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A market overview: * Why do they matter? * What barriers to growth do they face? * Where are the major deployments?
October 4, 2005
17 Min Read
Growing numbers of municipalities are beginning to think about broadband service in a very new way – classing it with basic services like water and power as a vital part of life and work in 21st century cities. Thus cities around the world are exploring the possibility of funding and building broadband infrastructure in the same way they do airports, roads, and sewers.
To the extent that information is and will be the dominant currency of the 21st century, as many believe, public ownership of the infrastructure that carries it seems consistent with the traditional role of cities. (See Broadband Subs Approaching 200M.)
One city official says she fears that if the “broadband highway” passes her city by, just as the interstate highway system passed many by in the 1950s, her city might become a backwater.
Proponents of municipal broadband argue that the business of broadband infrastructure might be best suited to government entities. The initial build and upkeep costs are considerable, and decades may pass before revenues from leasing out the network recoup the cost. (See Dutch, Swedes Rule Muni BB.)
So the idea of owning broadband networks often is couched by city officials as a means to “economic development,” a way to attract more taxpaying residents and businesses to the area. Cities must win the support of taxpayers, not shareholders, so profit isn't the central motivation.
The bulk of these projects are formed at the grass roots level. Once they get enough momentum, an organization is formed to push the project forward. The most significant municipal organizations are listed in the chart below.
Table 1: Municipal Broadband Network Organizations
Name/Location | Summary (From Organization's Website) | Membership | Next Event |
Wireless Internet Institute (w2i) | The Wireless Internet Institute is an international think tank that explores wireless Internet technologies, best practices and sustainable implementation models. | 10 private companies | W2i Digital Cities Convention (West), October 10-12, 2005 in San Francisco |
Civitium | Civitium is a for-profit consulting firm for municipal governments who are applying wireless technology as the foundation for municipal broadband networks. | Cities of Portland, Houston, Philadelphia, Dublin, Miami Beach | None |
Muni Consortium | The Muni Consortium is a for-profit consulting firm that helps municipalities and utilities deploy broadband networks using optical networking (PON) technology. | 20 optical gear and services suppliers | None |
Broadband Properties | Broadband Properties is a publication providing information on digital and broadband technologies for buildings and communities. | Publication | None |
Broadband Home Central is an information clearinghouse on residential broadband and the competitive deployment of new products. | Publication serving professionals in residential broadband | None | |
FTTH Council | The Fiber-to-the-Home (FTTH) Council is a non-profit organization established to educate the public on FTTH solutions for utilities and municipalities. | 200 vendors | 4th Annual Conference & Expo - October 3-6, 2005, Mandalay Bay Casino & Resort, Las Vegas |
Municipal World | The publication covers new technologies and implementation strategies for municipalities. | Readership of 40,000 | None. |
National League of Cities | The National League of Cities is the oldest and largest national organization representing municipal governments throughout the United States. | 1600 cities | 82nd Annual Congress of Cities and Exposition, December 6-10, 2005 |
Public Technology Institute | Public Technology Institute (PTI) is a national, non-profit organization advocating new technologies for U.S. cities and counties. | 40 | None |
International City/County Management Association | ICMA is an organization for chief appointed managers, administrators and assistants in cities, towns, counties and regional entities worldwide. | 8,000 | None |
National Association of Counties | NACo acts as a lobby group in Washington for 3066 U.S. counties. | 2,000 | 2006 Annual Conference & Exposition; McCormick Place/Lakeside Center; Cook County, IL |
Rural Broadband Institute | The Rural Broadband Coalition helps rural cities react to economic development challenges including high-speed access to the Internet. | 50 | None |
TrendsMedia (WiMax World) | Wimaxworld provides independent research on major and emerging Wimax technology markets. | Research Group | WiMaxWorld - Boston, October 26-28, 2005 (Contains a track on Muni WiMax) |
WiMax Forum | The WiMAX Forum works to facilitate the deployment of broadband wireless networks by helping to ensure the compatibility and interoperability of broadband wireless access equipment. | 250 Wireless tech firms and wireless service providers | Sponsor for other groups' events |
Media Access Project | The Media Access Project is a non-profit, public interest law firm concerned with providing broadband to all population groups. | Law Firm | None |
NATOA represents the telecommunications needs and interests of local governments and those who advise local governments on telecommunications issues. | 14 U.S. chapters | None | |
