Tag Archives: muni broadband

Salinas City Council approves contract to build municipal fiber network

by Steve Blum • , , , ,

Salinas fiber

A contract to build the first phase of a municipal dark fiber network was approved by the Salinas City Council earlier this month. This initial leg is a mile and a half long, and will run west along Alisal Street, a main thoroughfare through the downtown business district, beginning at the new Salinas Police station that’s under construction on the east side of downtown and ending at Central Park on the west side. A lateral will also connect City Hall to the network.

The route intersects several independent fiber networks, as well as infrastructure owned by major incumbent operators. The City plans to use the network to support its own operations – besides providing a direct, high capacity link between City Hall and the police station, it will interconnect traffic signals – but that’s just the beginning. According to the City’s press release

The installation of the fiber may also mean faster internet speeds for residents and businesses. The City intends to offer the fiber for use by private companies to provide affordable high-speed internet along the fiber route. The fiber can also be used by third parties to connect small cell antennas, which are necessary to increase current internet speeds and will ultimately be used to support a 5G network in Salinas.

Construction is expected to be completed by next Spring. Plans also call for another phase, which will extend the Salinas Municipal Network along Main Street, and for an extension through the Ag Tech Corridor in the southeast corner of the city.

The City’s Dig Once policy underpins the fiber build, which is just one element of a Downtown Complete Streets Project. The network will be supplemented by roughly three miles of empty conduit that was installed in earlier street projects.

The beginning of construction represents a major milestone in the implementation of a broadband development plan approved by the Salinas City Council in 2015, and supports the City’s policy of encouraging broadband infrastructure deployment, including expanded mobile network coverage and service.

I’m a consultant to the City of Salinas and assisted with the development of its broadband policy, plans and contracts. I’m not a disinterested commentator. Take it for what it’s worth.

City of Salinas Preliminary Broadband Plan, final version, 1 September 2015

City of Salinas, City Council Resolution, Policy Reducing Underground Excavation for Communications Infrastructure within the City Right Of Way, 15 November 2016
City of Salinas, Staff Report, Reducing Underground Excavation for Communications Infrastructure within the City Right Of Way, 15 November 2016

City of Salinas, City Council Resolution, Small Wireless Facility Regulations, 2 April 2019
City of Salinas, City Council Resolution, Small Wireless Facility Fees, 2 April 2019
City of Salinas, Staff Report, Small Wireless Facility Regulations and Fees, 2 April 2019

City of Salinas, City Council Resolution, Wireless Telecommunications Facility Lease Policy, 17 April 2018
City of Salinas, City Council Staff Report, Wireless Telecom Leasing Policy, 17 April 2018

Master License Agreement for Wireless Installations on Public Structures, by and between the City of Salinas and AT&T, 13 August 2019
City of Salinas, City Council Resolution, Authorising Mayor to Sign AT&T Master License Agreement, 13 August 2019
City of Salinas, Staff Report, License of City Facilities for Small Cell Sites, 13 August 2019

Study spots “third wave” of community broadband enthusiasm, but no swell of cash

by Steve Blum • , , ,

Wipeout

A “third wave” of community broadband initiatives is developing in the United States, but before it’s surfable, state and federal policy changes are needed. That’s the conclusion of a paper written by Sharon Strover, Martin Riedl and Selena Dickey, of the University of Texas at Austin.

They identify barriers deliberately created by lobbyists working for major incumbents and their capture of policy making machinery – such as the Federal Communication Commission’s industry-dominated broadband deployment advisory committee which offered legislative recommendations that would “eliminate municipal broadband”. But they also see community and corporate trends that are pushing against monopoly business models…

We see potential for community network development in the United States, acknowledging existing projects but also an abundance of obstacles. Their presence and growth testifies to the need for alternative regulatory arrangements…

New connectivity models in the space of community networks, innovation in terms of open source hardware, newly opened spectrum such as TV white spaces, as well as investments through private corporations into connectivity efforts such as terragraph (Facebook) and satellite internet (Facebook, Google, others), all foment this third wave of community networking efforts, but can only succeed in the long run if they are simultaneously accompanied by supportive federal and state policies. In the broad scheme of things, this calls for an end to protectionist legislation curtailing the opportunities to experiment and to offer services that communities themselves believe are more efficient, less costly and more attuned to their needs.

