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
Municipal Broadband Networks

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


Summary (From Organization's Website)


Next Event

The Wireless Internet Institute is an international think tank that explores wireless Internet technologies, best practices and sustainable implementation models.

10 private companies
InfoDev at the World Bank, UNITAR, UNDP, and private sector participants including industry and regulators associations, Intel and IBM.

W2i Digital Cities Convention (West), October 10-12, 2005 in San Francisco

Alpharetta, GA 30004

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


Muni Consortium
Minneapolis, MN

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


Broadband Properties is a publication providing information on digital and broadband technologies for buildings and communities.



Broadband Home Central is an information clearinghouse on residential broadband and the competitive deployment of new products.

Publication serving professionals in residential broadband


FTTH Council
Spokane, WA

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
Technology companies, small service providers, etc.

4th Annual Conference & Expo - October 3-6, 2005, Mandalay Bay Casino & Resort, Las Vegas

Municipal World
Thomas, Ontario N5P 3V3

The publication covers new technologies and implementation strategies for municipalities.

Readership of 40,000


National League of Cities
1301 Pennsylvania Avenue NW Suite 550 � Washington, DC 20004

The National League of Cities is the oldest and largest national organization representing municipal governments throughout the United States.

1600 cities
U.S. cities and towns

82nd Annual Congress of Cities and Exposition, December 6-10, 2005

Public Technology Institute
1301 Pennsylvania Avenue, N.W. Suite 800 Washington, D.C. 20004

Public Technology Institute (PTI) is a national, non-profit organization advocating new technologies for U.S. cities and counties.

cities and corporate technology companies


International City/County Management Association
777 North Capitol Street, NE - Suite 500; Washington, DC 20002

ICMA is an organization for chief appointed managers, administrators and assistants in cities, towns, counties and regional entities worldwide.

city, county, regional managers and administrators - global


NACo acts as a lobby group in Washington for 3066 U.S. counties.

U.S. Counties

2006 Annual Conference & Exposition; McCormick Place/Lakeside Center; Cook County, IL

The Rural Broadband Coalition helps rural cities react to economic development challenges including high-speed access to the Internet.

ISPs and technology companies


TrendsMedia (WiMax World)
4 West Main Street; Suite 201; Northboro, MA 01532

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
2495 Leghorn Street Mountain View, CA 94043

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
1625 K Street, NW Suite 1118, Washington, DC 20006

The Media Access Project is a non-profit, public interest law firm concerned with providing broadband to all population groups.

Law Firm


NATOA represents the telecommunications needs and interests of local governments and those who advise local governments on telecommunications issues.

14 U.S. chapters


CMS serves local governments (cities and counties)on core technology issues including broadband

500 municipalities in 17 states, and the National Park Service


Broadband Over Power Lines Industry Association (BPLIA)
1301 Pennsylvania Avenue, NW Suite 800 Washington, DC 20004

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)
P.O.Box 2350, Sausalito, CA 94966 415-331-1963

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.
2014 P Street, N.W. Suite 200 Washington, D.C. 20036

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


1615 L Street NW, Suite 520 Washington, DC 20036

TeleCommUnity advocates for local governments� interests on matters of federal telecommunications and broadband legislation.

200 cities in Texas, Michigan, Oregon, Maryland and Virginia
U.S. cities and towns


The World Foundation for Smart Communities
2717 Caminito Prado La Jolla, CA 92037 (858) 551-0051

Smart Communities is a nonprofit educational organization founded to promote the use of information technology by communities.

Corporations, government, academia, associations and community leaders


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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