<html xmlns:v="urn:schemas-microsoft-com:vml" xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:x="urn:schemas-microsoft-com:office:excel" xmlns:p="urn:schemas-microsoft-com:office:powerpoint" xmlns:a="urn:schemas-microsoft-com:office:access" xmlns:dt="uuid:C2F41010-65B3-11d1-A29F-00AA00C14882" xmlns:s="uuid:BDC6E3F0-6DA3-11d1-A2A3-00AA00C14882" xmlns:rs="urn:schemas-microsoft-com:rowset" xmlns:z="#RowsetSchema" xmlns:b="urn:schemas-microsoft-com:office:publisher" xmlns:ss="urn:schemas-microsoft-com:office:spreadsheet" xmlns:c="urn:schemas-microsoft-com:office:component:spreadsheet" xmlns:oa="urn:schemas-microsoft-com:office:activation" xmlns:html="http://www.w3.org/TR/REC-html40" xmlns:q="http://schemas.xmlsoap.org/soap/envelope/" xmlns:D="DAV:" xmlns:x2="http://schemas.microsoft.com/office/excel/2003/xml" xmlns:ois="http://schemas.microsoft.com/sharepoint/soap/ois/" xmlns:dir="http://schemas.microsoft.com/sharepoint/soap/directory/" xmlns:ds="http://www.w3.org/2000/09/xmldsig#" xmlns:dsp="http://schemas.microsoft.com/sharepoint/dsp" xmlns:udc="http://schemas.microsoft.com/data/udc" xmlns:xsd="http://www.w3.org/2001/XMLSchema" xmlns:sub="http://schemas.microsoft.com/sharepoint/soap/2002/1/alerts/" xmlns:ec="http://www.w3.org/2001/04/xmlenc#" xmlns:sp="http://schemas.microsoft.com/sharepoint/" xmlns:sps="http://schemas.microsoft.com/sharepoint/soap/" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns:udcxf="http://schemas.microsoft.com/data/udc/xmlfile" xmlns:st="" xmlns:st1="urn:schemas-microsoft-com:office:smarttags" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<meta http-equiv=Content-Type content="text/html; charset=us-ascii">
<meta name=Generator content="Microsoft Word 11 (filtered medium)">
<!--[if !mso]>
<style>
v\:* {behavior:url(#default#VML);}
o\:* {behavior:url(#default#VML);}
w\:* {behavior:url(#default#VML);}
.shape {behavior:url(#default#VML);}
</style>
<![endif]--><o:SmartTagType
namespaceuri="urn:schemas-microsoft-com:office:smarttags" name="country-region"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="PlaceName"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="State"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="City"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="place"/>
<!--[if !mso]>
<style>
st1\:*{behavior:url(#default#ieooui) }
</style>
<![endif]-->
<style>
<!--
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{margin:0in;
margin-bottom:.0001pt;
font-size:12.0pt;
font-family:Arial;
color:black;}
h1
{mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:24.0pt;
font-family:"Times New Roman";
font-weight:bold;}
h2
{mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:18.0pt;
font-family:"Times New Roman";
font-weight:bold;}
a:link, span.MsoHyperlink
{color:blue;
text-decoration:underline;}
a:visited, span.MsoHyperlinkFollowed
{color:purple;
text-decoration:underline;}
p
{mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:12.0pt;
font-family:"Times New Roman";}
p.byline, li.byline, div.byline
{mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:12.0pt;
font-family:"Times New Roman";}
p.deck, li.deck, div.deck
{mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
font-size:12.0pt;
font-family:"Times New Roman";}
span.EmailStyle20
{mso-style-type:personal;
color:black;}
span.EmailStyle21
{mso-style-type:personal-reply;
color:black;}
@page Section1
{size:8.5in 11.0in;
margin:1.0in 1.25in 1.0in 1.25in;}
div.Section1
{page:Section1;}
-->
</style>
<!--[if gte mso 9]><xml>
<o:shapedefaults v:ext="edit" spidmax="1026" />
</xml><![endif]--><!--[if gte mso 9]><xml>
<o:shapelayout v:ext="edit">
<o:idmap v:ext="edit" data="1" />
</o:shapelayout></xml><![endif]-->
</head>
<body bgcolor=white background="cid:image001.gif@01C9078F.C6F6F180" lang=EN-US
link=blue vlink=purple>
<img src="cid:image001.gif@01C9078F.C6F6F180"
v:src="cid:image001.gif@01C9078F.C6F6F180" v:shapes="_x0000_Mail" width=0
height=0 class=shape style='display:none;width:0;height:0'>
<div class=Section1>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span lang=EN
style='font-size:12.0pt'><img width=312 height=56 id="_x0000_i1025"
src="cid:image002.gif@01C9078F.C6F6F180" alt="Telephony Online Logo"
class=printLogo><o:p></o:p></span></font></p>
<h1><b><font size=6 face="Times New Roman"><span lang=EN style='font-size:24.0pt'>Muni
fiber networks bounce back<o:p></o:p></span></font></b></h1>
<p class=byline><font size=3 face="Times New Roman"><span lang=EN
style='font-size:12.0pt'>Aug 25, 2008<o:p></o:p></span></font></p>
<p class=byline><b><font size=3 face="Times New Roman"><span lang=EN
style='font-size:12.0pt;font-weight:bold'><o:p> </o:p></span></font></b></p>
<p class=byline><b><font size=3 face="Times New Roman"><span lang=EN
style='font-size:12.0pt;font-weight:bold'>By Carol Wilson<o:p></o:p></span></font></b></p>
<p class=byline><b><i><font size=2 face="Times New Roman"><span lang=EN
