Bell tolls for wholesale-only muni fiber

The sale of the Provo, Utah, municipal fiber-to-the-premises network this month to greenfield FTTP provider Broadweave Networks sounded a death knell for the wholesale-only municipal fiber approach, as the network's new owners vowed to fix the project's ailments by doing away with its wholesale model.

That model — in which the city owned and operated the fiber network passing some 36,000 homes, leasing use of it to service providers such as Mstar and Nuvont Communications — had often been blamed for iProvo's high customer churn level. Critics said the city's reliance on those providers' success created a conflict of interest, resulting in lax enforcement of dues they owed for use of the network.

Broadweave determined that inefficiencies resulted from a lack of integration between service provider operations and network operations, delaying service activation and troubleshooting.

Speaking at the Broadband Properties Summit in Dallas last month, Dr. Timothy Nulty, the former general manager of the retail muni fiber network in Burlington, Vt., called the wholesale fiber model “a recipe for financial failure.” In most cases, he said, muni wholesalers, under pressure to service the debt they incurred building the network, end up begging service providers to participate.

Some cities have had success complementing retail models with a wholesale component, such as Jackson, Tenn., and Lafayette, La. (See story below.) And the wholesale-only model also has been applied in ultra-rural Grant County, Wash.

Proponents of the wholesale model, such as Utah attorney Paul Morris, the longtime director of Utah's multicity FTTP wholesaler, Utopia, had argued that the wholesale model ensures broadband availability without sacrificing private competition or control of fixed infrastructure. Morris went back into private practice last year. And last week, Utopia named a new director, Texan Todd Marriott, who had been a consultant to Utopia and, at one time, a prospective buyer of the network.