their homes into smart homes by interconnecting devices over wireless networks, while businesses can use artificial intelligence to unlock tremendous efficiencies.
Local governments are also able to maintain oversight over network performance and hold participating ISPs accountable to certain standards. Communities can designate local leaders and personnel to ensure the success of their fiber networks.
One of the biggest disadvantages of municipal fiber networks is that they can be difficult to manage. Deploying any fiber network and running it well requires expertise and knowledge that takes a lot of time to develop. Finding the right resources and personnel can be hard, especially in smaller communities.
In cases where cities lease capacity to several ISPs, network operators must maintain relationships with multiple stakeholders at once while ensuring that the right incentives exist for them to participate. If population density is too low or market competition is too high, ISPs may not be able to generate high enough financial returns to justify joining a municipal network.
Building and operating fiber networks can also be very costly. Communities must invest a considerable amount up front to build the core network infrastructure. Once the network is built, there are also ongoing expenses and maintenance issues that must be addressed. It can be hard to cover these costs before a large subscriber base exists.
Because municipal networks are managed by local governments, stakeholders may also have concerns about their privacy and information. The public oversight inherent with municipal networks can be a deterrent in many parts of the country.
There are five primary municipal network design approaches:
Each approach has strengths and weaknesses. The right one for a community depends on several factors, including existing ISP presence, fiber deployment expertise, and the goals of city leaders.
Full service
Local governments act similarly to how private ISPs do under the full-service model. Telecommunications services, such as internet, TV, and phone, are provided directly to residents and businesses by the community, which has full accountability over the network’s success.
Chattanooga, Tennessee is one of the leading examples when it comes to full service municipal network deployment. Nicknamed “Gig City,” Chattanooga has become a regional hub of innovation, enabled by a publicly owned broadband network. The city of Sandy, Oregon also offers telecom services through its network, SandyNet.
Open access
In the open-access approach, cities build their own fiber infrastructure and then lease cable capacity to private ISPs. The communities are responsible for installing all of the necessary components for activating a network, including the cables, access points, and hardware. Cities manage the networks while ISPs compete for subscribers on a common infrastructure.
In the open-access model, participating ISPs buy into municipal networks and then have control over which services they provide. However, cities can hold ISPs accountable to certain performance standards. Utah’s UTOPIA network is one of the best examples of a successful open access municipal deployment today.
Dark fiber
Dark fiber municipal networks are those in which communities install fiber cables without the components needed to actually activate the networks. Instead, cities lease capacity and shift material costs and responsibility to ISPs. Local governments still own the infrastructure, but ISPs have to operationalize the dark fiber themselves.
The dark fiber route is an effective solution for cities that want to maintain oversight over telecom services without having to install more than the core fiber infrastructure. Although less costly to communities, dark networks may turn away ISPs who would rather not take on the costs of lighting up cables.
Stockholm, Sweden is one of the most prominent examples of how dark fiber has been deployed successfully on a wide scale. Across the country, 94% of all people are served by municipal networks.
Incremental expansion
For many cities, it makes sense to deploy municipal fiber networks in smaller steps. Rather than fully deploy infrastructure all at once, cities may just start with enough cable to provide services to a limited number of key organizations, such as educational institutions or public service departments. Over time, the municipal network will expand to residents and businesses.
Santa Monica, California is one example of a city that has taken the incremental expansion approach. The community’s network, City Net, has continued to grow for over a decade since its initial deployment.
Private-public partnerships
It is also common for cities to take the private-public partnership approach to deploy broadband capabilities. Under this model, communities often work exclusively with private ISPs to build out fiber infrastructure and operate networks. Cities and providers collaborate to set performance standards and share accountability over the success of the network.
More and more, communities are choosing the private-public deployment route. One leading example can be found in Westminster, Maryland where the city works with a wireless provider, Ting, to provide high-speed internet to residents and businesses.
Chattanooga, Tennessee has been an inspiring example of how municipal networks can spark economic development and regional growth. Launched in 2010, Chattanooga’s network has turned the area into an attractive destination for innovative businesses and young tech talent. The city’s Electric Power Board manages the municipal network, which offers affordable monthly rates for Mbps and Gbps packages. The network was funded by a federal grant and loan that totaled $280M.
In Longmont, Colorado, residents have enjoyed high-speed broadband since 2014. The city’s NextLight network transformed Longmont into the first gigabit city in the state and inspired nearly 100 other municipalities to opt out of state laws that restrict municipal network development. Residents can save substantially on monthly internet costs by choosing NextLight over other internet providers.
