America sits between a digital rock and a political hard place when it comes to broadband. If we're going to claw out of this mess, it will belocal communities that save the day by cultivating local assets.
The rock is the sad state of broadband: pathetic speeds relative to the needs of businesses and institutions, high prices for those speeds, crappy or no coverage in quite a few rural and low-income urban communities. It's ridiculous how often we trot out the line about how important broadband is to our economic revival while clearly ignoring what economic development professionals tell us.
In a national survey of these professionals, 25 percent said they need at least 100 Mbps of broadband speed to impact local economies by attracting new businesses, making current businesses more competitive and increasing individuals' earning potential. Around 35 percent said they need 500 Mbps or more. FCC data last year revealed that 60 percent of Americans can't even get 3 Mbps. So why are people swooning over this week's FCC report showing ISPs are delivering 96 percent of advertised speeds that don't mean jack to businesses and entrepreneurial individuals trying to make a bigger buck?
Alas, our hard place is created by those choice elected representatives who sell out the public interest to the legions of lobbyists that heavily influence -- if not outright draft -- legislation that stymies broadband competition. For example 19 states currently have laws that threaten to turn them into broadband backwaters by stifling municipal broadband solutions. But muni networks in Chattanooga, Tenn.; Lafayette, La.; Bristol, Va., and elsewhere are the only ISPs giving local economies gigabit speeds!
As Benjamin Lennett of the Foundation's Open Technology Institute states in a USA Today article, "We have to figure out a way to increase the level of competition or we are all going to pay through the nose, and speeds are not going to keep up." The incumbent telcos' and cable companies' party line is that dozens of providers in every state provide "robust competition." The stats that put the lie to this claim are ones revealing that in many states 75 percent, 80 percent and even 95 percent of the market is owned by just two or three giant corporations. Dozens of robust competitors fight over the crumbs.
Want better broadband? Do it yourself
The rallying cry of every community that wants better broadband should be, "if incumbents won't build it and the Feds can't fund it, dammit, we'll do it ourselves!"
"We have been marinated in a corporate culture that believes only a Fortune 500 company is able to deal with high tech," stated Wally Bowen in a Gigabit Nation radio interview He's the founder and Executive Director of the nonprofit Mountain Area Information Network (MAIN) in western North Carolina. Quite a few community organizations such as MAIN find the do-it-yourself strategy is giving them the broadband they want. To be effective at this, communities must 1) create the right organizational structure and 2) they need to convert local businesses and residents into investors in broadband.
Cooperatives (co-ops) are the nonprofit self-reliance vehicle of choice a number of communities are creating to get broadband done. Historically, co-ops were how rural communities early in the 20th century got electricity when big electric companies couldn't be bothered with these sparsely populated areas. As history repeats itself, and many rural and even urban areas find themselves with ineffective broadband, co-ops are once again proving invaluable.
Some communities are creating nonprofit organizations that aren't co-ops to run their broadband projects. There are subtle though important differences between the two, but the bottom line is the same. Local residents, businesses and institutions (aka "the market") form an organization that isn't run by the local government. So in one swoop you neuter most of those pesky anti-muni network laws.
A co-op or nonprofit formed in this manner represents and answers to the community as they build and operate a network. Everyone participates in an organization run with a mind for business and the heart of George Bailey (A Wonderful Life). These organizations can/should hire and contract with telecom professionals, but don't lose track of the requirement to serve the public good.
The next step is raising money. This is where you convert constituents into investors. The results can be awe-inspiring.
Twenty-three Vermont towns created ECFiber, an LLC nonprofit corporation. ECFiber offers tax-exempt 15-year $2,500 promissory notes that effectively earn 6 percent interest. Fifty thousand people in these towns raised over $900,000 in 2011 to begin an initial buildout covering 26 miles. Several additional fundraising efforts generated hundreds of thousands of dollars to continue the buildout.
The Utah Telecommunication Open Infrastructure Agency (UTOPIA) is a consortium of 16 Utah cities. Community residents became "investors" in the network by paying upfront for its buildout. UTOPIA CEO Todd Marriott said that "if residents were interested we'd bill them one fee of $3,000/home to connect to the network. We offered financing if they agreed to have a lien put on their houses. Over 31 percent of residents subscribed, with 25 percent of these households paying the $3,000 up front."
In San Leandro, Calif., OSIsoft is a local technology company that is building a fiber network for its community. The city government has joined them in a public-private partnership. The community funded and managed nonprofit MAIN has delivered effective broadband service since the '90s.
The Steuben County [IN] Community Foundation created a supporting organization called iMAN that raised $2.7 million through mostly local donations to build a dark fiber network infrastructure. iMAN sells the dark fiber to businesses that in turn contract with ISPs to turn on the fiber and sell Internet services. Sixty-five percent of activation fees go to the Foundation whose Board of Directors fund local economic development projects.
Communities can either sit on their assets and complain about how bad broadband is, or they can mine their local talent and potential investors to pursue alternative funding strategies to get the broadband they want. What are you going to do?
Craig Settles is a consultant who helps organizations develop broadband strategies, host of radio talk show Gigabit Nation and a broadband industry analyst. Follow him on Twitter (@cjsettles) or via his blog.
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