Municipalities Look to Gigabit Networks

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Delivering gigabit broadband service to the home is proving to be as much about changing attitudes among city officials as it is about fiber optic cable, conduits and technology.

Indeed, this shift in mindset is so significant that Google, AT&T and others can require communities to meet certain conditions before they will even consider a city for their high-speed Internet services. That represents a major change from the days when local governments awarded franchise rights as if they were medieval parents seeking a dowry for a son.

“In the past, many communities looked at any telecommunications provider seeking rights of way and access to their ducts, poles and conduit as the goose that laid the golden egg,” says Heather Burnett Gold, president of the FTTH (Fiber to the Home) Council, an industry association working to accelerate deployment of all-fiber networks. “They wanted to impose onerous and high franchise fees on providers.

“But now communities are finally understanding that fiber to the home shouldn’t be seen as a revenue source; it should be seen as an economic development asset,” she says.

In fact, many are lining up to be considered for gigabit service. After selecting the Kansas City metropolitan area for its first Google Fiber build-out, and subsequently Provo, Utah, and Austin, Texas, Google has announced discussions with some 34 municipalities in the Atlanta, Charlotte, N.C., Nashville, Tenn., Phoenix, Portland, Ore., Raleigh-Durham, N.C., Salt Lake City, San Antonio and San Jose, Calif., metros.

Rather than concentrating on the fees they can charge, cities are beginning to focus on developing their economies and the social well being of residents as natural consequences of rolling out FTTH to support gigabit Internet speeds.

“Fiber to the home brings more jobs and attracts more entrepreneurs. It means better delivery of education and medical care. A whole host of economic developments and social improvements come as a result of this high-speed Internet,” says Burnett Gold.

Currently between 24 million and 25 million U.S. households are passed by fiber optic networks, she adds.

Google Not Alone

While Google has grabbed headlines with its pioneering triple-play Google Fiber offering, it isn’t alone in driving gigabit fiber optic-based service to the home. After initially selecting parts of Dallas and Austin, Texas, for its U-verse with GigaPower, AT&T’s 1 gigabit triple-play service, and entering into deeper discussions with Raleigh-Durham and Winston-Salem, N.C., about a possible rollout, the company added 21 metros to its list of cities under consideration for the service.

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Google and AT&T are two of the 55 different businesses, municipal governments and utilities providing or currently putting in place gigabit data network coverage around the United States. Image courtesy of FTTH Council.

Like the candidate cities for new Google Fiber rollouts, AT&T’s U-verse with GigaPower candidates—including Atlanta, Augusta, Ga., Charlotte, N.C., Chicago, Cleveland, Fort Worth, Texas, Fort Lauderdale, Fla., Greensboro, N.C., Houston, Jacksonville, Fla., Kansas City, Mo., Los Angeles, Miami, Nashville, Tenn., Oakland, Calif., Orlando, Fla., San Antonio, San Diego, St. Louis, San Francisco and San Jose, Calif.—must demonstrate their willingness to make it easier, not harder or more expensive, to complete a gigabit overbuild.

“We’re interested in working with communities that appreciate the value of the most advanced technologies and are willing to encourage investment by offering solid investment cases and policies,” says Lori Lee, senior executive vice president at AT&T Home Solutions.

Google and AT&T are two of the 55 different businesses, municipal governments and utilities providing or currently putting in place gigabit data network coverage around the United States.

While most are offering triple-play service, including telephone, video and Internet that’s 100 times faster than typical broadband, one in particular has intentionally chosen to avoid delivering a cable TV-like service.

Longmont Power & Communications, the municipally owned electric utility in Longmont, Colo., has begun construction of a FTTH gigabit data network to serve the city’s 39,000 households after receiving voter approval for a $40.3 million bond issue to finance the project.

Distributing video via the network was never in the cards, says Tom Roiniotis, general manager of Longmont Power & Communications. “We are putting this network in place to future-proof our city,” he says. “We don’t see traditional cable TV as part of the future.”

Supporting video distribution over the data network would have required “an additional significant investment” in a headend as well as the “real hassle” of dealing with content, according to Roiniotis.

“I think what we are seeing is a lot of small video providers struggling to make it work financially. We just thought it made more sense to focus on areas that are our strengths—that is, building this fiber optic broadband infrastructure and putting in place the hardware needed to deliver video content over the top,” he says.

The Longmont Power & Communications data network is scheduled for completion in August 2017. The city projects that if 34 percent of Longmont households subscribe over a five-year period, the town will be able to pay off the bonds and the data network will begin making money within 10 years, says Roiniotis.

A couple of early residential FTTH pilot projects in Longmont reveal penetration of more than 60 percent of households, he adds.

News that the gigabit network is funded and under construction is also beginning to pay off for Longmont at this early date, says Roiniotis. “Our local economic council has already had discussions with businesses that are considering coming here [to Longmont] because of our new broadband,” he says.

“There are others who have said they have already located here because we are about to build the network.”

Whether it’s Longmont’s double-play or Google’s triple-play service, gigabit FTTH networks are popular with consumers.

A research note published in May by Wall Street research and brokerage firm Bernstein Research lays out how popular Google Fiber may ultimately be in the Kansas City metro. A door-to-door survey of about 350 Kansas City households found Google Fiber is gaining market share and that consumers are highly satisfied with the service. In medium- to high-income neighborhoods, it is capturing 75 percent of homes passed. In low-income areas, it is seeing market penetration of about 30 percent, the report found.

That type of early success is good news for city governments that took the long view, seeking economic growth and social benefits over seeking high franchise fees that may have dissuaded companies like AT&T and Google from rolling out their gigabit networks.  



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