On Aug. 14, a large stack of proposals will be submitted to compete for portions of $4B allocated by the U.S. Congress1 to extend broadband access to unserved and underserved areas.
Then it will be up to the NTIA (National Telecommunications and Information Administration) and RUS (Rural Utilities Service) to pick winners and losers.
The following preview of a proposal under development in my own Commonwealth of Massachusetts indicates what NTIA/RUS and other industry stakeholders can expect to see on Aug. 14.
Massachusetts Broadband Institute (MBI), a quasi-public agency established in 2008, will seek an NTIA grant for a “middle mile” project to serve un/underserved towns in western Massachusetts2; such projects are defined by NTIA as providing “interoffice transport, backhaul, Internet connectivity, or special access.” MBI will propose to build a backbone dark fiber network along interstate and state highways that cut through western Massachusetts, with regional fiber extensions and spurs into selected towns.
Some components of MBI’s backbone network are already under construction with state funding. Proving that it can design, engineer and build this network will be the relatively easy part of MBI’s proposal.
MBI will also need to demonstrate that by providing low-cost backbone connectivity, it will enable private sector ISP partners to deploy last-mile networks in the 65 communities that MBI has mapped as being unserved or underserved.
To this end, MBI will describe plans expressed by prospective ISP partners to connect to the MBI backbone in order to deliver broadband services to households, businesses and community anchor institutions in the un/underserved communities. MBI will submit a financial model indicating that payments from its prospective partners for their use of the backbone will be sufficient to cover its ongoing operating costs. And MBI will include “Letters of Support” from these partners, perhaps borrowing wording from its sample letter:
“…a major benefit will be the ability for companies like ours to provide last-mile service in areas that would not otherwise be financially feasible… This project has the ability to make last-mile service a reality for the thousands of residents and businesses who currently do not have access and for companies like ours who want to provide that access…. It is our hope that you will fund their proposed network in its entirety.”
MBI may refer to operating precedents for its proposed plan. For example, the Alberta SuperNet (in Alberta, Canada) provides a transport network to points-of-presence in more than 400 rural communities with over 90 ISPs deploying last-mile connections in these locations. Similar to the MBI plan, the Alberta SuperNet is a public/private partnership. Its backbone network is owned by the Province of Alberta, Bell Canada and the contracted network operator, and the independent connecting ISPs operate last-mile networks that access the backbone on a non-discriminatory open access basis.
Which firms are prepared to sign up as ISP partners will be revealed when MBI submits its proposal. Yet to be determined, for example, is the extent to which the dominant local cable (Comcast, Charter) and telco (Verizon) operators will be among them. There are several reasons why they might want to participate. Residents of western Massachusetts have complained vociferously about lack of broadband service from the cable and telco operators. If these operators were to deliver broadband Internet access using the MBI backbone, they would improve their standing politically in the Commonwealth as well as add to their topline revenues. They have customer service and back-office systems in place to support the additional customers.
On the other hand, even with the benefit of low-cost backbone connectivity, wired Internet access may still be uneconomic to reach many of the region’s remote households and businesses. The more economic technology option to reach such users—fixed wireless—is generally not deployed in last-mile cable and telco networks. And, despite the political benefits, the incumbent operators may be reluctant to commit to extend broadband service to remote end-users, until now not a top investment priority, or to pay MBI’s proposed rate for backbone connectivity.
It’s very likely that that wireless ISPs will be among MBI’s prospective last-mile partners, perhaps including rural WiMax ventures that have emerged in other parts of the U.S. as candidates for stimulus funding. How credible they are depends on how they meet certain requirements. First, they need spectrum. Spectrum options involve trade-offs; at higher frequency bands there is more bandwidth available but signals in these bands are more subject to foliage absorption and have more limited propagation range. If the wireless ISPs plan to use bandwidth at, say, 2.5GHz or above, it will be especially important for them to provide engineering studies that show how their planned fixed wireless networks will reach and serve customers despite the region’s hilly topography and dense green cover.
For broadband deployment proposals that do not win funding, there will be two more chances to compete for the rest of the $7.2B allocated by Congress. NTIA/RUS plan second and third funding rounds later in 2009 and in 2010.
1American Recovery and Reinvestment Act of 2009, signed 17 February 2009
2Facts about the planned MBI proposal were obtained from http://www.massbroadband.org/. Opinions and speculations about the proposal are the author’s.
Peter D. Shapiro, Ph.D., is founder and principal at PDS Consulting (www.pdsconsulting.net), which specializes in cable and telecommunications assignments. PDS Consulting clients include operators, financiers, attorneys, industry associations and government agencies. He provides opportunity assessments, due diligence analyses, competition monitoring and evaluation, and industry expert litigation support. He can be reached at Peter@PDSConsulting.net.