Center for Municipal Solutions Technologies | CMS serves local governments (cities and counties)on core technology issues including broadband | 500 municipalities in 17 states, and the National Park Service | None |
Broadband Over Power Lines Industry Association (BPLIA) | The association educates policymakers and the public about the benefits of power line communications, and advocates on behalf of the BPL industry. | Utilities, suppliers, ISPs, and governments that collectively serve over 9 million U.S. households and over 27 million households worldwide | Power Line Strategic Summit Presentations |
TeleStructure (Digital Village) | CTI is a collaboration of public and private interests working to encourage communities to design and develop strategies promoting local broadband deployment. | Consulting Firm | Virginia Muni BB Roundtable, October 28-29, 2005 |
The Baller Herbst Law Group, P.C. | Managed by attorney Jim Baller, the site is an information clearinghouse for (mostly U.S.) municipal broadband information. The site includes current information on the legal and regulatory climate in the U.S. | The firm represents the American Public Power Association, the National Association of Telecommunications Officers and Advisors, regional and state municipal electric associations, state municipal leagues, local governments, and public power systems | None |
TeleCommUnity | TeleCommUnity advocates for local governments� interests on matters of federal telecommunications and broadband legislation. | 200 cities in Texas, Michigan, Oregon, Maryland and Virginia | None |
The World Foundation for Smart Communities | Smart Communities is a nonprofit educational organization founded to promote the use of information technology by communities. | Corporations, government, academia, associations and community leaders | None |
But, while most would agree that the proliferation of broadband is a good thing, municipalities and incumbent telecomunications operators in many markets have radically different ideas on how, and by whom, this should be carried out. (See Utah's Broadband War.)
The incumbents (very rationally) want to maintain their traditional ownership of broadband infrastructure so that they can upgrade the networks at their own speed, while holding broadband service margins to predictable levels. They see government ownership of broadband infrastructure as a direct competitive threat.
The greatest interest in advancing broadband projects is usually found in rural and suburban cities whose residents don’t have affordable access to broadband service. In larger places, municipalities wish to force broadband prices down by creating competition against a telco and cable MSO duopoly.
Municipal broadband projects fall into two general categories – wholesale and retail. In retail models, the municipality not only owns and operates the broadband facilities used to deliver broadband services, but also acquires and distributes the services such as Internet access, video, and telephony. The retail model is more prevalent in markets where no private broadband service providers wish to participate.
In the wholesale model, the municipality funds and builds the broadband facility, but leases it to private sector service providers that distribute their own broadband services. This enables service providers to enter new markets without massive infrastructure investment, and reduces the need to lease lines from local incumbent providers.
The wholesale model has proven to be a more competitive and politically durable model in markets where the municipal provider competes with incumbent broadband service providers.
Questions addressed in this report:
What's happened so far? (recent Light Reading stories)
— Mark Sullivan, Reporter, Light Reading
Municipalities around the world use a variety of combinations of fiber, DSL, WiFi, broadband-over-powerline (BPL), and satellite technologies to deliver broadband to residents and businesses. (See Google Backs Powerline Carrier.) But FTTH and WiFi technology are the dominant access technologies in the vast majority of operating and planned municipal broadband deployments today.
The cost of fiber has dropped to the point where other technologies like DSL and hybrid fiber/coax are employed only when there is a need to leverage existing infrastructure investments. (See Telenor Advances ADSL Rollout.)
Municipalities often base their access technology choices on the technology and services with which they already have ownership and expertise. For instance, as Massachusetts Institute of Technology (MIT) researcher Sharon Eisner Gillett points out, municipalities that already have experience in provisioning electricity through publicly held power districts are more likely to venture into the the business of provisioning “public broadband."
Gillett and her team found that the reason for this is largely practical. Many public power districts already have dark fiber in the ground for the purposes of automatic meter reading and grid system control. For municipalities that run such utilities, it is far easier to see the economics of extending that fiber outward to the public for the provision of broadband service. (See ECI Targets Utility Networks.)
That scenario has become the most common way in which municipalities around the world move into broadband today. At the end of 2004, the American Public Power Association (APPA) found that 621 of the 2,000-plus public power systems it represents now offer some kind of community broadband service. That's up from 570 in 2003.
