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July 31, 2006

Boston Proposes Non-Profit Ownership of a City-Wide Network

By Glenn Fleishman

Boston suggests that a new or existing nonprofit get the nod to build and own a metro-scale wireless network: This is an interesting idea, which incorporates elements of many different plans. In Philadelphia, the city created (and controls) a non-profit that technically handles the contract with EarthLink and will fulfill digital divide initiatives. Many other cities are signing authorization contracts with wireless providers, which grant non-exclusive access to city facilities, agree that the municipality will assist in greasing wheels of utility issues, and in many cases agree (Philadelphia) or suggest (Portland, Ore.) that the town will shift data/telecom spending from existing contractors to the new quasi-franchisee. (The Boston Globe filed this story; here’s the AP story.)

(Update: l spoke on Tuesday, Aug. 1, with Michael Oh of NewburyOpen.Net about the Boston report in this podcast.)

Boston’s notion is that by having a non-profit that’s not under the city’s control, that it will allow many different forms of non-anointed Internet service providers to flourish in selling end-user Internet access at retail. A major underlying goal is ensuring “universal, low-cost broadband access with the maximum possible competition.” They would like to see services that cost $35 to $42 per month today cost $15 per month tomorrow without impairing private enterprise, partly by reducing costs to provide such service and expanding the user base. (Update: This story originally assumed that an existing non-profit would be chosen; see the comments from task force member Michael Oh noting that a new, independent non-profit could fit the bill, too.)

The city’s three goals are common with other towns: increasing economic development, digital divide reduction, and improving the city’s efficiency and quality of service. One metro-scale equipment vendor likes to talk about the pothole problem. If city workers can be equipped with the right form of access, a resident could report a pothole, have that automatically pumped into a GIS system, have the right crew that’s already out alerted, and dispatch them to the problem, all in a matter of hours. If you fill the potholes fast, residents think they have good government. It’s a starting point at least.

The report presents the stats that, unlike many cities pushing out similar proposals, Boston has nearly 90-percent penetration of the availability of one or more forms of broadband. however, only fewer than 40 percent of households have broadband service, while 30 percent use dial-up. The city already has some interesting digital divide infrastructure: the Boston Digital Bridge Foundation uses corporate partnerships to lets participants pay a computer and printer for $15 per month payments (no interest, no downpayment). And it offers 25 hours of technology training for parents and children.

Whatever nonprofit is chosen or created to carry out this plan will have to raise the $16m to $20m estimated to build and operate the network. The report suggests a combination of donation, equity, and debt. If the city does agree to shift millions in telecom/data spending to the new network, that coupled with, say, an existing nonprofit’s endowment and a history of performance on foundation grants should make the money flow from banks and donors.

The city would purchase wholesale access at non-preferred terms, which is a different deal than is in place in Philadelphia, Tempe, and some other cities, in which preferred wholesale pricing and some included mobile accounts are part of the financial arrangements for rights of way and other access. The city will provide infrastructure access such as they own or have rights to, which include parts of 9,000 utility poles owned by Verizon and another utility. This report hopes that this effort would be increased from 800 families per year to 5,000.

The city disclaims cross-subsidization to avoid the political football of perceived extra city services used disproportionately being paid by everyone. Of course, that wouldn’t be the case with, say, schools, right? In which school spending has a benefit for the entire city? Naw. But it is a big football.

The nonprofit will not be allowed to offer retail service or customer support, but will be required to run a neutral network. The report emphasizes that national and local ISPs will be granted the same access to operate end-user ISPs. The expectation is that with a 10-percent household uptake—and this doesn’t mention anything about business-grade service and so forth—the service could cost $9 per month for wholesale access to 1.5 Mbps downstream and upstream. That’s a higher upstream rate than in any typical network currently proposed or under construction. Coverage will be required for all outdoor locations, and exterior walls of every building. This is a hard mark, and I expect we’ll see 92 percent or 95 percent tacked on in negotiation.

On the backhaul side, the city has identified that a 50-mile fiber ring comprised of dark fiber could be built out for $2m and connect city buildings in each Boston neighborhood. For user-facing networks, a number of vendors and organizations have also offered to run trials and donate equipment for underserved areas.

The next step is in appointing the city’s CIO and the Mayor’s Technology Advisor to put together a committee to find the nonprofit partner, and pursue the steps that would allow that partner to build the network.

Posted by Glennf at July 31, 2006 10:36 AM

Categories: Metro-Scale Networks, Municipal

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Posted by: Michael Oh at July 31, 2006 2:09 PM

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