Monday, October 09, 2017

Small town builds a broadband network by charging signup fees; makes financial assistance available

Public-private partnerships are a popular way to build broadband networks in cash-strapped rural areas. Most of these are between local government and private companies, but a small Idaho town created a broadband network with a unique public-private partnership. Other towns could use this model too.

"Ammon, Idaho (pop. 13,800), today celebrates its success at thinking differently to produce a city-owned gig network. The city built the network with no debt and got an impressive 70 percent of the potential customers to sign up for service. One key is new technology. The other is that the 'private' in this PPP structure is citizens themselves," Craig Settles reports for The Daily Yonder.

It started when city officials were trying to find a cost-effective way of providing broadband access just to city offices. After considering offers from outside providers, city leaders realized they could build their own 10-gigabit network at a third the cost of paying others to do it. The city's IT group runs the day-to-day operations.

Ammon, Idaho (Best Places map)
When city officials were researching the cost of fiber-optic cable, they realized that they could buy cable with 144 strands for not much more than the 48-strand cable they had been planning to use. They decided to buy the larger cable and sell broadband access to local businesses and residents.

The city made an initial investment of $1 million, mostly on fiber-optic cable, but needed more. Each citizen or business that wants to get broadband pays a one-time fee of $3,000, plus a $16.50 utility fee, and their ISP's internet access fee. People who can't afford the $3,000 can get financing from one of the Local Improvement Districts set up by city officials. "Subscribers can opt in during the build-out phase and have 30 days following the completion of construction to determine if they want to pay for the installation costs in full, or take the monthly fee option of about $17.50," Settles reports. "In essence, subscribers are private partners who are paying for the cost of construction. After the city pays for the initial infrastructure, the LID takes on responsibility to retire the debt by collecting money from subscribers. The financing for the network is based on the payments made over time by the users."

Ammon's approach is different from other communities that try to finance building a network through utility fees; Ammon owns the network but wants internet service providers to interact directly with residents through that network.

Attracting internet service providers to small towns can be difficult, so Ammon sweetened the deal by providing some of the cables that ISPs would normally need to install themselves. Technology Director Bruce Patterson of the City of Ammon says four ISPs have signed up to offer internet services in Ammon. Not all will likely survive, but he thinks the competition will make for lower prices. Subscribers can also set up virtual private networks (VPNs). That can be useful for gamers, entrepreneurs, or even hospitals that want an extra layer of security.

"Ammon has created a unique and interesting model," says Deb Socia, executive director of Next Century Cities, a national organization of civic leaders trying to improve local broadband connectivity. "The funding structure for Ammon’s [system] worked perfectly for them and may possibly work for others."

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