style='font-size:10.0pt;font-weight:bold;font-style:italic'>Telephony Online <o:p></o:p></span></font></i></b></p>
<p class=deck><font size=3 face="Times New Roman"><span lang=EN
style='font-size:12.0pt'>Despite some high-profile failures, the deep-seated
need for broadband keeps municipalities on the fiber-to-the-home-track.<o:p></o:p></span></font></p>
<p><b><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt;
font-weight:bold'>The headlines surrounding</span></font></b><span lang=EN>
municipally funded telecom networks have been dominated by bad news this year. <o:p></o:p></span></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>In
addition to the outright collapse of muni Wi-Fi networks, there have been
notable failures in the muni fiber market as well, namely the iProvo network,
sold to Broadweave earlier this year, and Utopia, a network linking multiple
municipalities that has struggled to sign up customers. A multicity fiber
network in northeastern <st1:place w:st="on"><st1:State w:st="on">Minnesota</st1:State></st1:place>
that had been under study for years also was scrapped recently. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Anyone
who thinks the municipal broadband market is headed south, however, needs to
take a closer look. For every visible failure, there are multiple other cities,
towns and villages either building or looking to build their own
fiber-to-the-home (FTTH) networks, for the simple reason that they want
broadband facilities they can't convince their local telco and cable incumbents
to build. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>These
projects are being fueled by the falling cost of FTTH technology and the
growing experience in deploying systems, due in no small part to the massive
effort Verizon has launched, as well as that of other telcos. It is supremely
ironic that one of the nation's more visible and contentious muni fiber
projects, involving the city-owned Lafayette Utilities System in <st1:place
w:st="on"><st1:City w:st="on">Lafayette</st1:City>, <st1:State w:st="on">La.</st1:State></st1:place>,
is now reaping the benefits of delays to its FTTH construction caused by
lawsuits and legal actions launched by incumbent cable and telco operators. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“Not
only is the technology cheaper than what we would have deployed, it's
better,” said Terry Huvall, director for LUS. “We are using
[Gigabit passive optical networks], not [broadband PON].” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>In
addition, in a few cases states are getting in on the act. North Carolina's
e-NC Authority is seeking ways to stimulate broadband initiatives in rural
areas of that state, while Massachusetts just passed a bill to create a
Broadband Institute, using $40 million in state funding to bring broadband to
western areas of the state still served only by dial-up. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>What's
different about today's municipal networks is that, while still intended to
solve the problem of broadband access, they are more practically grounded in
market realities. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“I
would say that in the last few years, literally three, it's really gone through
a flat period, whereby people have tried to evaluate a way forward,” said
Tim Scott, director of sales for <st1:place w:st="on">North America</st1:place>
for PacketFront, a company that assists in developing, designing and operating
open-access fiber networks for municipalities. “There were a couple of
early adopters who started early in 2000 and ran into some difficulties. It was
an early time from a technology perspective; prices were higher so the business
case was tougher. We've seen a little bit of turn now. People are starting to
understand some of the lessons learned. They got more into a business mode
where they put more time into planning, so new muni nets are technically viable,
commercially viable, funded correctly and have a realistic business
model.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>One
other definite trend is that the municipalities themselves are biting the
bullet and becoming service providers — something many of them avoided
either for regulatory or business reasons. The notion of building a fiber optic
network using municipally backed bonds and then serving only as a wholesaler
now is generally viewed as a very tough row to hoe. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“If
you look at the municipal fiber projects that succeed and what characteristics
are inherent to those projects, one salient fact is that the projects provide
retail services directly and are not a wholesale-only network,” said
Timothy Nulty, the man who helped Burlington Telecom bring fiber to that
Vermont community and is now president of ValleyFiber, which is bringing FTTH
to a consortium of 25 rural Vermont communities. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Networks