More than 10,000 residents in Sandy, Oregon use SandyNet, a municipal network that has been active since 2003. Rather than use taxpayer money, the city’s mayor, Bill King, used a $7.5M revenue bond to upgrade the community’s DSL network to fiber. Now, residents have access to high-speed internet at affordable monthly rates without having to commit to any contracts.
Local communities taking internet service into their own hands
All over the country, communities are choosing to invest in their own fiber networks and bypassing the traditional ISP model. Although municipal networks are not right for every city or region, there are many success stories that help highlight the viability of open access networks as a broadband solution.
There are obstacles that stand in the way of widespread municipal fiber network deployment:
For some markets, overcoming hurdles is relatively easy, while others still have a long fight ahead. As more municipalities explore alternatives to delivering high-speed internet to residents, the debate around publicly owned networks will only intensify.
Challenging economics
Fiber deployment costs have come down significantly over the last several decades. However, installing fiber infrastructure still requires considerable capital. Depending on the deployment approach, labor and material costs can vary widely, making it critically important for communities to thoroughly understand all future costs before breaking any ground.
There are also ongoing expenses associated with fiber network management. Consequently, this means that communities must achieve a certain adoption rate to be successful. The higher the overall capital investment, the larger the subscriber base needs to be. Because consumers are price sensitive when it comes to paying for telecom services, cities must carefully price their offerings.
Market dynamics
Market dynamics can also make it challenging for communities to successfully launch their own municipal fiber networks. There is an inherent monopolistic nature associated with the telecommunication space. The barriers to entry are high, which makes it harder for smaller ISPs to offer the same level of customer support and services that well-established providers can.
Incumbents benefit from having large geographic footprints over which they can spread economic risk and administrative costs. They also have the capacity to serve dense populations in major urban areas. Consequently, startup ISPs are less likely to get permission to break additional ground to install their own cables. Instead, they must collaborate with competitors, which can be a tricky relationship to navigate.
City leaders must consider many factors before deploying municipal fiber networks. Some of the most important questions to ask include:
Communities must answer these questions to put themselves in the best position to succeed.
What are the community’s overarching goals
All major development projects require clear goals and strong guiding visions, such as:
Fiber networks are a powerful way for cities to spark economic development. High-speed internet is essential for residents and businesses that want to participate in the global economy and take advantage of technological advances. Public service organizations can also benefit from high-speed broadband, as better internet can enhance the productivity of key personnel so that they can serve constituents more effectively.
Cities must think long-term about their networks. Municipal networks should support current technology and future development. Many cities target specific areas where they want to attract talent and innovation. Rather than roll out a uniform solution, leaders can cater to certain populations initially to test their skills at managing networks.
When communities have a strong sense of what role fiber can play in the region’s development, they are better equipped to make sound decisions around network marketing, execution, and management.
How would the network be funded?
Municipal networks are primarily funded in the following ways:
Tax revenues are a primary source of capital for many municipal networks. In some municipalities, local governments raise taxes to help pay for network developments.
Bonds are also a common funding source for municipal networks. Cities can issue bonds to private investors, which are paid back over long periods of time with revenues produced by their networks.
Many communities also take out internal loans to fund future development. Capital is provided from one or several government departments to the section overseeing the fiber development project. State governments are often the entities dictating loan terms under these arrangements.
Another way that communities pay for municipal networks is by cutting existing expenses. In many cases, this means eliminating budget that is allocated to other broadband service support or ISPs.
What does success look like?
Knowing what the key economic success metrics are is crucial:
Because municipal fiber networks require such a heavy investment, city leaders must know what adoption rates they need to generate attractive returns. For obvious reasons, population density is a huge factor in estimating adoption rates. Networks must also be priced appropriately to entice subscribers while also generating enough cash flow to sustainably maintain network operations.
What expertise and resources are needed?
Deploying municipal fiber networks requires skill, experience, and resources. No matter the geography, project scale, or community, it is essential for leaders to have sophisticated network management tools and expertise at their disposal.
Before beginning any project, cities must also understand the competitive dynamics in their local markets. Should communities want regional ISPs to participate in their networks, they need to know how to incentivize effectively. Otherwise, they will be forced to provide all services themselves, which is not an effective deployment approach for many smaller cities.
How would the fiber network be deployed?
The right deployment model for a community depends on a variety of factors. City leaders must consider what fiber infrastructure already exists in the market that can be utilized. In addition, fiber networks should be designed so that they can easily expand and absorb incremental capacity, if available. Choosing an appropriate deployment model can make or break the performance of a network.
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