Who should build the next generation of high-speed networks?

by Jennifer Vogel, Minnesota Public Radio

Image by Zach K via Flickr

Windom, Minn. — Dan Olsen, who runs the municipal broadband service in Windom, was just about to leave work for the night when he got a call. The muckety-mucks at Fortune Transportation, a trucking company on the outskirts of town, were considering shuttering their office and leaving the area.

“They said, Dan, you need to get your butt out here now,” Olsen recalls. “I got there and they said, ‘You need to build fiber out here. What would it take for you to do it?'”

Fortune, which employs 47 people in the town of 4,600, two and a half hours southwest of the Twin Cities, relies on plenty of high-tech gadgetry. Broadband Internet access figures into how the company bids for jobs, communicates with road-bound truckers, controls the temperatures in its refrigerated trucks and remotely views its office in Roswell, New Mexico. Fortune even uses the Internet to monitor where and to what extent drivers fill their gas tanks in order to save money.

Yet, when it was time to upgrade company systems three years ago, Fortune’s private provider couldn’t offer sufficient speeds.

That’s where Windomnet came in. Though Fortune was a mile outside the municipal provider’s service area, “We jumped through the hoops and made it happen,” recalls Olsen. “The council said, “Do it and we’ll figure out how to pay for it.’ We got a plow and a local crew. We had it built in 30 days.”

Across rural Minnesota, cities, counties, cooperatives and companies are planning or building broadband internet networks. The goal is to provide even those who live in the remotest parts of the state with high-speed internet in order to foster job growth, better health care and increased educational opportunities. The most optimistic observers think telecommuting and other internet-based endeavors could help stabilize the populations of rural areas.

The big question is, who should build these networks–public entities or private companies? The debate has been playing out all over the state, exposing the seemingly innocuous topic of internet access to the vagaries of knock-down, drag-out ideological brinksmanship.

Article continued on MPR News…

This article is provides the excellent example of Windom, MN where Frontier Communications could not afford to build out a broadband network to the entire county. The author addresses the issue of whether public entities should endeavor into the broadband business.  She relates the argument to health care and mail delivery, but broadband services have a different set of economics.  The problem delivering adequate broadband services to every household is that the cost of building out a single-purpose network by every service provider is cost-prohibitive.  Public communications companies cannot establish a viable business case sufficient to satisfy their shareholders.

Municipalities and other governmental entities do not have the short-term financial restraints of public companies.  They can wait 5-7 years before seeing a positive rate-of-return over the 20+ year lifespan of the network.  This reason alone is why municipalities must treat broadband networks as a utility.  They should provide the last-mile infrastructure to homes and businesses and let service providers like Frontier sell services.  This way public companies are the service provider and the municipality sticks to selling wholesale infrastructure.  This arrangement is similar to tower space that wireless carriers purchase from companies like American Tower.  The open-access municipal broadband model is not a government take-over of the communications industry;  it actually supports it.  I hope that someday enlightened service providers understand the advantages to them and support this successful business model.

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