such as iProvo and Utopia found it hard to attract service providers, and
without services, customers just weren't interested. A <st1:place w:st="on"><st1:State
w:st="on">Utah</st1:State></st1:place> state law, passed after those two fiber
projects were in discussion, prohibits municipally owned networks from selling
retail services. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“What
happened in Utah is something we have been talking about for years — the
state law that effectively prohibits retail service is, in my view, a very
substantial part of what is wrong with the environment in Utah and particularly
iProvo,” said Jim Baller, attorney with Baller & Herbst, which
represents municipalities and has done research for e-NC Alliance, among others.
“If applications are slow to evolve — and they have been —
service providers are left competing with incumbents on traditional services,
where they have no advantages.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>In
<st1:place w:st="on"><st1:State w:st="on">Washington</st1:State></st1:place>
state, the Grant County Public Utilities Department, another FTTH pioneer,
still is operating a wholesale-only network in accordance with state law there,
although it came under criticism and went through a management change over the
$400 million price tag of that network. Partially in response to that
criticism, the Grant County PUD halted its network expansion in 2004, after
four years of construction had connected about 11,000 homes — or
one-third of the anticipated homes — said Sarah Morford, spokeswoman for
PUD. After extensive review and exploration of other technology options, the
Grant County PUD commissioners voted in March to press forward, citing public
support for its fiber network. Over the next five years, <st1:place w:st="on"><st1:PlaceName
w:st="on">Grant</st1:PlaceName> <st1:PlaceName w:st="on">County</st1:PlaceName></st1:place>
plans to expand the network to reach 80% of residents and 95% of businesses, or
about 3000 homes and business per year. <o:p></o:p></span></font></p>
<h2><b><font size=5 face="Times New Roman"><span lang=EN style='font-size:18.0pt'>Many
Models<o:p></o:p></span></font></b></h2>
<p><st1:place w:st="on"><st1:PlaceName w:st="on"><font size=3
face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Calling</span></font></st1:PlaceName><span
lang=EN> <st1:PlaceName w:st="on">Grant</st1:PlaceName> <st1:PlaceName w:st="on">County</st1:PlaceName></span></st1:place><span
lang=EN> the exception to the wholesale rule isn't really accurate, however,
because there really aren't rules associated with municipal broadband, Baller
said. <o:p></o:p></span></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“There's
no one thing called municipal broadband,” he said. “It's a lot of
different things that have different trajectories and different histories. We
did see a little lull in movement into the fiber arena, but there is a lot more
interest now. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>PacketFront's
Scott agreed. “There are more choices today,” he said. “A
municipality can look for public/private partnerships, third-party operators
and service providers to come and offer services.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>One
of the popular models is for municipally owned utility companies — many
of which were created to bring electricity to towns in which large incumbent
utility companies weren't interested — to build FTTH networks that
privately owned incumbents can't cost-justify. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>In
<st1:place w:st="on"><st1:City w:st="on">Chattanooga</st1:City>, <st1:State
w:st="on">Tenn.</st1:State></st1:place>, for instance, the municipally owned
utility, EPB, is economically justifying its fiber build on the basis of
creating a “smart grid” that will enable the company to reduce
energy consumption and lower the cost of power it buys from the Tennessee
Valley Authority. The plan is to reach 80% of the 167,000 homes in the
600-square-mile service area in the first three years and then reach more rural
homes in the last two years of the five-year buildout. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>It's
really a win-win,” said Kate Espeseth, vice president of EPB's
communications system. “Not only do we enhance the electric services,
there has also been a tremendous amount of support for choices for advanced
communications as well. The way it is set up financially, the communications
division will pay something similar to a lease fee to the electric division for
use of the network. We will pay our fair share; there is no subsidy.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>The
smart grid will allow consumers to remotely monitor their usage and will enable
EPB to remotely read meters as well. “It gives customers the ability to
see their electric bill real-time or usage real-time,” Espeseth said.
