The case for municipal fiber broadband

What we can learn from electric co-ops and the New Deal

Robert Schouwenburg, Founder and CEO of OneFiber

From: "The Municipality", the "Official Monthly Publication of the League of Wisconsin Municipalities", December, 2023

Many towns and rural areas are struggling with below average Broadband Internet service, and have been overlooked by private internet providers for years. However, there are alternatives beyond merely waiting for substantial government grants to incentivize these providers to come in. Let's talk about Municipal Broadband Internet.

Critical Infrastructure

Think about roads, sewers, and water lines - the nuts and bolts of public infrastructure. They're managed by towns and cities for their residents and are publicly owned. This approach has ensured equitable access and has distributed the responsibility of these utilities amongst the community.

Electricity, however, has taken a different path.Most of the power network is owned by private companies, except for co-ops. These co-ops were born out of the New Deal. Historically, rural areas were overlooked by commercial power companies who didn't think they'd make enough revenue to build and maintain these networks. Fast-forward to today, and commercial power generation is a heavily regulated industry without much competition - but with many electric co-ops still up and running.

Currently, the Broadband Internet situation resembles the early days of the power network. The Biden administration has set aside $42B to ensure nationwide Broadband access through the BEAD Program. While large cities, their suburbs and outer-suburbs enjoy fast and reliable internet access, Broadband availability is not guaranteed beyond these locations.

Public or Private

There is a lot to be learned through the development of the power network. Today, we find ourselves in a heavily regulated industry with no real competitive market. The Broadband industry is strikingly similar, with individual providers dominating certain areas. These providers have no real competition, allowing them to dictate prices. This sector is largely unregulated and we should ask ourselves if it is wise to allow a single provider full control of a vital piece of public infrastructure with little to no regulation.

The consequences are evident today, with certain parts of the country getting poor service or no service at all when it comes to Broadband. An estimated 45 million Americans don't have access to Broadband internet, which the FCC defines as speeds of 100mbps/25mbps. This lack of access often leads to higher prices with subpar service. According to OECD research, the United States ranks as one of the most expensive countries for Broadband Internet, surpassed only by Mexico.

Broadband prices among OECD countries 

Infrastructure is expensive to build and maintain. When left to the market, only those areas which are profitable are serviced well and the rest are ignored until government funding closes that gap. That's what BEAD is supposed to do, but many argue whether it will be enough to get every American connected to Broadband.

Electric Co-ops

In the early 20th Century, the electrification of America was largely centered in urban areas, leaving many rural communities in the dark. The private power companies were reluctant to extend their services to these areas because of the high costs and low returns. That's when electric cooperatives, or co-ops, stepped up to the plate.

Born out of the New Deal era's Rural Electrification Administration (REA) in the 1930s, these member-owned, non-profit groups were set up to bring reliable and affordable electricity to rural America. They made a huge difference, rallying local communities, securing loans from the REA, and working their socks off to build the necessary infrastructure. In only 10 years, they managed to bump the rural electrification rate from 10% to over 90%.

By pooling resources and sharing costs and benefits among their members, these co-ops were able to hurdle the economic barriers that had put off private power companies; But they did more than just provide electricity; They transformed rural economies and communities, boosting agriculture, education, and healthcare.

These electric co-ops are still making an impact today with hundreds still providing vital utilities to their communities. Their success shows the power of teamwork in overcoming economic and logistical hurdles, and that's a lesson we can apply to Broadband Internet.

Do Towns Want To Run Their Own Broadband Network?

Building and operating fiber networks is more complex than setting up power networks. Towns and cities should hesitate to assume the role of an Internet Service Provider (ISP), as it requires extensive work and attention. It involves managing infrastructure, dealing with customer service, and keeping up with rapidly changing technology, which can be challenging and time consuming.

However, Towns and Municipalities can choose to own the fiber network infrastructure themselves and run it as an open access network (OAN). This could be a smart way to attract multiple Internet Service Providers (ISPs) to deliver Broadband services to their community. Owning the infrastructure gives towns more control over their network and makes sure it meets the specific needs of their community. They can also set terms that draw in a wider range of ISPs, sparking competition, which leads to better services and lower costs for residents. In addition, this  approach can ensure that Broadband service reaches all parts of the community, including those that commercial ISPs might ignore, as they may be viewed as less profitable.

However, this approach needs careful planning and management to ensure the long-term sustainability and effectiveness of the network. This is where a company like OneFiber comes in. At OneFiber we specializes in building and maintaining open access networks for towns and cities and their solution is budget neutral for any town.

Benefits of Municipal Internet

One of the largest benefits of Municipal Broadband is that it is price competitive. By owning and managing their own Broadband infrastructure, towns and cities can control the pricing, potentially leading to cheaper rates for residents. This local control can ensuring that Broadband services are priced fairly across the community, making it easier for everyone to get online. Municipal Broadband also plays a key role in promoting digital equity. By ensuring that Broadband service reaches all parts of the community, it helps close the digital divide that often leaves rural or economically disadvantaged areas behind.

Retaining and attracting more people and businesses in a town is a crucial part of its sustainable development. Municipal Broadband, by providing reliable and high-speed internet, plays a pivotal role in this. It gives residents access to essential digital resources, such as remote work opportunities, online education, and telemedicine which contributes to the quality of life and may attract more people from outside the area. For businesses, high-speed internet is vital for operations and staying competitive in today's digital world. It allows them reach more customers, improve their services, and operate more efficiently. Municipal Broadband helps a community grow while helping retain both residents and businesses.

Economic Impact

Broadband internet has a powerful long-term economic impact on towns and communities. This is evident in a few key areas. For example, property values have been seen to rise by 2 to 4% after Broadband internet becomes available in a region. In addition, there is a significant increase in the economic output of residents, with a rise of 9% to 15% in the same timeframe. This growth could be attributed to the opportunities Broadband provides, such as remote work, online education, and digital entrepreneurship, all of which help to create a more lively and productive economy. Introducing Broadband internet leads to real economic benefits, boosting both property values and individual productivity.

Another example is in Chattanooga, Tennessee and the community-wide fiber optic network which serves a population of 180,000 and has generated more than $2.69 billion in economic and social value within its first ten year. (source)

To Summarize

With the cost of living going up in cities across the country and remote work becoming the norm, the idea of living the quiet life in a small town is looking more attractive than ever.

These towns, armed with fast and efficient Broadband, point to a future where rural America can bounce back as a major player in the national economy, as long as we clear the hurdles to nationwide Broadband implementation and use.

Municipal Fiber is a fair and affordable alternative for towns to deliver that future.

About Robert Schouwenburg

Robert is Founder and CEO of OneFiber. OneFiber is a Wisconsin based company constructing and managing Municipal Fiber networks. His mission is to bring fiber internet to underserved communities.

As an entrepreneur, Robert has founded and ran several successful companies within the Telecom and Manufacturing industries. Robert lives with his wife and son in Lake In The Hills, Illinois.

Contact: Public Relations: (1) 202 379 9622, [email protected]m