Muni Efforts Should Stick to Property Management
April 1, 2012
by Hunter Newby
In an effort to gain monetarily from their investment while adding value to their community, the city of Farmington, N.M., has articulated the apparent options and challenges that municipalities face when contemplating the business model for a new, or existing, municipal fiber network.
Here are highlights from the Feb. 9, 2012 article by Kurt Madar in the Farmington, New Mexico Daily Times:
- City officials sought the best way to light up Farmington’s 80 miles of fiber optic cable.
- The city uses the cable to run its electric utility system, but only needs a fraction of the available strands.
- The extra strands (dark fiber) represent unused potential that could attract business investment.
- Expanded connectivity could benefit hospitals, colleges, and residences.
- Consultants presented options ranging from doing nothing to a full triple-play model.
- They recommended against becoming a triple-play provider and instead leasing fiber to existing service providers.
As noted in the reporting, while a triple-play approach could produce more revenue, it would also require major capital and likely trigger legal and political pushback from incumbent providers. By contrast, leasing dark fiber can enable broader service availability while limiting risk.
The article also reported city discussion around whether to provide bandwidth directly or allow service companies to do so, along with infrastructure investment estimates and early provider leasing interest.
The greatest power municipalities possess is the power of the pen to grant access to rights of way for empty conduit and dark fiber. That approach enables, rather than competes with, carriers and lit network providers, reducing opposition and opening the market to multiple networks that can offer competitive services at competitive prices.
The practical conclusion is that a city should focus on what it is best at—essentially property management—rather than entering an active service business it may not fully understand.
When cities face a shrinking tax base, it is easy to believe a broadband network alone will solve the problem. A broadband network can absolutely support economic growth, but the means to that end matters. The better model is often open dark fiber access on reasonable rates and terms, attracting providers that build lit enterprise services and consumer triple-play offerings without forcing the municipality into direct retail competition.
Hunter Newby was CEO of Allied Fiber at the time of this publishing.
Originally published in Internet Telephony, April 2012.