Strover, Riedl and Dickey are correct in calling for open and creative use of public money earmarked for educational and medical networks, greater flexibility in federal programs and more widely available state and local subsidies “to various types of providers”.

That’s a good start toward solving the critical problem that community, and particularly municipal, initiatives face: paying for building a network and for operating deficits that might last far longer than advocates generally care to contemplate. But it’s only a partial solution. Consumers and businesses also have to embrace the reality that better infrastructure and service comes at a price, and universal infrastructure and service comes at a universal price. There’s a point where someone else’s money becomes everyone’s money.

TANSTAAFL.

Scoping New Policy Frameworks for Local Broadband Networks, Strover, Riedl and Dickey.

Tacoma moves from courtship to consumation of deal to sell muni broadband system. Maybe

by Steve Blum • , , ,

Good to be the king

The Tacoma city council unanimously approved a plan to lease its municipal cable system, called Click, to a relatively small local Internet service provider. After years of study and negotiation, the choice came down to turning over the struggling system to one of two locally based companies: Wave Broadband, which has a growing footprint of cable and telecoms operations in California, Oregon and Washington, and Rainier Connect, which operates primarily as a reseller in the Tacoma area.

The winner, according to staff, the Tacoma public utilities board and CTC, a consulting firm, was Rainier. The Tacoma city council agreed, and passed a resolution authorising formal contract negotiations with Rainier. The final agreement is expected to be completed by the end of June.

Or not.

Based on what I’ve been reading, which I’ll cheerfully admit is only what’s been made public and doesn’t offer much of a peek behind the scenes, there’s a good chance the deal with Rainier could collapse as the city does its due diligence research and tries to craft an agreement that will withstand full financial scrutiny.

The council resolution contains a helpful table that outlines the differences between the proposals made by Rainier and Wave. Overall, Rainier simply promises to give the city more – more money, more control, more perks – but, according to the CTC report, only appears “to have the capability to scale up operations to meet its proposed obligations” which are considerably greater than the promises made by Wave, which already operates at the necessary scale.

Wave vs rainier 26mar2019

A key difference is the annual lease payment. Wave proposed paying $1 million a year, while Rainier offered an annual payment that begins at $2.5 million and grows to $3 million in year five. Both companies say they’ll upgrade the system to gigabit capacity but, here too, Rainier makes the bolder promise.

To meet these commitments, both companies need access to capital to cover upgrade costs and to finance lease payments to the city, while they turn around a business that’s in the red and make it profitable enough to stand on its own in a three-way competition with Comcast and CenturyLink. It’ll be up to city staff and outside financial advisors to dive into the numbers and decide whether 1. Rainier’s offer is based on a plausible business case and 2. if Rainier has the assets, management and credibility necessary to convince lenders and investors to carry its losses while it tries to execute it.

Wave already competes as the third wireline provider in other communities, and has a bigger balance sheet than Rainier. Despite being headquartered in the Puget Sound area, it’s not locally owned – its corporate parent is a private equity company that paid $2.4 billion for it last year – so its less generous offer might be the result of higher internal return on investment requirements and/or debt servicing needs. But it could also reflect hard won experience over small business hope. The City of Tacoma has until the end of the month to figure out which it is.

More documents regarding the City of Tacoma and Click are here, and more blog posts are here.

Tacoma weighs risk and reward with list of muni broadband suitors down to two

by Steve Blum • , , ,

The City of Tacoma has narrowed the list of possible buyers of its municipal cable system – aka Click – down to two local companies, Wave Broadband and Rainier Connect. A year ago, the city issued a request for information and qualifications and received responses from five companies. Only two initially met the city’s specifications – Wave and Yomura Fiber – but subsequent talks convinced Rainier to take on more risk, and led to Yomura’s exit, due to ownership concerns. Click is operated by, and operationally integrated with, the city’s municipal electric utility, which has a different set of federal rules to follow.

CTC Technology and Energy, an east coast consulting firm, helped evaluate the proposals and is recommending that the city go with Rainier, largely because it’s offering to lease the system for $2.5 million to $3 million per year, while Wave is only offering $1 million a year. But, CTC’s report acknowledges, Rainier is a riskier partner…

Wave is a large, private equity-backed, enterprise that is part of the sixth-largest broadband company in the United States. As such, it should easily be able to scale to meet the obligations contemplated in the term sheet and thus represents a very low risk proposition for the partnership.

