NEWTON, Mass.--When it comes to building the infrastructure that makes public high-speed Internet access possible, companies are keen to take on projects for large cities. However, smaller cities are another story.
During the past 18 months, MultiState Associates, a consulting firm for lobbyists, has compiled a database on more than 2,000 communities with populations of 60,000 or more interested in developing municipal broadband or wireless services. The database includes cities in the early stages of public broadband interest, not just those that have put out requests for proposals (RFPs) to companies.
Its data shows that while thousands of towns are interested in developing municipal networks, few vendors are willing to take on small projects.
"I think towns are putting out RFPs faster than the industry can respond. I mean, there are several thousand cities pursuing this; there are only so many vendors pursuing smaller cities," Mitch Gorsen, vice president at MultiState Associates, said in an interview.
"There are several thousand cities pursuing this; there are only so many vendors pursuing smaller cities."
vice president, MultiState Associates
"There is no lack of vendors for responding to Chicago and Boston. But you drop to tier 2 and there is only resellers. Motorola will take an RFP from a place like Sunny Isles Beach, Fla., and they send it to their reseller in Florida and say, 'You go do this,'" Gorsen said.
EarthLink and AT&T in a panel at MuniWireless New England here on Tuesday said that population density is a factor when they consider taking on a project. As businesses, they want to see a return on their investment through things like subscription services or advertising revenue, depending on the business model.
"We've come out publicly about revising our strategy about the cities we'll go after," Cole Reinwald, vice president of product strategy and marketing for EarthLink Municipal Networks, said in the panel discussion.
"We should be looking at cities with densities of about 2,500 people per square mile. As tech costs drop, we'll be able to bring that number down," he said.
"I never say no to any deal, because I always believe there's a deal. But it's about a value-driven deployment that balances between the need of your city and the needs of our shareholders," said Carl Nerup, vice president of development at AT&T.
The towns want a big company that will be there forever and take care of everything, but the vendors don't necessarily want them as clients, Gorsen said.
As a result, towns will have to figure out a way to build a broadband infrastructure on their own, according to Esme Vos, who founded MuniWireless in June 2003, an organization dedicated to municipal broadband. Vos maintains a blog on the status of public broadband projects around the world.
"I see it (public broadband) as a utility like water or electricity. I see it as the thing that carries a lot of other things. A road carries car traffic, motorcycle traffic, not just one type of car," Vos said. There are communities in the U.S. and Europe that small towns can look to for examples of how to do it, she said.
Ring of communication
In rural towns in the European Union, for example, they build a fiber ring and then attach WiMax antennas that send a signal to a town. From there, the signal is dropped down to users via Wi-Fi. The U.S. Department of Agriculture has also earmarked funds for communities interested in building municipal broadband networks, Vos said.
"What I see is that the people who are late in deploying are learning from people who have gone before. There are interesting projects that will be announced this summer that will not just concentrate on free Wi-Fi, but on municipal services," Vos said.
Using a public broadband infrastructure as a platform for city services is a way to save money. Aside from applications that can be used to cut down on city services costs, public safety uses can qualify a municipality for federal funds. There are grants available from Homeland Security and the Department of Justice for municipalities planning to use their broadband infrastructure to carry proprietary networks for police and first responders.
In other instances, a large corporation in a small town looking for a better broadband infrastructure may be willing to partner with the town so that its residents could also benefit.
That is the case with a large insurance company in a small Wisconsin town. Azulstar, a wireless broadband company, plans to make an announcement next week on a project to build a broadband infrastructure that will benefit both, but there's a reason they're willing to go there, said Yorke Rhodes, chief executive officer of Azulstar.
"There is a large insurance company that has committed to a tenant revenue, so we will go in," Rhodes said in a panel discussion at MuniWireless. Rhodes didn't identify either the company or the town.
"We wouldn't be in a small town in Wisconsin were it not for this insurance company that is looking to bring that to their community. That commitment can come from people in the municipality or businesses that are interesting in doing that for the town," he said.
Rhodes also said that municipalities that have done their homework are more welcome when it comes to discussing outsourcing for specific management or maintenance needs with relation to their broadband network.
"The more preparation that is done on the side of the customer, the better they will come to the table prepared, obviously, and we can have a meaningful conversation. We go through qualification steps. We don't like to say no out of the gate either," Rhodes said.
Can small towns make money from their broadband investment? Vos and Gorsen both said it's possible, but will take careful planning on the part of the town.
Gorsen pointed out that as taxes from landlines wane, towns may look to things like voice over Internet Protocol (VoIP) as a way to make money from their broadband infrastructures. This could work either through taxes applied to VoIP services or through lease agreements for the infrastructure with providers.