Muni fiber networks bounce back

“I would say that in the last few years, literally three, it's really gone through a flat period, whereby people have tried to evaluate a way forward,” said Tim Scott, director of sales for North America for PacketFront, a company that assists in developing, designing and operating open-access fiber networks for municipalities. “There were a couple of early adopters who started early in 2000 and ran into some difficulties. It was an early time from a technology perspective; prices were higher so the business case was tougher. We've seen a little bit of turn now. People are starting to understand some of the lessons learned. They got more into a business mode where they put more time into planning, so new muni nets are technically viable, commercially viable, funded correctly and have a realistic business model.”

One other definite trend is that the municipalities themselves are biting the bullet and becoming service providers — something many of them avoided either for regulatory or business reasons. The notion of building a fiber optic network using municipally backed bonds and then serving only as a wholesaler now is generally viewed as a very tough row to hoe.

“If you look at the municipal fiber projects that succeed and what characteristics are inherent to those projects, one salient fact is that the projects provide retail services directly and are not a wholesale-only network,” said Timothy Nulty, the man who helped Burlington Telecom bring fiber to that Vermont community and is now president of ValleyFiber, which is bringing FTTH to a consortium of 25 rural Vermont communities.

Networks such as iProvo and Utopia found it hard to attract service providers, and without services, customers just weren't interested. A Utah state law, passed after those two fiber projects were in discussion, prohibits municipally owned networks from selling retail services.

“What happened in Utah is something we have been talking about for years — the state law that effectively prohibits retail service is, in my view, a very substantial part of what is wrong with the environment in Utah and particularly iProvo,” said Jim Baller, attorney with Baller & Herbst, which represents municipalities and has done research for e-NC Alliance, among others. “If applications are slow to evolve — and they have been — service providers are left competing with incumbents on traditional services, where they have no advantages.”