Rainier Connect is a smaller, family-owned enterprise with far less scale and resources, and thus entails some more risk for TPU and the City than would a partnership with Wave. Rainier Connect does appear to have the capability to scale up operations to meet its proposed obligations.

Wave also has considerable experience building and operating broadband systems as the third player in markets with incumbent telephone and cable companies. Rainier doesn’t appear to have much, if any, experience as a facilities-based wireline cable company or Internet service provider.

Both companies promised to abide by network neutrality principles, and to offer discounted service to low income households, as required by the city. But they fudged on open access commitments.

As CTC’s analysis put it, both companies “will provide wholesale services consistent with its practices and policies in other markets”. Which really means that the access available to third party Internet service providers won’t be so open – in this case, probably a good thing because Click already competes with Comcast and CenturyLink in Tacoma. Forcing a private operator to cede space to other competitors on an unrestricted basis could very well lead to the kind of business case death spiral the Utopia project in Utah found itself in.

For now, the city is taking public comment before making a final choice.

City of Tacoma fact sheet, Click private/public partnership, 5 March 2019
CTC presentation, Click private/public partnership, 5 March 2019
CTC report, Rainier and Wave term sheets, 5 March 2019
CTC summary, Rainier and Wave term sheets, 5 March 2019
Rainier Connect, Click term sheet, 5 March 2019
Wave Broadband, Click term sheet, 5 March 2019

More documents regarding the City of Tacoma and Click are here, and more blog posts are here.

Newsom’s budget plan lowers barriers to public broadband financing

by Steve Blum • , , , ,

Following up on one of the items in his campaign manifesto, California’s new governor, Gavin Newsom, might make it easier to finance municipal broadband projects. One of the many, many ideas offered in his maiden budget proposal is to make it easier to form enhanced infrastructure financing districts by eliminating requirements for voter approval of bond issues…

Various economic development tools have been introduced following the dissolution of Redevelopment Agencies (RDAs), including Enhanced Infrastructure Financing Districts (EIFDs). However, only three EIFDs have been formed since statute created them in 2014. EIFDs can be created by cities or counties without voter approval and expend tax increment revenues without voter approval. However, an EIFD must receive 55-percent voter approval to issue debt.

The Budget encourages the formation of additional EIFDs through removal of the 55-percent voter approval requirement to issue debt. This change will allow EIFDs to support longer-term infrastructure commitments, similar to former RDAs.

Although it’s always been arguable that EIFDs can build and operate publicly-owned broadband infrastructure, the California legislature removed all doubt last year when it passed assembly bill 1999. Public agencies in California – cities, counties and special districts, including EIFDs – were given explicit authority to get into the broadband business.

As with the redevelopment agencies that were killed off by the legislature in 2012, an EIFD would repay the debt with future increases in tax revenue attributable, in theory, to the infrastructure improvements. It’s a complicated process. Even if Newsom succeeds in making it easier for EIFDs to borrow money, that doesn’t mean it’ll be easy.

Forming an EIFD will not be the first step towards a community broadband project. It will come further down the road, after a city or other local agency decides it wants to get into the broadband business. But it’s one more tool in the kit, and that’s useful.

New year but old questions for technology and telecoms policymakers

by Steve Blum • , , , ,

Five major broadband issues will top the public policy charts in California and at the federal level in 2019. In no particular order…