“And we can provide energy management applications to enable them to
reduce consumption during the times during the day when power is more
expensive.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Billy
Ray, CEO of the Glasgow Electric Plant Board of Glasgow, Ky., which built the
nation's first municipally owned broadband network, is now publicly arguing
that instead of spending $18 billion to build nuclear power generators to meet
future electric demand, the TVA should build FTTH networks to 9 million homes
at $2000 each and use those connections to manage in-home electrical use in a
way that would reduce demand and render new nuclear plants unnecessary. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>In
<st1:place w:st="on"><st1:City w:st="on">Lafayette</st1:City></st1:place>, the
LUS network is under construction and expects to turn up its first customer in
January 2009, Huvall said. “Our plans are still to serve the entire city
of <st1:place w:st="on"><st1:City w:st="on">Lafayette</st1:City></st1:place>,
putting fiber along every street and alley,” he said. “After that,
the only thing left to be done is when the subscriber will contact us and we
will run the line to them.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Both
LUS and EPB plan to offer their own triple-play services, although the <st1:place
w:st="on"><st1:City w:st="on">Chattanooga</st1:City></st1:place> utility isn't
opposed to wholesaling its network as well if a service provider comes along to
compete, Espeseth said. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Bristol
Virginia Utilities began offering triple-play services on its OptiNet network
in 2003, after considerable challenges from anti-muni broadband forces that,
among other things, forced a state law requiring open access for those
networks. But while OptiNet has offered open access from the outset, it has had
very few takers. “Most of what we wholesale is backbone network,”
said Wes Rosenbalm, president and CEO of BVU. “It's not down to the
[optical network terminal] on the side of the home. We tried to find companies
to [offer retail services] early on and couldn't.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>The
Burlington Telecom network is similarly disposed to providing open access,
Nulty said, but he doesn't believe there will be takers. “Open access is
a philosophical or policy matter which I happen to believe in,” he said.
“But open access is a bit of a red herring. If you are a municipality and
you are providing services directly to the customer — triple-play
services — no major provider of triple play is going to try to come in
and beat you for your citizens. I couldn't pay Time Warner enough to use our network.
Unless you are so awful that people are itching to get away from your services,
the idea that major providers are going to use your network doesn't make
sense.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>The
wholesale model is working in <st1:place w:st="on">Europe</st1:place>, Scott
said. The Swedish city of <st1:place w:st="on"><st1:City w:st="on">Vasteras</st1:City></st1:place>,
for example, teamed up with Malar Energy to build an FTTH network that was
intended to be open-access from the outset. “They realized they hadn't
done all that early marketing to make this work, so they decided to be an ISP
for the first year,” he said. “Once they were able to show them the
benefits of being on fiber, of a 100-megabit connection, they could encourage
private companies to come on board, and today it is a perfect success, with 22
service providers.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>PacketFront
also encourages municipalities to consider public/private partnerships and
options such as working with a local service provider to build or operate a
network, Scott said. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“In
the old days, the city was taking all the capital risk, doing the bonding, and
we firmly believe there are a lot more different choices, from municipal leases
to public/private partnerships to 100% privately funded,” Scott said.
