When Internet Access is a Public Utility

2019-09-27T11:02:24+00:00September 19th, 2019|

In some Rust Belt communities, broadband access is provided by the municipal government

By Travis Dunn

In 2013, the city of Fairlawn, Ohio, an Akron suburb with a population of about 7,500, had some of the slowest internet download speeds in the country. Ohio was near the bottom for speeds nationwide, and Fairlawn was ranked low for Ohio. “We were at the bottom of the bottom of the barrel,” Ernie Staten, Fairlawn’s deputy director of public service, told me.

The city’s terrible internet service was killing business development. That same year, when the city was mulling over its internet problem, William Roth, Fairlawn’s mayor, went on a trade mission to Germany. One day he sat down with the head of a company that was interested in setting up in Fairlawn. But there was a big problem: “The water’s great, the land is cheap, it looks like you have some talent around you,” the man told Roth, “but your internet sucks.”

“And the mayor didn’t have an answer for that, other than ‘Well, we better do something,'” said Staten.

Staten and the mayor talked over breakfast in 2013 and came out of the meeting determined to push Fairlawn into the twenty-first century. They started out with an open mind about solutions: private, public, some partnership in-between, they didn’t care. What they wanted was the best: Not dial-up, not cable. The city already had both, and neither was good enough, which is what the German businessman was trying to tell them. What they wanted was fiber optic cable—cable spun from glass or plastic that transmits signals as light, not electricity. Signals sent by fiber optic lines degrade much more slowly than those sent over copper wires, making fiber optic cable ideal for broadband internet.

City officials originally asked representatives of major telecom companies if they would build out the fiber optic infrastructure. “The incumbents laughed at us and said that’s never going to happen,” said Staten. Laying the fiber was cost-prohibitive, they were told; there weren’t enough potential customers to justify it, and the profit margin was too slim. So Fairlawn officials took the only option they had left: They did it themselves.

In 2015, the city got the local port authority to issue a $10.6 million bond for the project. Then they started building. It took eighteen months from start to finish. They did it incrementally, bringing sections of the city online until they had full coverage. By mid-2017, broadband was available to every resident and business in town. Today, 49.6 percent of the city’s residents and businesses subscribes. That number, said Staten, will continue to grow, as FairlawnGig, the city’s municipal internet utility company, signs up between four and eight new customers a week.

Fairlawn is one of a handful of small cities and rural communities in the post-industrial midwest and northeast that have set up municipally-owned fiber-to-the-home (FTTH) broadband companies. For some Rust Belt municipalities it’s the only choice, but it’s not an easy one. Cities attempting to set up municipal broadband face multiple barriers—including costs, legal hurdles, and opposition from telecom companies—but those who pull it off can make a significant difference in residents’ lives.

 

One hurdle for municipalities is that fiber optic cable is expensive, between eighteen thousand and twenty-two thousand dollars per mile. Second, the basic fiber optic infrastructure has to exist before it can be run to individual homes and businesses. A city needs the so-called “middle mile” of fiber (the connection to the main “trunk” fiber lines) before it can lay down “last mile” fiber, which allows for FTTH. Thus the less connected an area is, the more expensive the entire proposition becomes. Rural areas in particular are in a bind; they have fewer potential customers yet require substantially more investment in infrastructure. Partly because of the expense, telecoms are unwilling to tackle the problem. The investment in infrastructure is deemed not worth it.

To make matters worse, in many areas of the country, Americans do not have much choice when it comes to high-speed internet. The choice, if it can be called that, is “between a single cable provider and a single DSL provider,” according to a 2012 report by the Institute for Local Self-Reliance (ILSR), a nonprofit that promotes and supports local community-owned development. “The big cable companies have refused to compete with each other,” the report adds. “Time Warner Cable has no interest in going head to head with Comcast.” Further, two cable companies, Comcast and Charter, “maintain a monopoly over 68 million people,” according to a July 2018 ILSR report.

On top of this, areas deprived of real high-speed internet access are then told that FTTH isn’t necessary. “One of the most frequently repeated claims by incumbents is that any community network would be redundant because they already offer the connections the community needs. But a next-generation fiber optic network far outstrips a cable or DSL one. Community fiber networks are no more redundant than interstate highways being built over dirt roads,” the 2012 ILSR report says.

