Muni fiber networks bounce back

Jobs, health care and education; retaining young people; and improving quality of life are all goals of municipal networks. Burlington Telecom now has about 5000 customers and is looking at full profitability by early 2009, Nulty said, but it also is able to do things with its video offering that local cable can't.

“For example, Burlington Telecom's network has capacity for 100,000 cable TV channels,” Nulty said. “We can and do sell a channel for $65 a month. If you try to go to Comcast and buy a commercial channel, it costs $6500 a month if you can get it, which you mostly can't. We can provide it at 1% of their costs for commercial uses. At anything that remotely smells of public service, we give [the channel] away because it costs us $4 a month, fully allocated.”

Burlington's thriving arts community wasn't certain what to do with virtually unlimited cable TV capacity at first, so it took some promotion on the part of Burlington Telecom, but there are now local plays, concerts, debates, sporting events and more on view, along with a classified ad business from a local newspaper. A telemedicine application also is in trial that links shut-ins to their doctors via video and home sensors.

The Challenges

Everyone involved with building municipal networks readily agreed that the process of getting a muni network up and running is not for the faint of heart. There are still ongoing critics of the process, such as the Heartland Foundation, that say cities don't have the expertise to run telecom networks cost-effectively. And virtually every successful muni fiber operator interviewed for this article admitted some early mistakes.

“This is not a game; you need to decide whether you are going to do it or not do it because if you don't fully do it, you will suffer the consequences,” said BVU's Rosenbalm, whose company now sells its consulting services to other municipalities. “It is not for everyone.”

The first major challenge muni broadband networks face is opposition from incumbents, both in the form of lawsuits and efforts to pass laws at the state level to limit or even prohibit municipalities from owning, operating or providing services over their own networks. A local referendum gave Monticello, Minn., a 74% approval rating for a city-owned FTTH network, but plans to issue the revenue-generation bonds to pay for the system are on hold because TDS Telecom filed a suit claiming the network violates state laws. The Tennessee Cable TV Association is appealing the dismissal of its lawsuit to halt the Chattanooga EPB network.