“It is not necessary that the city has to take the full risk.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Berkshire
Connect is a volunteer group that initially worked to bring affordable
connections to businesses in western <st1:place w:st="on"><st1:State w:st="on">Massachusetts</st1:State></st1:place>
by aggregating demand to make it more appealing to private service providers,
said Dan Dubendorf, a local attorney who heads the group. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“I
have never wanted to fight with the provider community; I have always said we
need to find ways to alter the capital equation — if they can earn a
return, then they'll invest,” he said. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>After
months of “going to a lot of meetings, eating a lot of bad chicken
dinners,” Dubendorf and Berkshire Connect were able to pull together
local hospitals, colleges, businesses and other institutions into a buying
group that lured Global Crossing into the area with a broadband wireless
solution. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Finding
a residential option for an area that includes 32 towns with nothing but dial-up
access proved thornier, which is why even a public funding skeptic such as
Dubendorf welcomed the $40 million the state of <st1:place w:st="on"><st1:State
w:st="on">Massachusetts</st1:State></st1:place> is now willing to pay. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'> “The
$40 million will come to a quasi-public institute — the Broadband
Institute — which has the ability to do things that a line agency could
not in terms of interacting with the private sector,” Dubendorf said.
“We will find places to invest at places where public dollars can be
spent and not have to be replaced every three years.” <o:p></o:p></span></font></p>
<p><st1:City w:st="on"><font size=3 face="Times New Roman"><span lang=EN
style='font-size:12.0pt'>Bristol</span></font></st1:City><span lang=EN>, <st1:place
w:st="on"><st1:City w:st="on">Burlington</st1:City></st1:place> and others are
paying their way by selling triple-play services to residents and showing a
local economic payoff. <st1:place w:st="on"><st1:City w:st="on">Bristol</st1:City></st1:place>'s
OptiNet has a 65% penetration rate, or about 9000 customers, who pay about $10
less per month than the local cable rates for basic cable. BVU estimates its
business and residential customers have collectively saved more than $9.7
million between 2005 and 2008 over what they would have had to pay incumbents. <o:p></o:p></span></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>But
the bigger payoff is in economic development, Rosenbalm said. BVU's 800-mile
fiber network, some of it built in partnership with the Cumberland Plateau Co.
— a company 50% owned by BVU — has helped lure two major new
employers to the region, bringing 700 new jobs. Defense contractor Northrop
Grumman came in 2005 with 400 jobs and specifically cited BVU's available
infrastructure as a key reason for the decision to put its new facility in
Russell County, Va. CGI, an IT and business process services firm, opened its
new facility in late 2007, also in <st1:place w:st="on"><st1:PlaceName w:st="on">Russell</st1:PlaceName>
<st1:PlaceName w:st="on">County</st1:PlaceName></st1:place>, and is served by
CPC Optinet, the BVU partnership. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“We
had two very good success stories that happened with Northrop Grumman and CGI,
which brought in 700 new jobs with average salaries of $50,000,”
Rosenbalm said. “The average salary here is $24,000 to $27,000. And we
have a couple other deals we are looking at internally.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>The
BVU network's success is particularly significant because <st1:place w:st="on"><st1:City
w:st="on">Bristol</st1:City></st1:place> was in bad financial straits before
it was built, Baller said. “All of its major industries were cratering at
the same time; downtown was boarded up,” he said. “Think what it
means in a town of 18,000 to see 750 to 1000 high-paying jobs move in, paying
twice the local salaries. Think of what that does to a community where each of
those jobs generates income that is buying soccer cleats and haircuts and
building materials and homes, pushing property values up, raising the tax
bases, generating dollars spent in the local economy so someone else has a
dollar.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Jobs,
health care and education; retaining young people; and improving quality of
life are all goals of municipal networks. Burlington Telecom now has about 5000
customers and is looking at full profitability by early 2009, Nulty said, but
it also is able to do things with its video offering that local cable can't. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“For
example, Burlington Telecom's network has capacity for 100,000 cable TV
channels,” Nulty said. “We can and do sell a channel for $65 a
month. If you try to go to Comcast and buy a commercial channel, it costs $6500
a month if you can get it, which you mostly can't. We can provide it at 1% of
their costs for commercial uses. At anything that remotely smells of public
service, we give [the channel] away because it costs us $4 a month, fully
allocated.” <o:p></o:p></span></font></p>
<p><st1:place w:st="on"><st1:City w:st="on"><font size=3 face="Times New Roman"><span
lang=EN style='font-size:12.0pt'>Burlington</span></font></st1:City></st1:place><span
lang=EN>'s thriving arts community wasn't certain what to do with virtually
unlimited cable TV capacity at first, so it took some promotion on the part of
Burlington Telecom, but there are now local plays, concerts, debates, sporting
events and more on view, along with a classified ad business from a local
newspaper. A telemedicine application also is in trial that links shut-ins to
their doctors via video and home sensors. <o:p></o:p></span></p>
<h2><b><font size=5 face="Times New Roman"><span lang=EN style='font-size:18.0pt'>The
Challenges<o:p></o:p></span></font></b></h2>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Everyone
involved with building municipal networks readily agreed that the process of
getting a muni network up and running is not for the faint of heart. There are
still ongoing critics of the process, such as the Heartland Foundation, that
say cities don't have the expertise to run telecom networks cost-effectively.
