Municipal fiber developments are currently outlawed in more than half of the U.S.26 stateshave laws that prevent local municipalities from funding, installing, or managing their own networks. But there are risks when investing in muni bonds. Currently, the only option for wired internet access in Agawam is Comcast, which announced in November that it would start charging customers extra when they exceed 1.2 terabytes of data per month. For example, some sources double-count a network if it crosses state lines, or is extended to a second town. , including a mix of dark fiber networks, Fiber to the Home networks, and business/residential services. Instead, cities lease capacity and shift material costs and responsibility to ISPs. DISCLAIMER: MoneySmartGuides has financial relationships with some of the merchants mentioned on this blog. Learn how your comment data is processed. Deploying any fiber network and running it well requires expertise and knowledge that takes a lot of time to develop. This is because the municipal bond yields tend to be lower than other bonds but since you dont pay taxes on munis, you might come out ahead. 788 0 obj <>/Filter/FlateDecode/ID[<6451788AD0D847438E5B847DFB6D1695><925C54FEB1DB6945A060964B3709D13D>]/Index[774 40]/Info 773 0 R/Length 88/Prev 598858/Root 775 0 R/Size 814/Type/XRef/W[1 3 1]>>stream Today, many communities throughout the country are investing in their own publicly owned telecommunications networks. Consequently, this means that communities must achieve a certain adoption rate in order to be successful. Municipal networks are primarily funded in the following ways: Tax revenues are a primary source of capital for many municipal networks. A wireless network might make broadband access more available and affordable for more people. If interest rates rise, the value of a previously issued bond will drop in value. For optimal browsing, we recommend Chrome, Firefox or Safari browsers. The payment for your account couldn't be processed or you've canceled your account with us. Often called "municipal WiFi," these networks use more than just 802.11 networking. In this case, I am talking about capital gains taxes. A slightly more lukewarm 50.6 percent marked probably would switch on their surveys. Fiber deployment costs have come down significantly over the last several decades. As might be expected, Cox Communications, the incumbent cable company, pushed back against the city network. community broadband have tended to emphasize the substantial potential benefits of such projects, while reports by opponents have stressed the significant costs and risks involved. India Expected to Raise $84B In Future Spectrum Auction. @X, 3KHCKpqgRiJfBW4:ZPa% g"h Timnath town officials want to partner with a neighboring municipal broadband provider to bring high-speed internet to town, but who, when and how to pay for it are questions without answers. Note: OSPInsight is committed to fiber and we are optimistic that constituents, regulators, and businesses will find effective solutions. The citys Electric Power Board manages the municipal network, which costs $58 per month for 300 Mbps or $68 per month for 1Gbps. Municipal broadband (also sometimes referred to as "community broadband") is a somewhat amorphous term that can signify many different ways that a local government might participate either directly or indirectlyin the provision of broadband service to the local community. MoneySmartGuides is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. Operators must also have access to real-time information about cables, such as where they are installed and who they service. However, cities can hold ISPs accountable to certain performance standards. Check out my book and learn how you easily can be a successful investor. Should communities want regional ISPs to participate in their networks, they need to know how to incentivize effectively. However, this doesnt mean that muni bonds come without risks. Click here to learn more about how our cloud-based platform can help you manage public, high-speed broadband for your community. There are also ongoing expenses associated with fiber network management. Several municipalities have created public broadband providers with varying degrees of success. On the downside, municipal networks can be very complex to manage. The Phases of Community Broadband with Courtney Gates Community broadband projects typically go through six phases. According to the National Conference of State Legislatures, 41 states have proposed bills related to municipal broadband projects. Satellite internet is a wireless connection that uses 3 satellite dishes- One on your home, one at the supplier's central location, and one in space. For a number of reasons, private ISPs are not able to deliver quality broadband in every market. Whats the difference between Wi-Fi and internet? Municipal Broadband. Prices and speeds can vary significantly between municipalities and providers, but prices around $40/mo. For support, Cleland cited the 2004 Supreme Court decision Nixon vs. Missouri Municipal League, which said the FCCs authority to regulate telecom did not give the commission the authority to preempt state prohibitions on localities offering telecom services. Influence-free. qZ #TK ? A wireless access point in a municipal network is also different from a typical WiFi hot spot. If municipal bond investors are looking to buy a bond, are they more likely to buy the one that is paying them 5% interest or 10% interest? The development of these programs is relatively new, with the last decade seeing their primary push so far. The right one for a community depends on several factors, including existing ISP presence, fiber deployment expertise, and the goals of city leaders. Copyright 2023 MoneySmartGuides.com - All Rights Reserved. Communications Access Cooperative by Hood River Electric Cooperative, DeKalb Advancement of Technology Authority Broadband, ECFibernet (East Central Vermont Community Fiber Network), Elevate - Delta-Montrose Electric Association, Firefly Fiber Broadband (Central Virgina Electric Cooperative), Fort Morgan Fiber Optic Broadband Network, Freedom Fiber (Tombigbee Electric Cooperative), Glenwood Springs Community Broadband Network (GSCBN), HITEC - Hawarden Integrated Technology, Energy, & Communication, Independence Light & Power, Telecommunications, Johnson County Fiber Network (Johnson County REMC), Laurens Municipal Power and Communications, Manning Municipal Communication and Television System Utility, NEXT, Powered by Northern Arkansas Electric Cooperative, Nine Star Connect (Hancock Telecom and Central Indiana Power), Oconee FOCUS (Fiber Optics Creating Unified Solutions), Oregon South Central Regional Fiber Consortium Lighting the Fiber, Red Bolt Broadband (Continental Divide Electric Cooperative), Ruralband (Prince George Electric Cooperative), SECOM (Southeast Colorado Power Association), SGRITA Rural Last Mile Infrastructure Project Last Mile, South Central Connect (South Central Arkansas Electric Cooperative), SVEConnect (Sequachee Valley Electric Cooperative), Tohono O'odham Last-Mile FTTH and Broadband Wireless Network, Town of Islesboro Fiber Network (Islesboro Municipal Broadband), True North (Arrowhead Electric Cooperative), Utah Telecommunications Open Infrastructure Agency (UTOPIA), XStream Internet (Mille Lacs Energy Cooperative). 2023 Advance Local Media LLC. Whip City Fiber, the municipal broadband Internet provider owned by the neighboring city of Westfield, has partnered with several towns in the Berkshires to operate their publicly owned fiber. hWnF1o$-l7. Through municipal fiber networks, communities can encourage healthy competition amongst private ISPs or deliver high-quality, cost-effective broadband themselves. Additional fees and terms may apply. When investing your money for long periods, you need at least some portion of it to outpace inflation if you are going to have any chance at increasing your net worth over time. 813 0 obj <>stream Here are the pros and cons of fixed wireless internet: Pros. Superfast speeds. All rights reserved (About Us). Since the interest rate of muni bonds is generally lower than other types of investments, it can be difficult to beat inflation. Nicknamed Gig City, Chattanooga has become a regional hub of innovation, enabled by a publicly owned broadband network. Once the network is built, there are also ongoing expenses and maintenance issues that must be addressed. This public oversight may be too much of a deterrent in certain parts of the country. In some municipalities, local governments raise taxes to help pay for network developments.Bonds are also a common funding source for municipal networks. Comcast later said it would suspend implementation of the plan until August. While the municipal broadband feasibility study was being conducted, the city cleared a bureaucratic hurdle that would allow for the establishment of a public utility, if voters ultimately decide the time is now. Check your inbox and stay tuned for deals, news and more. Tax savvy investors know that municipal bonds are a great way to diversify your investment portfolio. The laws require any municipal broadband system to be self-sustaining, limiting local authority to bundle services like voice and data, which is a common industry practice; and finally the law bars municipalities from providing broadband services to residents beyond their jurisdiction. Joshua Cox-Steib is a writer and contributor for the Allconnect team, focusing on broadband and satellite internet. The town of Cleveland, TN is currently considering a proposal to partner with Cleveland Utilities to install a broadband grid for all its residents. The communities are responsible for installing all of the necessary components for activating a network, including the cables, access points, and hardware. In cases where cities lease capacity to several ISPs, network operators must maintain relationships with multiple stakeholders at once while ensuring that the right incentives exist for them to participate. To be approved, it would need a two-thirds majority vote. Municipal broadband networks tend to be established in small and mid-sized communities, often located in rural areas. Communities that lack access to high-speed internet continue to fall further and further behind in todays rapidly changing world. Rather than use taxpayer money, the citys mayor, Bill King, used a $7.5M revenue bond to upgrade the communitys DSL network to fiber. Learn how to become a successful