Typically, cable is pointed to as a solution, since it is widely available. But cable download speeds degrade the further a customer is from the signal, and cable simply cannot match the upload speeds of FTTH. There are those who think 5G is coming to the rescue. But 5G is beset by a number of technical challenges that have yet to be overcome, and there is no evidence that this emerging technology would provide the level of coverage and speed to rural areas that FTTH can.

“The private sector is unlikely to solve the significant problems that we see,” Christopher Mitchell, the principal author of the ILSR reports, and the director of the Community Broadband Networks Initiative for ILSR, said in an interview. When there is no high speed private option available, particularly in rural areas, then municipal broadband may be the only way to go, he said.

That, however, is in areas where municipal broadband is even an option: thanks to heavy lobbying from telecom companies, twenty-five states have passed laws that either ban municipal networks or make it difficult for them to get started. Three Rust Belt states—Wisconsin, Michigan and Pennsylvania—have such laws.

In the past, when the federal and some state governments have stepped in to help, they have instead helped the telecoms help themselves. A conspicuously wasteful example of this is the 2015 Connect America Fund, which has thrown $1.5 billion to major telecoms each year, but done little to solve the gaps in internet access the fund was set up to address. Instead, Mitchell argues, the fund was essentially set up to fail at its avowed purpose: telecoms receive subsidies if they provide upload speeds of 10 mbps for download and 1 mbps for upload, even though these speeds fall far short of the 25/3 speeds that essentially everyone other than telecom lobbyists consider the baseline. Connect America, which ends in 2020, is now a national laughingstock. But it’s not funny, especially to the residents of areas that still lack broadband access.

Yet just because past government programs have failed to extend broadband access, that doesn’t mean current and future programs have to repeat past mistakes, said Mitchell. He thinks the new wave of federal grants are different. Now it’s possible for municipalities to use money from the Federal Communications Commission, as well as from the U.S. Department of Agriculture, to fund FTTH projects.

 

Sebewaing, Michigan is one town that used its existing municipal power and water utility to lay down a municipal fiber network. Sebewaing, population 1,643, didn’t wait for outside help. They built it themselves, using money loaned by Sebewaing Light and Water. “We did it because our residents—who are our owners— didn’t have any access and the incumbents were not planning for anything beyond dial-up,” said Melanie McCoy, the recently retired superintendent of Sebewaing Light and Water.

Sebewaing, situated in the thumb of Michigan, is tiny and rural: A sugar beet processing facility is the biggest business in town, and the nearest city is Bay City roughly thirty miles to the southwest. The town already had a fiber optic infrastructure that dates back to 2004, when the town built out the system mainly for use by police, firefighters, and emergency responders. The town then extended fiber to some businesses and the local municipally-owned electric utility. But that’s as far as it got. As the years went by, and the local internet options, and speeds, failed to improve, the clamor began to grow for something better. Municipal broadband was seen as the only way out.

“It was crippling,” said McCoy. “You [had] the kids who couldn’t do their homework, you had the people who couldn’t work from home.” The town voted to go for it 2013. By 2015, Sebewaing Light and Water started hooking people up. “We basically funded it through our electric utility, and we are paying them back now,” said McCoy.

Sebewaing Light and Water currently has about six hundred customers out of a possible nine hundred (McCoy said roughly one thousand customers could theoretically be hooked up, but the additional hundred live in apartment complexes serviced through package deals with either Comcast or AT&T). The basic charge is thirty-five dollars per month for thirty mbps download, and thirty mbps upload. There are also two higher price plans, used mostly by businesses. The rates have not changed since the utility’s inception in 2015. “It’s one of the best projects I ever worked on,” said McCoy.

But getting their utility started wasn’t easy. Michigan is one of the twenty-five states that either ban municipal broadband outright or have onerous laws that make setting it up a difficult. According to the Michigan law, a municipality can only move forward with the municipal system after first issuing a request a request for proposals (RFP) from private companies and receiving less than three bids. But Sebewaing passed that test easily; not one company submitted a proposal.

Sebewaing is not the only other Michigan municipality to successfully overcome the legal hurdles to municipal broadband. The city of Marshall, which has a population of about seven thousand, did so last year. Municipal broadband advocates in Holland, Michigan hope that city will follow suit. Setting up municipal broadband would be easier in this case, said local activist Daniel Morrison, since the city put in a fiber system in the 1990s for emergency responders; because of this, Holland is grandfathered in, and would not have to face the same legal hurdles.