And virtually every successful muni fiber operator interviewed for this article
admitted some early mistakes. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“This
is not a game; you need to decide whether you are going to do it or not do it
because if you don't fully do it, you will suffer the consequences,” said
BVU's Rosenbalm, whose company now sells its consulting services to other
municipalities. “It is not for everyone.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>The
first major challenge muni broadband networks face is opposition from
incumbents, both in the form of lawsuits and efforts to pass laws at the state
level to limit or even prohibit municipalities from owning, operating or
providing services over their own networks. A local referendum gave <st1:State
w:st="on">Monticello</st1:State>, <st1:place w:st="on"><st1:State w:st="on">Minn.</st1:State></st1:place>,
a 74% approval rating for a city-owned FTTH network, but plans to issue the
revenue-generation bonds to pay for the system are on hold because TDS Telecom
filed a suit claiming the network violates state laws. The Tennessee Cable TV
Association is appealing the dismissal of its lawsuit to halt the Chattanooga
EPB network. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Lawsuits
mean delays, which can be costly, although not all delays translate into lost
capital, as LUS found out in <st1:place w:st="on"><st1:City w:st="on">Lafayette</st1:City></st1:place>.
Still, Huvall believes the hassle is discouraging to some cities that might
otherwise consider building their own networks. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“I
think there would be a lot more municipalities doing this if it weren't for the
fear tactics of going through lawsuits and delays that incumbents throw up
against you,” Huvall said. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>LUS
did lose out on a source of video content. The utility had planned to join the
National Cable Television Cooperative to purchase its content, but the NCTC
declared a moratorium on members during the period when LUS was fighting in
court, and the utility has had to buy its content from individual providers at
a higher cost. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“The
positive side of that is that we now have our own relationship with those
content providers, and we will still be able to meet our commitments, in terms
of the price of our service,” Huvall said. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>Baller
sees a reversal in the legal trend that favors municipalities, citing recent
success in fighting state laws designed to limit what can be done. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“Take
a look at the biggest battle we had within <st1:place w:st="on"><st1:State
w:st="on">North Carolina</st1:State></st1:place> [in 2007],” Baller
said. “The kinds of people who line up in support of municipalities
— Googles, Alcatels, Intels — everyone saying these restrictions
make no sense, they are not good for our communities, the states or our
country.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>According
to Joe Savage, president of the Fiber to the Home Council, there are 14 states
where laws either prohibit or limit muni networks. “Lately there are
three or four states that have tried and failed,” he said. “I think
we'll see some states begin to roll back these restrictions.” <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>A
national Community Broadband Act failed in 2007 at the federal level, but U.S.
Rep. Edward Markey (D-Mass.) introduced similar provisions as part of a 2008
bill that also seeks to unlock cell phones from specific mobile networks. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>As
more cities get more experience and that experience is shared, municipal
networks will become more common in the <st1:country-region w:st="on">U.S.</st1:country-region>,
as they already are in <st1:place w:st="on">Europe</st1:place>, Scott said. <o:p></o:p></span></font></p>
<p><font size=3 face="Times New Roman"><span lang=EN style='font-size:12.0pt'>“I
believe that some of these challenges over the last few years — there are
great lessons to be learned there,” he said. “There will always be
mistakes to be made, but as long as new initiatives learn from these, the
future of municipal broadband looks pretty good.” <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 color=black face=Arial><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
</div>
</body>
</html>