investor in just 7 days. In many cases, this means eliminating budget that is allocated to other broadband service support or ISPs. This compensation may impact how, where and in what order products appear. This report, written by the Institute for Local Self Reliance, provides an extraordinarily detailed discussion of both the pros and cons of such projects. The task force consists of five town officials, IT Director Jeff Hulbert, City Councilor Rosemary Sandlin, Planning and Community Development Director Marc Strange and Cable TV Manager Les Tingley, as well as two residents at large, Brian Burbank and Paul Jenney. This service requires a modem that uses cables to connect to the satellite dish on your home. Copyright 2023, IQGeo UK Limited. ?Wj5|H(zB0mzD -v/l =|:{B^cfx,TNW1*BxYUqXd}$*phulJC[ch-'XJDhVCpc~aw7~. Never miss a story with the GovTech Today newsletter. But year after year the lobbyists kill such efforts. The town of Cleveland, TN is currently considering a proposal to partner with Cleveland Utilities to install a broadband grid for all its residents. If so, where? Within this bill is an allocation of more than $40 billion to be spent on a Broadband Equity, Access and Deployment program (BEAD). By using municipal bonds to get your asset allocation correct, there is a greater chance you will stay invested for the long term, thus increasing the odds of success. 5:55 am. The barriers to entry are high, which makes it harder for smaller ISPs to offer the same level of customer support and services that well-established providers can. Copyright 2023, IQGeo UK Limited. Why It Matters: The Affordable Connectivity Program, Three Ways Rural Broadband Is Creating Positive Change, Internet is Affordable for All: Broadband Not Fueling Inflation, Internet Trends, Fueled by Broadband, That Continue to Soar. BroadbandNow is supported by commissions from some of the providers listed on our site. As an operator, you need a balanced perspective on municipal networks so that you can best serve your government clients. Your guide to technology in state & local government. Reset your password. What is the time horizon for cash flow to begin. Since munis avoid this tax, they can be a better investment. With municipal fiber networks, smaller cities can close the connectivity gap and keep pace with larger urban centers. Any references to third party products, rates, or websites are subject to change without notice. It is important for communities to understand both the advantages and disadvantages of fiber networks before pursuing large-scale projects. Several of Agawams neighboring cities have signed, or are considering signing, a petition calling for Comcast to abandon its data charge plans. Compared to a dial-up connection, a broadband connection is almost 100x faster. Comcasts proposed data charges affect customers in the Northeast, including Massachusetts, who are not subscribed to an unlimited plan. Below are examples of municipal broadband providers currently operating and offering cheap broadband for residents. Passwords are 6-20 characters with at least one number and letter. Disclaimer: All trademarks remain the property of their respective owners, and We have to have an alternative to Comcast, Sapelli said. Through municipal networks, communities create competitive marketplaces in which consumers have a choice over who provides their broadband services. Municipal networks also help promote community-wide economic development. Your email address will not be published. More and more, communities are choosing the private-public deployment route. With OSPInsight, managing municipal fiber networks is much easier. The idea is to create an accessible and low-cost option for a communitys residents to have internet in their homes. The higher the overall capital investment, the larger the subscriber base needs to be. Does the city want to support next-gen technological innovation? OSPInsight also comes with powerful reporting capabilities. Municipal broadband is an internet network and provider owned by public entities instead of private companies. In addition, fiber networks should be designed so that they can easily expand and absorb incremental capacity, if available. To better understand this, you have figure out the tax equivalent yield. Noting that community networks are generally funded through revenue bonds, he said revenue debt doesnt have the same impact as general obligation debt you dont see pensions and public safety funded by bonds.. * Your Information will never be shared with any third party. Under this model, communities often work exclusively with a private ISPs to build out fiber infrastructure and operate networks. You should know both the pros and cons involved so that you can serve your community's internet needs effectively over the long term. Although municipal networks are not right for every city or region, there are many success stories that help highlight the viability of open access networks as a broadband solution. This is huge because of the higher income tax brackets for Federal income taxes versus state income taxes. Many new investors confuse the tax exempt status of muni bonds with the idea they are tax free. With some exceptions, municipal broadband networks are typically not