 

The other problem that many municipal broadbands have had to face is political attacks from telecoms. In an earlier wave of municipal broadband that wired up cities such as Chattanooga, Tenn., Lafayette, Louisiana, and Longmont, Colo., telecoms spent millions on lobbying, advertising, and lawsuits to prevent municipal broadband from getting a toehold. But that didn’t happen in Sebewaing. “There was no concern from the incumbent,” said McCoy. “They basically didn’t care about us because we were small and rural.”

The same thing happened in Fairlawn, Ohio. They weren’t even noticed during the process of setting up municipal broadband. The city has a bigger population than Sebewaing, but still, it’s only 7,500 people.

But once the broadband was set up, the telecoms did go after Sebewaing and Fairlawn in another way. “A lot of their marketing has gone to attack what we’re doing,” said Staten. That marketing has been tied to special promotional deals. The existing internet plans in Fairlawn suddenly got a lot cheaper. McCoy said Sebewaing has seen the same effect. Also, the download and upload speeds improved. Same in Fairlawn, where Spectrum now offers 100 mbps download speeds, whereas previously the average was 17 mbps download and 1 for upload.”That was a big step for them to do that, and that was strictly done because of what we were doing,” said Staten.

And that’s a good thing in his opinion. Even though the competition may  draw away some existing and potential customers from the municipal service, the mere existence of the FairlawnGig has pushed Spectrum to improve its service. That’s the way it should be, said Mitchell. Competitive prices and improved service from telecoms is one of the benefits of municipal broadband, which provides the competition the monopoly telecoms never had, he said.

 

Despite the obstacles, more municipalities are pursuing their own fiber systems. Yates County, New York, is one example. While Yates is a rural area, it’s also within commuting distance of two post-industrial Rust Belt cities, Corning and Elmira.

The municipal broadband effort here is a bit of anomaly, however, since it began with a middle-mile fiber network laid down by three nearby counties, Steuben, Chemung, and Schuyler, and the initial funding, $10 million, came from Corning Optical, the company that helped create the modern fiber optic revolution. That donation, combined with a mix of federal and state money, made the network possible.

The goal of this fiber network was to attract telecoms that would then put in high speed to homes. But that didn’t happen. Instead, telecom companies put out numbers claiming they were meeting the targets, but in reality, said Yates County Planner Dan Long, many of the “served” residents were getting substandard service that did not meet the advertised download speeds. While it was publicly presented as “problem solved,” this was “not realistically the case,” he said.

Yates County, which joined in later, is now trying to get a full federal grant through the USDA ReConnect program—money the county would use to build out the fiber from the nearby network, and then use to set up a FTTH network, according to Long. Chemung County is considering setting up municipal broadband as well.

Also in New York state, a version of municipal broadband already exists in the Seneca Nation, where a tribal-owned company has been providing a wireless broadband service since 2013, and received a federal grant earlier this year to build out a fiber network. Municipal broadband is also being considered by the town of Dryden, a rural suburb of Ithaca, putting the town in the running to be the first municipality in the state with municipal FTTH. Dryden, unlike the others, said it would bond out the $12 million itself.

This effort, which still hasn’t made it past the exploratory stage, would represent a “good use of bonds,” said Mitchell. The town also plans to apply for grants, but because Dryden is a relatively affluent community, town officials said they don’t qualify for many grants and have a hard time securing the ones for which they are eligible.

In order for more municipalities to gain access to FTTH, a concerned nationwide effort is required, said Mitchell, something analogous to the Rural Electrification Act of 1936 or the Federal Aid Highway Act of 1956, which established the interstate highway system. “This is a generational investment,” said Mitchell. “We reach back in history for examples because we haven’t rebuilt the electric system, we haven’t rebuilt all of the water systems, or the interstate highway system.”

After rural electrification and the construction of the interstate highway system, the federal government has undertaken had no infrastructure initiative of comparative magnitude, he said. “Then what’s the next greatest investment infrastructure? We haven’t had one,” said Mitchell. “I think we’re overdue, and we’ve forgotten how to properly invest in long-term infrastructure that will make the future better for our children.” ■

Correction: a previous version of this story state that Sebewaing was near Base City. It is near Bay City, in Michigan.

 

 

Travis Dunn lives in Cortland, New York, where he works as a reporter for the Cortland Standard. His work has been published by WhoWhoWhy, Alternet, the defunct Baltimore City Paper, and the Center for Public Integrity.

Cover Image: An aerial view of land near Holland, Michigan. Advocates say the city is in a good position to create municipal broadband access. Photo via Flickr (CC BY-SA 2.0).

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