Homeowners’ Groups Fill ­.s. Last-Mile Broadband Gap

Incumbent telecommunications providers in the U.S. have long been protective of their franchises and footprints in trying to maintain their advantage in last-mile network infrastructure.

Municipally owned alternatives, exemplified by networks in Wilson, NC, and Chattanooga, TN, have met with legal roadblocks from incumbent providers seeking to limit alternatives to their own offerings, and legislators opposed to public broadband infrastructure continue to introduce bills to that end.

However, some private homeowners’ associations are sidestepping these lobbying efforts by directly contracting with alternative network providers. For residents of these neighborhoods, greatly improved network speed comes at a higher price up front, but may also result in higher property values, as well the ability of residents to better enjoy higher-quality digital products–and also to be more productive, if their livelihoods depend on network quality.

Phil Trice, president of the Kingswood Farms Development Homeowners’ Association (HOA) in West Lafayette, IN, recalled a neighbor who ran a web development firm, who had to sell his home because available network capabilities did not keep pace with his needs. "Regrettably, he chose to move a couple years ago because we weren’t making progress toward fiber to the home, and he didn’t see any other option," Trice said. "He absolutely had to have it."

At the time, Kingswood’s 72 homes had access to only one cable Internet provider, which Trice said provided 85 megabits per second (Mbps) downstream and 18 Mbps upstream, unloaded; "loaded, like on a Sunday night, it would be as low as 10 megabits down and 10 up," he said.

That situation is set to improve very soon. The HOA negotiated a deal with Evansville, IN-based MetroNet Systems, which is currently installing a fiber-to-the-home (FTTH) network that will provide a minimum of 50 Mbps downstream. Trice said the term "last mile" is appropriate in Kingswood’s case, as MetroNet already had fiber-optic lines running along the county highway right of way accessed by Kingswood roads. He said the association chose MetroNet because its competitor for the project mandated a minimum number of households sign up, and MetroNet did not. The association also opted to use its own infrastructure funds, instead of levying fees on each household for construction of the network.

About the time construction crews were laying fiber for the Kingswood last mile, the Rancho Santa Fe Association in suburban San Diego County, CA, signed a letter of intent with Philadelphia-based Hotwire Communications to construct an FTTH network for the affluent low-density community of about 2,000 homes. The agreement, announced early in May, noted the private, non-profit association will own the network, while Hotwire will build and manage it to the specifications of a service-level agreement that, association officials said, will provide greater incentive for better service than a provider-owned network would.

"When we started the process, we reached out to several major providers. They wanted us to hand them millions of dollars to upgrade their own infrastructure in our community, with only marginal improvement in service," Ann Boon, president of the Rancho Santa Fe Association, said in a statement announcing the deal. "What we did was complex, yet simple at the same time. We negotiated from a simple premise: if we are funding it, and our members are going to be paying for the service, we ought to own it ourselves."

The trend toward direct private contracting may also underscore a wider public policy dilemma. On the one hand, projects such as those Kingswood and Rancho Santa Fe are undertaking illustrate a willingness to shoulder much of the financial burden of bringing legitimate broadband to their communities when incumbent providers are slow to take the initiative. On the other hand, both communities could also be considered "upscale," and the budding private last-mile movement may underscore the next chapter in a widening digital divide in the U.S. between those with the resources to invest in next-generation infrastructure, and those at the mercy of others.

Small state, big lesson?

Connecticut may hold salient lessons for the next steps in wholesale upgrading of network infrastructure. In 2014, AT&T sold its entire landline operation in the state to Frontier Communications for $2 billion, after partially upgrading its legacy copper DSL network to its "advanced" U-verse fiber-copper technology, which brought fiber to local neighborhood nodes and then used existing copper to connect to customer premises. As a result, much of the state served by Frontier is still served by obsolete technology.

In approving the sale agreement, the Connecticut Public Utilities Regulatory Authority mandated Frontier invest a total of $63 million in capital improvements over three years (2015, 2016, and 2017) to improve and expand broadband capabilities in Connecticut, with at least $3 million to be focused on expanding to areas that are currently unserved or underserved with broadband. Michael Cicchetti, Frontier’s director of government and external affairs, said Frontier has brought 25,000 of those underserved households 18Mbps  connections, and estimated 100,000 more will gain access to that technology over the three-year period.

The state’s Office of Consumer Counsel is prodding Frontier to go beyond the bare letter of the agreement, and in a recent report, made clear upgrading legacy copper will go only so far, with no time for delay: "DSL is a short-term solution in a market where bandwidth needs are growing exponentially and high, symmetrical capacity is increasingly needed for small businesses and for popular applications like video-downloads, video-gaming, and video-conferencing. Aging copper plant is not capable of meeting these growing needs in the long-run."

The report "Broadband in Connecticut: Opportunities for the State and Localities to Enable World-Class Broadband" highlights possible public-private partnership models presented to the statewide CT Gig Project, including a proposal from Frontier that could alleviate the issues inherent in relying on purely private investment. The report, which does not cite a definite timeline for the construction of upgraded last mile networks in the state, offers three different approaches that could satisfy the project’s request for qualifications:

• Under Frontier’s proposal, construction would be dependent on municipal commitments to pay a fixed monthly amount based on the total number of homes, which would be paid to Frontier monthly for 15 years, with a decline in payment amounts after the first five years. The monthly base payment would cover all the homes in the agreed area. In return for this funding, Frontier will build fiber to pass all the homes in the agreed area.
• Macquarie Capital and its partners propose to provide financing, construction, operations, and service delivery over the network. To fund all this activity and investment, the locality will pay Macquarie on an ongoing basis by placing a monthly fee on all local property owners’ utility bills, with multiple ISPs competing over the network, giving consumers a choice of providers and the benefits of price competition (and creating a revenue stream for ISPs, which will pay Macquarie).
• SiFi Networks‘ fiber-to-the-home network is proposed to be built and operated by SiFi and its partners at public sector expense. SiFi would provide financing, turnkey construction, and operations—all of which would be compensated by lease payments from the public sector partner. SiFi would then bring aboard one or more ISP partners, with which the locality would contract to provide open access services over the network.

Telecommunications attorney Jim Baller, founder and president of the Coalition for Local Internet Choice, which works to broaden the avenues for broadband network construction across public and private sectors, said time is short for policy makers in the U.S. to speed true broadband investments, and options such as those being explored by Connecticut need to be broad and innovative.

"The U.S. needs to make advanced communications capabilities available at affordable rates wherever possible, as rapidly as possible, through as many workable models as possible," Baller said. "Incumbents have an important role to play in this, but where they can’t or won’t give communities—including homeowners’ associations—what they demand, alternatives will increasingly emerge."

Gregory Goth is an Oakville, CT-based writer who specializes in science and technology.