  • Net neutrality – The ball is in a federal appeals court in Washington, D.C., where arguments will be heard in February over whether the Federal Communications Commission acted properly in 2017 when it declared broadband is not a telecommunications service. California’s net neutrality law is on hold until that case plays out, which could take years. Congress is unlikely to act. In 2018, house democrats couldn’t even agree amongst themselves whether to overturn the FCC decision.
  • Privacy and data ownership – Big corporations with big political budgets will be urging congress, on the one hand, to preempt state privacy legislation with friendlier federal rules, and on the other hand they’ll be trying to water down California’s new privacy law. A bill that’s already been introduced in Sacramento could do that. The larger debate – who owns customer data, consumers themselves or the companies they share it with? – is just beginning. Congress, courts, regulators and administrators will be involved, but tech companies can get in front of the issue. 2019 is their opportunity to offer answers. If they don’t, governments will decide for them.
  • Monopoly vs. competition – Courts and regulatory agencies will decide whether competition continues to shrink as monopoly model ISPs grow. T-Mobile’s takeover of Sprint is under review by the FCC and the CPUC. The federal justice department gets a look too, and it continues to challenge AT&T’s purchase of Time Warner in court. Cable and telco lobbyists are whispering wishes into compliant republican ears at the FCC, this time with the aim of killing municipal broadband competitors. The CPUC looks at broadband affordability and the future of PG&E, one of the few remaining sources of independent dark fiber. It also has to decide if it’s serious about the conditions it puts on mergers and acquisitions, as it did with Charter’s purchase of Time Warner cable systems.
  • Local ownership and authority – Another federal court fight heats up, as an FCC order regarding wireless facilities is otherwise set to take effect on 14 January 2018. It limits what local government can do with property they own in the public right of way, restricts their authority to review permit applications, and sets shorter shot clocks for decisions. Lobbyists and lawyers for mobile carriers are already using the order to try to force cities to do their bidding, and they’ll be handing out cash to legislators in Sacramento, while asking them to bake FCC rules into California law.
  • Broadband infrastructure subsidies – Applications for grants from the rebooted California Advanced Services Fund (CASF) are due in April, and in a couple of weeks incumbent Internet service providers have a chance to exercise the right of the first night first refusal that California lawmakers gave them in 2017. Cash payments from AT&T, Comcast, Charter and other monopoly model ISPs tilted the playing field. The California Public Utilities Commission tried to level it a bit; we’ll see in the next few months whether CASF will improve broadband access in rural California, or simply be a $300 million slush fund for telcos and cable companies. The federal agriculture department is rolling out a $600 million rural broadband grant and loan program, with billions more on the way, and it’s better designed to benefit rural communities.

The players are changing, too. New CPUC and FCC commissioners will take their seats, and a new administration takes office in Sacramento. Not much has changed at the California legislature, though. Democrats have a super majority in both houses, with familiar faces leading key telecoms committees. Charter, Comcast, AT&T and Frontier know where to send the checks.

Lobbyists ask FCC to hit cities with another taxpayer funded broadband mugging

by Steve Blum • , , ,

The ravaging horde of (largely) telco and cable lobbyists known as the Federal Communications Commission’s broadband deployment advisory committee (BDAC) has drafted its latest letter to Santa advice to FCC chair Ajit Pai.

Not surprisingly, it thinks that Charter Communications, Comcast, AT&T and other monopoly model broadband service providers aren’t getting enough love from local governments. Love, in this case, meaning give us everything you have, then go out and get us more.

If a city owns dark fiber, then it should be required to hand it over to “any private sector communications provider” on demand, and only be allowed to keep enough for its “reasonably anticipated 50-year fiber needs”. That’s one of the giveaways that telecoms lobbyists put into the latest draft of their model state broadband code. The FCC already endorsed the seizure of city property, such as light poles, in the public right of way, so the next step, according to the draft, is to claim the same squatters rights on “buildings and other vertical assets that are located outside of the public right of way”.

But why stop at taxpayer owned assets? Why not tax anyone whose business depends on broadband, and give it to telcos? As Jon Brodkin writes in Ars Technica, that’s what AT&T asked for, and largely got…

An AT&T executive who is on the FCC advisory committee argued that the recommended tax should apply even more broadly, to any business that benefits financially from broadband access in any way. The committee ultimately adopted a slightly more narrow recommendation that would apply the tax to subscription services and advertising-supported services only.

It’s difficult to imagine that the FCC will try to impose this wish list on states and local governments, but then it was hard to believe they’d try to preempt local ownership of street light poles. As they did.

More likely, this time around the republican majority on the FCC will say you’ve been nice little lobbyists this year, and put their stamp of approval on the draft. Then they’ll hand it down to state lawmakers who are, collectively, being paid millions of dollars by those same lobbyists.

California’s next governor talks the broadband talk, but will he walk the walk?

by Steve Blum • , , ,

California governor-elect Gavin Newsom has a broadband development track record of sorts. Whether that will translate into sound telecoms infrastructure policy remains to be seen.

When he was mayor of San Francisco, Newsom made a big splash with a deal with Google and Earthlink to blanket the city with WiFi, with free service playing a prominent role in a difficult to understand business plan. That was back during the great municipal WiFi bubble of the mid–2000s. The deal collapsed, but Newsom pushed on with a small ball program to install WiFi hot spots, including in public housing communities.

