Muni Fiber Sees Business Boom Amid Pandemic

FairlawnGig nearly doubled weekly installations, and monthly revenue of the muni network in Fairlawn, Ohio, increased 6.5% over the past two months, said Ernie Staten, deputy director of the city’s Public Service Department. Many customers upgraded their speed tier because they are home and streaming more video, he said. The most popular residential speed plan shifted to 1 Gbps symmetrical from 300 Mbps, Staten said.

The network is handling a 25% increase in bandwidth mostly from increased video streaming and videogames 9-10 p.m., Staten said. Typically, the entire city uses about 3-5 Gbps in the evening, but that increased to 6.5-7 Gbps, he said. “It’s really shown why it’s so important for a municipality to have a fiber network that people can get whatever speed they need,” said Staten. “It doesn’t mean the incumbents can’t still be in your town. It just means they need to have better bandwidth for their customers.” FairlawnGig’s top competitor, Charter Communications, increased bandwidth after the muni network started, he said.

The pandemic validates why cities deployed their own networks, said Utah Telecommunication Open Infrastructure Agency (Utopia) Fiber’s Chief Marketing Officer Kim McKinley: the 14-city public-private partnership handled a 30% increase in bandwidth. Utopia had a 50% increase in sales from new subscriptions after a local stay-at-home order took effect, she said. It had more upgrades to 1 Gbps from the base 250 Mbps symmetrical. Before the pandemic, it was about 50% on either plan, but now 60-70% have the gigabit plan, she said.

Utopia fought criticism over the years for early financial challenges (see 1306050024 and 1208100030). All bonds that have been taken down since 2009, more than $200 million, “are currently being paid back with subscriber revenue,” the CMO said. New sub revenue financed all new projects since then, McKinley emailed later. Utopia "continues to meet its bond obligations on schedule," with the entity "building up its cash reserves, investing in expansion of the network, and repaying obligations to its member cities." Utopia soon plans to announce another city on the network, said McKinley.

FairlawnGig installers wear masks and protective suits and ask customers to stay in separate rooms, Staten said. Utopia is following Centers for Disease Control and Prevention protocols, including by wearing masks and keeping 6 feet apart from customers, said McKinley.

Some Skeptical

“So what?” emailed Phoenix Center Chief Economist George Ford about recent muni broadband gains. “All broadband companies are getting new customers during COVID. There’s been a positive demand shock from shelter-in orders.” What hasn’t changed, he said, is such systems “are nearly certain to fail financially, be sold for pennies on the dollar, and leave constituents and municipal electric ratepayers paying for the losses for decades.”

Every ISP “has likely seen an uptick in orders and network usage due to the pandemic,” emailed a CenturyLink spokesperson.

More people working from home makes “all forms of broadband more viable economically,” said Christopher Yoo, University of Pennsylvania law professor. The pandemic is “increasing pressure to find more creative solutions,” he said. The “new normal” is unknown and might still require better connectivity if, for example, many businesses continue to make more use of teleworking, Yoo said. “Municipal broadband makes sense to reach unserved areas,” but increased demand might encourage more private buildout, he said.

The pandemic shows the need for speedy internet that's affordable and reliable, emailed Institute for Local Self-Reliance Director-Community Broadband Networks Christopher Mitchell. “For many years, elected officials have hoped that private solutions alone would achieve this important goal, but they have not.”

North Carolina

North Carolina legislators will try to pass a bill this session to allow local governments to construct broadband networks and lease them to private operators, said sponsor Dobson. The Fiber NC Act (HB-431) cleared a House committee last year but could have difficulty getting a hearing in the Finance Committee due to the short session and higher-priority items, the GOP state representative said. The pandemic is significantly reducing the state’s revenue forecast and “sucks a lot of the oxygen out of the room,” he said.

Increased teleworking and other broadband applications “nominally” help the bill’s chances, but it may be tough to overcome adamant opposition from telecoms, Dobson said. “They see it as a threat to private enterprise.” Dobson gets the argument, but rural areas “don’t have the luxury of ideology,” he said. “Half of the students at the high school that I attended do not have access to high-speed internet.” Local governments shouldn’t have “free reign” providing broadband and shouldn’t expand networks outside their areas, “but an approach that allows municipalities and counties to invest in the infrastructure” and contract with private providers “strikes the right balance,” he said.

While the pandemic elevates broadband issues, that may not be enough to push the bill across the finish line, said North Carolina League of Municipalities Chief Legislative Counsel Erin Wynia on an NC Broadband Matters webinar last week. Most Democratic and Republican legislators there support the policy, but opponents AT&T, CenturyLink and Charter are large financial contributors to political campaigns, she said.

“Competitive broadband grants are the best way to make areas economical to serve,” the CenturyLink spokesperson responded. “Grants lower the cost of entry for providers without exposing taxpayers to the risks associated with maintaining networks in the long term. ... We will continue to work closely with local communities and state policymakers on creative public-private partnerships that encourage broadband investment and bring high-speed internet services to more homes and businesses.”

AT&T didn’t comment Tuesday. Charter thinks "scarce government funding must be used to increase access in unserved areas," a spokesperson emailed: HB-431 "does the opposite, allowing the use of government subsidies to build in areas that already have high-speed broadband."

Editor's note: This is one in an occasional series about how the novel coronavirus is affecting telecom and consumers. It includes four articles so far on 911: 2004270046; 2004130032; 2003180033, with the most recent published two weeks ago and here in front of our pay wall (along with some other virus coverage). Two more reports examined how sheltering place is affecting residential broadband networks: 2004060038 and 2003190042. Other coverage was on keeping customers and technicians safe: 2004100038. And an article earlier this month looked at home phone usage trends 2005140038.