Commentary: Will Broadband Projects Dodge the Missteps of Municipal Wireless?

While there are plenty of lively policy debates going on as the public comment period for the broadband stimulus winds down, I hope some folks are dealing with the more mundane elements of this process – the actual dash for dollars. Once the floodgates open, some communities and service providers may be in for a big shock, while others will seem to have the inside track.

I’ve conducted a lot of in-depth interviews with towns, cities and counties across the U.S., plus watched the NTIA /RUS public meetings. I see two categories of players (and potential players) in the upcoming grant pursuit: those with stars and hope in their eyes, and those with a plan of attack.

As in the early days of muni wireless, some communities will see what looks like goo-gobs of money in someone else’s till and, believing their broadband cause is noble, righteous and well deserving, jump on the bandwagon without clear planning or rational thought. On the flip side, like those insightful souls who saw the “free” model for what it was, there are other communities quietly building realistic strategies for success.

Here’s how I think success will be clothed in this next broadband chapter.

First, several communities have been planning a broadband network of some sort for a year or two. They’ve done needs assessments, technology due diligence, business analysis, stakeholder partnership development and determined from where money might come. The broadband stimulus grants are just one funding avenue that happened to pop up. Whatever rules come down from on high governing grant distribution, these people have a leg up.

Second, I listened to people’s comments and suggestions during the public meetings and I wondered how realistic a picture many of them have of being in the broadband network business. After several years, Jackson, Tenneessee has a fairly good fiber business. Michael Johnston drove their project from the beginning. He paints a painfully stark picture of what happens when town fathers and mothers aren’t prepared to be real SOBs [my words] when necessary in their business dealings.

You can’t be a warm and fluffy businessperson [his words] if you want to get some of this grant money. Whatever plan you bring to NTIA and RUS better reflect the reality that, after getting financing for 80% of your buildout cost, you have to finish the network and then operate it as a viable business. Even if you don’t make one dime of profit, a million dollar network will cost you $200,000 in cap ex and possibly $200,000 PER YEAR in operating costs (assuming annual op ex is 20% of buildout costs). That’s a big nut to crack if your community only has a few thousand people.

This next observation may be painful for some communities to accept. The rugged individualism that made so much of the heartland, the southland and New England Yankeeland great will not serve you well when chasing grant dollars.

After watching all that has gone down in this public comment period, you realize that no way is there enough NTIA/RUS staff, time or grant money to address the flood of proposals poised to gush through the gates. Small communities standing alone and even some mid-size towns, no matter how deserving their projects, are almost assured to get lost in the flood. Those with the best chance of getting money are communities that band together.

Casey Beard, Director of the Morrow County, OR Emergency Management Department describes the rationale behind a 10-28-county proposal being formed. “Most of the communities out here are similar enough with common enough problems to make it easier to address them as a whole. Counties can share each other’s resources that a network requires: some are owned by the counties, some by fire departments and others by organizations that potentially are users of the final network. Sharing these resources allows us to build more for less. For rural communities, the only option for getting this money is to work together.”

Next week I’m running a Webinar to help communities and providers address these and other cold realities. But the bottomline is this: while we still have battles with intransigent incumbents to address, and policy issues to resolve, communities better be hustling to address the fundamentals of business management : thorough strategic planning, realistic financial analysis and aggressive partnership development.

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Comments

  1. Mr. Settles,

    I enjoyed your article regarding community collaboration for broadband stimulus funding applications. I agree that it will be the larger, compelling projects that deserve, and receive, the most attention.

    I noted, with a bit of a wry smile, the comment about Michael Johnston driving JEA’s fiber project since its inception. I recently retired from JEA as Senior Vice President of Telecommunications after implementing and managing JEA’s project for nearly eight years. Michael came on board as a VP of IT for JEA midway through the project and was quite helpful in managing the technical functionality of our network. Michael is a very talented young man, and I appreciated his assistance.

    Thanks for the good article.

    Kim Kersey

  2. Kim,

    I didn’t mean to overlook your role and contribution. I made the leap to the conclusion that Michael was there from the beginning without actually asking him since he was referred to me as “the person in charge.” I didn’t ask him how the project got started. I apologize profusely because I believe in giving everyone their just due for these efforts.

  3. Craig, you are correct in stating that OpEx is a very large portion of the Capex. However, there are several ways to reduce that signficantly. One way is to reduce or eliminate manufacturer required warranties and support agreements. The second is to utilize standard windows based monitoring and management software. For example, our design utilizes hardware that requires no hardware contracts and equipmnet costs are less than $100 per radio if one fails. Secondary, management is handled by Windows based applications that doesn’t require specialized servers and training that can be done in a few hours, not days. If by using your numbers and our design, installation costs (in the west) are $10,000 per square mile then yearly costs are less than $2000 per square mile per year. That makes it significantly easier for Municipalities to afford that management fees. This type of system can also be upgraded to continuously take advantage of newer technologies at minimal costs for additional capacity and capability. That solves one financial problem that cities will have to address.

  4. Joe Citizen says:

    Craig, your insightful article was weakened by your choice of examples. The Jackson TN ftth is a text book case of what not to do. Il conceived, corrupt leadership, poor execution, and bad management. Just look at what the local Gannet owned newspaper (Jackson Sun) had to say about them on May 11th 09, http://www.jacksonsun.com/apps/pbcs.dll/article?AID=/20090511/NEWS01/305110015&s=a
    They’re broke! It’s not that we do not desparately need an alternative to the RBOC, we just do not need government run ISP’s!