located in major metropolitan areas, where many private providers already offer broadband service. However there is still risk that these municipalities and governments will not pay back their debts when it comes time for repayment or they might even fail completely. Most of the others remove regulatory requirements or speed up permitting processes for . They also pointed to municipal projects in other cities that proved to be more expensive than predicted, creating a hardship for the local economies. May or may not be available based on service address. I have over 15 years experience in the financial services industry and 20 years investing in the stock market. For some, it is important that the city owns every aspect of the network, from installation to management. Line of sight is required between the transmitter and the receiver. There will likely be a fight in the 18 states where it is illegal to start a municipal broadband project. Municipal broadband is a complex issue with many implications. Stockholm, Swedenis one of the most prominent examples of how dark fiber has been deployed successfully on a wide scale. For now, states are scrambling to study related issues and put relevant legislation into place to keep up with federal requirements, citizen internet needs, and private ISP stakeholder concerns. We have to have an option, and there are some options. He added that uncertainty over future price hikes has caused a tremendous anxiety in town.. The town of Cleveland, TN is currently considering a proposal to partner with Cleveland Utilities to install a broadband grid for all its residents. Bringing services to folks in rural areas is a main goal of municipal broadband and one of the drivers of government involvement. January 18, 2023. Consequently, startup ISPs are less likely to get permission to break additional ground in order to install their own cables. Because consumers are price sensitive when it comes to paying for telecom services, cities must carefully price their offerings. Municipal networks can be extremely effective in areas where leaders have fiber network management experience and private ISP coverage is lacking. Supporters of municipal broadband opposition laws Wheeler opponents, including industry research consultancy The Precursor Group, say the FCC would be overstepping its authority if it were to. As for FCC authority, Mitchell said the recent Net Neutrality court decision said that the FCC had the authority to remove barriers to broadband network deployments. The city of Sandy, Oregon also offers telecom services through its network, SandyNet. While there are some safeguards in place for municipal bond investors to get some of their principal back in the event of a default, it isnt foolproof. He cited North Carolina as one state with such laws, noting that the North Carolina law totally prohibits municipal networks. Knowing what the key economic success metrics are is crucial: Because municipal fiber networks require such a heavy investment, city leaders must know what adoption rates they need in order to generate attractive returns. But if the FCC makes such a move, Cleland argues that it will encounter substantial opposition. The creation of BEAD has pushed public broadband into the national spotlight like never before. Communities can designate local leaders and personnel to ensure the success of their fiber networks. Itd be more expensive for us to string those wires.. Currently,500 communitieshave active municipal networks. Ask yourself, is the company or local government stable, or could they go out of business? As with any bond in this asset class, you have the risk of changing interest rates. If you want to sell your 5% interest bond, you are going to have to lower the price of yours to find a buyer. But if inflation rises at a much faster rate than the interest rates on muni bonds, you might end up losing money. All major development projects require clear goals and strong guiding visions. Many cities build networks in order to attract talent and tech pioneers to certain areas. Get the latest internet, streaming, wireless, TV and home security news directly to your inbox. Your username maybe be your email address. What are the primary approaches to deploying municipal fiber networks. Communities must develop a plan that includes a path to broadband connectivity, while minimizing the inherent risks that come with executing it. And if you invest in muni bond funds or municipal bond ETFs, the selling process is even easier. What happens next? Not Tax Free #5. As mentioned above, muni bonds are backed by local and state governments. Last week, the UCP government tabled its 2023 Budget, which included local funding for a Sherwood Heights school replacement construction, a capital planning for a courthouse ($1.5 million), capital planning for expanding the Strathcona Community Hospital ($3 million over three years), increased library funding, and $60 million to replace the . In taking action against anti-municipal network legislation, Mitchell believes the FCC will go after the most egregious state-level laws. Broadband is Affordable Infrastructure Local governments spend billions on all sorts of infrastructure every year to advance the public good for their communities.