Newsom didn’t talk much about it during the campaign, but broadband rated a mention on his website

We can’t build an innovation culture with global reach or reap the benefits of the information age without the capacity to send and receive vast amounts of information. As Governor, Gavin will align infrastructure decisions with regional strategies, pursue new and creative approaches to financing including Enhanced Infrastructure Financing Districts [EIFDs] and the new state bank, and lead the movement to make universal access to high-speed broadband a reality for every Californian.

It’s not exactly a jump over the big hurdle – finding the money to pay for modern broadband infrastructure – but at least there are a couple of small hops in front of it. EIFDs were supposed to be a fast track to bond financing, backed by the tax revenue that was expected to result from infrastructure-driven economic growth. Assembly bill 1999, passed by the California legislature and signed by governor Jerry Brown earlier this year, specifically allows EIFDs to get into the broadband business.

But pretty much everything under the sun rates a line or two in Newsom’s encyclopedic campaign platform. Whether any given issue makes it from the wish list to the to do list is anyone’s guess.

California’s new muni broadband law establishes rights, and net neutrality responsibility

by Steve Blum • , , , ,

California governor Jerry Brown actually signed two network neutrality bills into law on Sunday. The Big Kahuna was senate bill 822, which establishes net neutrality rules for Internet service providers doing business in California. But alongside it was assembly bill 1999, which, among things, requires publicly owned broadband systems to abide by net neutrality principles, whether or not their private competitors have to.

It’s a mixed blessing. On the one hand, it’s good thing for muni broadband systems to operate on a net neutral basis, both from a public policy and a customer service perspective. On the other hand, it might not always be a viable way of doing business. If SB 822 is tossed out by a court, and the current anything goes federal policy stays in place, then a few years from now the broadband business might look completely different. If muni broadband systems are handcuffed to a business model that is no longer competitive, the only ones who will benefit are the big, monopoly model ISPs like AT&T, Charter and Comcast. That’ll be a problem to worry about later, though.

AB 1999 does two other things. It lifts a restriction on community service districts (CSDs) that effectively bars them from the broadband business. It was the only meaningful restriction on public agency broadband on the books in California.

The bill also clearly spells out that cities, counties and certain kinds of special districts, including CSDs, county service districts, utility districts and infrastructure financing districts can offer broadband service. It’s long been assumed they can, but there wasn’t much in the way of explicit legal authority. Cities have a long history of precedent to rely on, but other kinds of agencies don’t have that level of confidence to fall back on. I know from experience that there is a huge difference between “there’s nothing that says you can’t” and “the law specifically says you can” when you’re trying to convince local officials that a broadband enterprise is a good idea.

But there’s also potential danger. A law that explicitly allows muni broadband service is a tempting target for corporate lobbyists who want to fiddle with it, to the benefit of their business models and at the expense of the public. We’ll have to keep a permanent watch on California’s new muni broadband law.

California muni broadband bill lands on governor Brown’s desk

by Steve Blum • , , ,

Net neutrality isn’t the only broadband issue awaiting a decision from California governor Jerry Brown. As the legislative session wound down to a close last week, the California senate and then the assembly approved assembly bill 1999 more or less on party lines – democrats mostly voted aye, republicans no.

AB 1999 explicitly sets out in law what has been the practice and, to the extent its been challenged, the long standing precedent that Californian cities and some kinds of special districts can build broadband systems and offer service, whether or not it’s in competition with cable and telco monopolies.

The bill also removes the only significant barrier to public broadband that’s clearly written into California’s statutes: the byzantine restrictions – amounting to a ban for all practical purposes – on community service districts (CSD) that want to get into the broadband game. CSDs are halfway houses for unincorporated communities that want a higher level of municipal services, but don’t want all the legal and financial overhead that comes with being a fully incorporated city. Yet.

Net neutrality requirements are also written into AB 1999, but it’s a double-edged sword. Broadband service provided by a local agency has to adhere to the basic net neutrality principles: no blocking, throttling or paid prioritisation. That seems to be a good deal for muni broadband customers, but it comes with a risk. If private sector Internet service providers don’t have to follow net neutrality rules, that may be a competitive advantage for muni ISPs. But if Internet fast lanes, slow lanes and no lanes become the norm, muni systems would likely face higher costs to swim against the tide, and would have to charge customers higher prices. Or would simply be undercut by monopoly-model competitors who can shift costs to make monthly subscription rates look cheaper.

Governor Brown has until the end of September to decide what to do with AB 1999, and the hundreds of other bills approved last week by California lawmakers.