The municipalities' technology decisions may also depend on the functional needs of residents. Some municipalities, especially large cities, are more interested in providing mobile broadband access and so opt for a WiFi model with somewhat less bandwidth than FTTH. (See Telecom Global Warming.)
More advanced and well-funded networks, however, deliver both – using FTTH with WiFi built on top. (See Gorillas in the Mesh.)
Many observers believe that the number of RFPs circulating for municipal FTTH and wireless broadband deployments is on the increase. Unfortunately, very little market sizing data is available on municipal broadband networks, especially fiber-based networks.
It's clear now that individual community projects number in the hundreds worldwide. (See PON & FTTx Update.)
Some 140 fiber-to-the-home projects exist in Europe, most of which are small. In a mid-2004 survey, Idate found that nearly 70 percent of European fiber deployments were being undertaken by municipalities or power utilities. But at the time of the survey, only 60 percent of the fiber deployments had progressed to a commercial phase.
The vast majority of the world's fiber subscribers are concentrated in just six countries: Denmark, Italy (FastWeb SpA), Japan (NTT Communications Corp.), Korea, The Netherlands, and Sweden (Bredbandsbolaget AB [B2]). (See Yano Reports on FTTH and Fiber Spreads in the USA.)
As for WiFi deployments, the U.S. is currently the most active country in the world. According to MuniWireless.com, 84 city and regional wireless broadband networks are functioning in the world today – 34 in the U.S. and 50 outside the U.S.
MuniWireless.com believes U.S. municipalities will spend nearly $700 million over the next three years on municipal wireless broadband networks.
Yankee Group Research Inc. believes that at least 200 cities are now in the planning stages with wireless networks in the U.S. alone.
In most of the world, serious regulatory and legal barriers now stand in the way of widespread municipal broadband deployment. But interest in and awareness of the municipal broadband cause seems to be growing, and with it the social and political debate.
In the United States, the large incumbents have publicly ridiculed the idea of municipal broadband. But at they same time, they have invested millions in legal and lobbying efforts to slow or stop it, which means they see it as a legitimate threat. (See Poll: RBOCs Fuel 'Broadband Gap', BellSouth Fans Fiber Flames, and FCC's Martin: Markets Rule).
So far, 14 state legislatures have enacted legislation that either prohibits or impairs municipalities’ ability to offer telecommunications services directly or indirectly. And more states are considering such legislation.
Telephone and cable broadband providers are backing legislation that prohibits city- or county-owned communications networks outright. This has happened, for example, in Texas and Nebraska. Another legal tack is to enact legislation that gives free-market service providers the “right of first refusal” to offer service in any given market.
Until this year, the legal and policy battles had taken place mainly in city halls and state houses across the U.S., but the debate is now making its way to Congress.
Washington sources say lawmakers want to introduce new municipal broadband legislation as part of a sweeping overhaul of the Telecommunications Act of 1996. Two such "overhaul" bills have been introduced so far, and both contain substantial sections on municipal broadband.
The first to be introduced was Nevada Senator John Ensign’s bill S.1504, which calls for increased restrictions on municipal broadband networks and provides for incumbent providers a right of first refusal to sell broadband in any market. (See New Bill Boosts Telecom .)
More recently, the House Energy and Commerce Committee, chaired by Congressman Joe Barton (R-Texas), released its version of a Telecom Act overhaul that appears to be much more sympathetic to municipal broadband. The bill allows municipalities to build broadband networks and deliver packet-based services without interference from the states. The bill states only that municipalities can't play favorites among the service providers using its networks. (See New Telecom Bill Draws Raves.)
Many observers believe it remains unclear and even doubtful whether a sweeping rewrite of the Telecom Act can be accomplished by the 109th Congress.
Unlike the U.S., European countries place common carriage requirements on broadband networks, which some believe has retarded the growth of European broadband in general. The European Union's rules on state aid also prohibit government backing for broadband projects unless they reach a certain range of rural areas as well. However, in a sign that the EU may be flexible on this, Amsterdam’s municipal fiber project has reached a compromise limiting the rural coverage requirements of the network. (See Eurobites: Access All Areas and FTTH Unhappy with Regs.)
