The feasibility of fiber: What other places have experienced with municipal-owned broadband

Superior’s Communications and Information Technology Committee has a plan to build a fiber optic network that runs directly to people’s homes and businesses.

The committee turns its attention Monday, Feb. 22, to determining the feasibility of the proposal that comes with an estimated $31 million price tag. Costs for building and maintaining the municipal fiber optic network would be paid by users.

According to the broadband plan, most businesses and residents in Superior subscribe to wired internet services through Charter Spectrum’s cable system and CenturyLink’s digital subscriber line network. Both offer asymmetrical service with faster download speeds and slower upload speeds. DSL can offer download speeds up to 100 megabits per second, while coaxial cable can offer speeds of up to 940 Mbps.

Fiber optic cable, which sends information through hair-thin strands of glass using light pulses, can offer symmetrical upload and download speeds, and can transmit 25 terabits per second (25 million Mbps), the plan documents show.

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Superior is considering a 1 gigabit per second (1,000 Mbps) symmetrical network where internet service providers could compete to keep costs down.

If the network is installed, Christopher Mitchell, director of the community broadband networks initiative with the Institute for Local Self-Reliance, said he expects private companies to lower their rates to compete with the city's offering.

Competition would keep more money in the community, which is good for the local economy, but it could slow the city’s efforts to move to a higher capacity, more reliable fiber optic network.

Mitchell said the biggest advantage of building a fiber optic network is competition for the dominant provider, which leads to better prices and faster upgrades.

Another upside is keeping revenue in a community rather than sending it to a corporation out of state.

People are also willing to move to places where better broadband is available, Mitchell said.

“To me it seems the greater threat is doing nothing,” Mitchell said. “Cook County and Lake County have pretty good broadband. Duluth is still pretty limited … I would worry about cities that have comparatively poor broadband access if there’s better service just a short distance away.”

However, getting buy-in from consumers and stakeholders is a major obstacle.

“The biggest challenges will be political,” Mitchell said. “Building a fiber optic network with superfast service shouldn’t be that difficult. From what we’ve seen, it may even capture half the market in five years … because people are pretty frustrated with the options out there.”

Mitchell was skeptical that the program would achieve a 60% take rate initially, which officials believe is necessary to make the project feasible, but he said the city could achieve that over time.

"It depends in some ways on how Charter Spectrum responds," Mitchell said. "If they offer their base package for $30 a month or $40 a month, I think it will be hard to rapidly capture a majority of the market just because they will delay switching while they are getting such a great deal… that's why Charter Spectrum would do it."

Nationwide, 63 municipal networks serve 125 communities with fiber optic internet service, according to the Institute for Local Self-Reliance. The Telegram spoke with officials in a few of those communities to learn about their experience.

Reedsburg, Wisconsin, a community of about 9,500 people southwest of Wisconsin Dells, got into the telecommunications business in 1998 when the city-owned utility constructed a small fiber optic ring to monitor the city’s water and electric systems.

“We wanted to connect up our substations and wells with fiber optics,” said Brett Schuppner, general manager for Reedsburg Utility Commission and LightSpeed. “The local providers at that time weren’t interested in that, so basically we did it on our own."

Once word started to spread about the city's network, local business owners and school district leaders asked if they could join.

"It just kind of grew from there. We saw there was a need and an interest so the decision was made to do a complete build of the city of Reedsburg. Once that was completed, we saw there was interest and need outside of the city and we’ll continue to expand and grow," Schuppner said.

LightSpeed offers TV, phone and internet service with unthrottled access to its gigabit fiber network for as low at $44.95 per month. Their standard speed is gigabit by gigabit, Schuppner said.

During the initial construction, Schuppner said existing providers challenged the project, resulting in more competitive pricing and better speeds for communities served by LightSpeed. However, he said, having local control over the network has been the biggest advantage.

Schuppner said Superior officials have to be prepared to compete for customers.

"They have to be able to provide good customer service and support to make sure they are keeping their customers happy," he said.

Highland, Illinois, is a community of about 10,000 people 35 miles east of St. Louis, Missouri. It’s home to the headquarters of three global companies that were threatening to leave because the DSL connectivity was slow and unreliable.

The city put together a committee, which decided the way to protect the city’s economy was to provide a fiber optic network of its own, said Angela Imming, director of innovation and technology for Highland.

Using Build American Bonds issued as part of the American Recovery and Reinvestment Act., the city launched construction of the $9 million network in 2010 after receiving 75% voter approval the previous year.

“Don’t get me wrong, it was really rough in the beginning," Imming said. "I go to the different junkets, and I get asked to speak often on what our experience was. I see other people or other communities that venture out and do this, and the first three years is really tough.”

She said the big challenge is convincing the public, including city employees and local elected officials. Pursuing such a project requires training government officials, as well as new council members and mayors who join the ranks of city leadership.

"Cities just don't have a lot of money lying around. You have to constantly remind them what the goal is, what the benefit is, why you're doing this," Imming said.

Highland offers television, phone and 1 Gbps symmetrical service. Imming said if the city built the system now, rather than a decade ago, they would have gone without television service because of the high cost of content.

However, she said the network helped retain the companies that were threatening to leave and attracted other large businesses to the community.

Fairlawn, Ohio, about 28 miles south of Cleveland, started building its fiber-to-the-premise network in 2015, connecting businesses first in 2016 and adding residents the following year.

“The mayor had gone on a couple of trade missions overseas and quickly learned from any of the companies that he visited with that one of the drawbacks with coming to Ohio was that our internet was not the best,” said Ernie Staten, public service director for Fairlawn. “All of them were demanding fiber optics.”

Staten said they were hearing similar messages from businesses in the community and decided to approach the three incumbent providers in Fairlawn.

“We were willing to write a check to a provider to build this and they all declined,” Staten said. “They actually laughed a little bit at us.”

So Fairlawn decided to build a 100 gigabyte network that allows the city to offer 1, 2.5 and 10 Gbps service in the community. Officials used revenue bonds to cover the $10 million cost. Staten said the city also has the ability to offer faster circuits if someone needs them.

Fairlawn officials decided to forego television services because of the emergence of streaming. It was a gamble, Staten said.

At the time, slightly more than half of the city's 7,500 residents were age 60 and older. Officials worried about whether residents would be willing to change their TV viewing habits.

So city staff learned to be experts in streaming services and offered classes to the public.

“Inside our building, we put together a living room where someone could sit on the couch and they could play with the TV … let them see what was possible,” Staten said.

Today, about 62% of the community subscribes to Fairlawn Gig despite three incumbent providers. Staten said the network offers many advantages from public safety to economic development and improved home values.