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UC2B, a non-profit group in the Urbana-Champaign region of Illinois, has handed over control of its gigabit fiber network to a private company, iTV-3.

Taking a Different Path to 1 Gigabit

Mari Silbey
6/11/2014
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The non-profit organization Urbana-Champaign Big Broadband (UC2B) took an important step recently in its efforts to extend development of the Illinois region's gigabit Internet services.

It turned the UC2B fiber network over to a commercial entity.

UC2B partnered with video and broadband company iTV-3 in a deal that has the private firm taking on management of UC2B's existing fiber network and extending the broadband infrastructure to new communities in the Urbana-Champaign area. According to Director of Operations Sabrina Gosnell, once UC2B hands the project to iTV-3, her organization will have the freedom to "start thinking about how to really incorporate this network and this partnership in the community in a way that bolsters things like healthcare and education."

However, Gosnell also acknowledged that UC2B, which only established itself as an official non-profit in late 2013 (after existing as an intergovernmental consortium), may not retain any staff after the iTV-3 transition. The organization does have a nine-member Board of Directors who will stay involved in the broadband initiative even if no paid staffers remain.

So why did UC2B decide to turn its fiber network over to i-TV3? Gosnell said in an interview that the twin cities of Urbana and Champaign never planned on running a broadband service over the long term. "I don't think that was really ever on the table, frankly."

Instead, UC2B had every intention of fulfilling the terms of the broadband grants it received in 2010 (which were supplemented by more than $3 million in local matching funds), and then finding a partner in the private sector to carry the project forward.

Even as UC2B started an expansion drive in 2012 to finish the fiber buildout it had begun two years earlier, the organization began looking for a potential service partner by issuing a public Request for Information (RFI). The RFI went out in August 2012, and over the following year, UC2B accepted submissions from a wide range of respondents.

The process was enlightening.

By September 2013 when UC2B's fiber network was complete, one of the companies that had responded to the RFI was already out of business, and several others clearly didn't meet UC2B's minimum requirements. "[The partner] had to be a company that would adhere to our core values," said Gosnell.

That meant three things. Any partner had to agree to: use fiber to continue network expansion; make service available to any local community wishing to participate in the broadband program; and make access to the UC2B network available to other Internet service providers on a wholesale model.

In addition, UC2B needed a partner that would remain viable as a company and be able to fund continuing expansion on its own.

UC2B didn't share details on all of the companies that responded to its RFI, but the organization did explicitly say that it had reached out to local ISPs including AT&T Inc. (NYSE: T) and Comcast Corp. (Nasdaq: CMCSA, CMCSK), as well as to Google (Nasdaq: GOOG). Among those service providers, there was very little interest in the project. Of the local service providers, Gosnell said "[I] don't know that we were ever even a blip on their radar."

Luckily for UC2B, iTV-3 did respond to the RFI, and the company had significant advantages weighing in its favor. The company is local to Illinois. It has a track record as an Internet service provider. And it was willing to agree to all of UC2B's partnership terms.

Gosnell described iTV-3 as "the right fit for us." Within two months of finishing network construction, UC2B was already in serious talks with iTV-3.

Going forward, iTV-3 will lease UC2B's fiber network and equipment and will spend "tens of millions of dollars" expanding service to new areas across Urbana and Champaign. In any established sector in the region, if 50% of locations sign up for Internet service, iTV-3 must begin construction to extend network access within 120 days.

Initially, iTV-3 will offer Internet and phone service over the UC2B fiber network, and the company has "committed to offering a gigabit Internet service as the top tier" of its residential offerings. iTV-3 plans to add on television service as well, but the company will have to negotiate franchise agreements in order to do so.

According to UC2B, the deal with iTV-3 is an unprecedented public-private partnership. Indeed it does illustrate that there are multiple ways to bring gigabit broadband to a community, particularly when there aren't state laws in place barring municipal broadband projects. (See FCC's Mignon Bashes Anti-Muni Bills.)

Federal Communications Commission (FCC) Chairman Tom Wheeler also praised the initiative saying, "This public-private partnership provides a valuable model for communities and companies throughout the country and a demonstration of the creativity that is stimulated when localities are free to work with the private sector to improve broadband offerings."

Other cities, meanwhile, are trying different methods. Among existing gigabit regions across the US, some cities are partnering with Google for Google Fiber Inc. , and some are starting to see gigabit service from traditional ISPs such as AT&T and Cox Communications Inc. (See AT&T Turns Up Gig Heat in 21 New Metros and Cox Lays Out Gigabit Roadmap .)

In Chattanooga, Tenn., the community-owned utility EPB Fiber Optics has successfully deployed a gigabit network and is now using it not only for residential services, but also to power the city's smart grid communications. In North Carolina, the North Carolina Next Generation Network initiative is combining the efforts of six municipalities and four universities to turn the Research Triangle area into a gigabit community. (See Power Companies Promise Gigabit Broadband and TWC Bids on NC's Next-Gen Network.)

There is also a growing contingent of small telecom companies building out their own gigabit networks to improve local broadband service. (See Gigabit Speeds Come to Rock Hill.)

There is no one tried-and-true formula for bringing high-capacity broadband service to every American city. Instead, as UC2B and others are proving, there are multiple ways to pursue the same gigabit goal. It's still a messy market, but there are some notable examples of successful ventures.

UC2B looks like it could be one of them.

— Mari Silbey, special to Light Reading

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