Broadband growth in Japan and Hong Kong has been driven mainly by private-sector competition, observers say. In Korea, the government has played a major funding and planning role in broadband deployment; and that country now leads the world in broadband penetration.
Still, in many parts of the world, proposed municipal broadband networks exist in a climate of regulatory uncertainty, if not hostility. This is harmful to would-be municipal networks, because it creates a cool atmosphere in which to rally political and financial support.
SF Muni WiFi in Low Gear
SEPTEMBER 30, 2005 - A year later, San Francisco's muni WiFi project is still little more than a gleam in the mayor's eye
Dutch, Swedes Rule Muni BB
SEPTEMBER 28, 2005 - Nordic broadband execs discuss where municipal networks can really work
Utah's Broadband War
SEPTEMBER 22, 2005 - The UTOPIA broadband service is facing a price war with incumbent broadband providers
Muni Networks: The Public's Not Buying
SEPTEMBER 21, 2005 - Municipal broadband networks are gaining momentum, but consumers haven't noticed
Broadband Subs Approaching 200M
SEPTEMBER 21, 2005 - Point Topic says another 24.5M users switched to broadband in the first six months of 2005; expects total to reach 200M by the end of the year
Cannon Fires at Incumbents
SEPTEMBER 19, 2005 - Utah Congressman accuses Baby Bells and cable MSOs of inhibiting the growth of broadband in the US
New Telecom Bill Draws Raves
SEPTEMBER 16, 2005 - The House Commerce Committee has released a first draft of it Telecom Act overhaul legislation
Yano Reports on FTTH
SEPTEMBER 09, 2005 - Yano has conducted comprehensive research on the FTTH market in Japan and compiled a report
FTTH Unhappy with Regs
AUGUST 18, 2005 - Current EU Regulatory Framework for Electronic Networks and Services is a barrier to investment in new generation broadband, says FTTH Council
Nortel Wins VOIP Deal in Israel
AUGUST 10, 2005 - Municipality of Rishon LeZion in Israel deploys IP telephony network from Nortel
Light Readers Embrace Muni Nets
AUGUST 08, 2005 - Municipal networks are good for the industry, according to Light Reading poll
Eurobites: Access All Areas
AUGUST 04, 2005 - Broadband gains are boosting the bottom lines of Europe's leading carriersPalo Alto FTTH Initiative Stalls
JULY 29, 2005 - Silicon Valley city's FTTP trial halted; if it can't work in Palo Alto, then where?
New Bill Boosts Telecom
JULY 27, 2005 - The introduction of new legislation that would re-tool the Telecom Act of 1996 had a warming effect on telecom stocks Wednesday
Poll: RBOCs Fuel 'Broadband Gap'
JULY 19, 2005 - LR readers feel RBOCs are a big reason the US is far behind other countries in broadband penetration
BellSouth Fans Fiber Flames
JULY 04, 2005 - The Brand X decision won't materially change the RBOC's fiber plans, but an upcoming FCC ruling might help
Coalition Calls for Community Broadband
JUNE 23, 2005 - More than 40 local, state, and national organizations write Congress to promote community broadband Internet access
Spain Preps $500M Broadband Net
JUNE 22, 2005 - Keynoters at LR conference to describe monster municipal broadband project in Catalonia
Alcatel Names FTTx Customers MAY 31, 2005 - Local cable TV operator and a municipal authority in Japan deploy Alcatel's new fiber-to-the-user video/Internet system
World Wide Packets Names Customer
MAY 24, 2005 - Washington public utility district expands network with World Wide Packets
ECI Targets Utility Networks
MAY 23, 2005 - ECI Telecom introduces optimized transport solution for utility networks
PacketFront, Ementor Win City Net
MAY 02, 2005 - PacketFront and Ementor develop state-of-the-art city network in Karlskrona, Sweden
FCC's Martin: Markets Rule
APRIL 05, 2005 - New FCC chairman Martin says he prefers markets and competition to regulation
DynamicCity Claims UTOPIA Milestone
MARCH 07, 2005 - DynamicCity announces first rollout of MStar's UTOPIA-powered municipal fiber service in Orem, Utah
HomeNet Launches TriplePlay on IProvo
DECEMBER 10, 2004 - Triple-play provider launches first services on Utah's municipally-owned fiber network
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