Financial distress of PPP toll road projects holds lesson for telecom infrastructure

Are US toll roads in crisis? | Jacques Cook | LinkedIn: In a recent article “On the Road: Navigating the twists and turns of US highway P3s” (Dec. 8, 2014), Michael Dunning describes some of the serious financial difficulties facing some of the most important US P3 toll roads. He notes that the Indiana Toll Road, once described as a trend setter in the US P3 market, has declared bankruptcy; while several major projects in California (SR-125), Texas (SH-130), Virginia (I-495 Hot Lanes, Pocahantas Highway) and Illinois (Chicago Skyway) are also in financial distress and in various stages of bankruptcy and restructuring. These are not encouraging signs for the US P3 market. Dunning notes however that there are important lessons to be learned from these transactions.

While each of these projects was funded at different times and under different legal and institutional frameworks, they share one common characteristic—they were being funded entirely with tolls paid by automobiles and trucks.

The experience here can be applied to other costly infrastructure projects like modernizing and building out fiber optic telecommunications networks. Relying completely on user fees for its financing heightens the risk of insolvency.

Another public regional telecom infrastructure project may be ripe for PPP investment

In Utah, several cities are moving ahead with due diligence on a public-private partnership (PPP) to construct fiber to the premise (FTTP) telecom infrastructure.

Another public FTTP infrastructure project in the eastern United States might also be an attractive partner for private investment companies like Australia-based Macquarie Capital Group, which is looking at investing in Utah's UTOPIA regional network.

This one's in western Massachusetts and is a utility cooperative of 42 municipalities. According to a June 2014 update by the Wired West cooperative, it is hoping to obtain state funding to move forward with construction as people in western Massachusetts continue to be vexed by the lack of adequate internet service.

Given the scope of the Wired West project, it will likely need significantly greater funding from the private sector as part of a PPP like that under consideration in Utah.

Forum discusses broadband possibilities in Alcona - TheAlpenaNews.com | News, Sports, Jobs, Michigan, Community Information - The Alpena News

Forum discusses broadband possibilities in Alcona - TheAlpenaNews.com | News, Sports, Jobs, Michigan, Community Information - The Alpena News

Community forums like this have been going on for at least a decade throughout the United States with little or no change in the status quo. People and community leaders show up and tout the benefits of landline Internet access and demand more of it. Incumbent providers counter they're doing the best they can within the limits of their monthly subscription-based business models that constrain the extent to which they can modernize and build out their networks. And round and round it goes as the locals and community leaders grow increasingly frustrated over the lack of progress.

As I blogged yesterday, Utah may provide a way out of this circular trap. Instead of wholly relying on Internet service provider subscription revenue to fund infrastructure construction and operating costs, nearly a dozen municipalities there are looking into a private-public partnership (PPP) that would entail a per-premise utility fee to help fund them. Communities across the U.S. that are tired of unproductive "broadband" forums should be looking to Utah as a potential path forward.

France undertakes public private partnership to build out fiber telecom infrastructure

France launches 20 bln euro fibre broadband rollout | Reuters: Feb 20

Three tranches of more than 6 billion euros each will fund the planned network rollout, Hollande said. One will come from network operators, one from a mix of operators and local government and the last from state and local-government money.

Local governments' outlay will be funded using tax-free, regulated deposits gathered by state bank Caisse des Depots.

By 2017, the end of President Hollande's first term, 50 percent of the country will be covered under the plan.

This clear implication here is telecom infrastructure build needs cannot be adequately funded purely by an investor-owned telecom market.

Independent New Englanders take control of their telecom infrastructure

Last year, 22 central Vermont towns took charge of their telecom infrastructure by forming a public/private partnership to deploy 1,400 miles of aerial fiber-optic lines to provide high-speed Internet access, phone and video.

True to their fiercely independent reputation, more New Englanders in a neighboring state are doing likewise. Forty seven Western Massachusetts towns plan to form a non-profit to plan and build a fiber optic network to serve a part of the U.S. that has been described as a "broadband ghetto." A key driver is a desire to provide an economic boost to the region.

Here's an excerpt from the Berkshire (Massachusetts) Eagle story:

"This wasn't a hard sell," noted David Greenberg, chairman of the WiredWest steering committee. "It's pretty much a no-brainer -- economic development is the driving force. Without this major initiative, Western Mass is going to be sinking fast."

Once the non-profit has been formed, financing options would have to be identified, and preliminary design and cost estimate work would start.

None of the cost of the project would be borne by the towns, Webb said.

Ongoing maintenance cost and debt service payments would come from money paid to the agency by the service providers, added Andrew Michael Cohill, president of Design Nine, a consultancy hired to help WiredWest through the next phase of development.

"This is a jobs creation and a business attraction project," Cohill said. "And the highest proportion of home-based businesses in the state are in Western Mass."

Palo Alto moves forward with open access fiber

After more starts and stops than a dial-up connection, ultra-high-speed broadband Internet may soon be feasible in Palo Alto.

In a new business plan recently submitted to city staff, a group of companies proposed funding and constructing an open network capable of delivering cutting-edge communications, including voice, data and video services.

The city council will review the plan at a study session on Monday and will direct staff later this month whether to move forward with the project.

The new network would have the capability of delivering Internet to residents at a speed of 100 megabits per second. In contrast, a regular broadband service sends out information at a speed of two-tenths of a megabit per second, said Palo Alto resident Bob Harrington, one of three council-appointed citizens advising on the project.

This is the kind of thing I like to see: solid steps toward actually building broadband infrastructure in a public private partnership instead of useless projects by telco-funded nonprofits to study broadband black holes and aggregate demand, as if the latter activity is going to have any influence whatsoever on telcos' broadband depolyment plans. It doesn't as shown by numerous petition drives directed at telcos and cable companies over the past several years by folks who are still waiting in vain for high speed Internet.

Funding these nonprofits are merely cynical PR efforts by the telcos to paper over their sprawling broadband black holes and give the impression they are "concerned" about the lack of broadband access, costing them very little money relative to the real dollars they would have to invest to bring their infrastructures into the modern digital age.

Maryland county lacks adequate broadband access, report finds

The insufficiency of existing services doesn’t come as news to Ken Decker, chairman of the Carroll Cable Regulatory Commission. Home-based workers in Carroll often need broadband access and can’t get it, he said.

The report recommends the county increase broadband access by exploring partnerships with service providers, conducting a feasibility study of a public broadband network and considering how other infrastructure projects can provide opportunities to add fiber-optic lines.

Local public/private partnerships are America's best hope to close the digital divide

America's best hope for the rapid, widespread deployment of fiber optic based telecommunications systems that can serve up a "triple play" array of services -- broadband Internet access, voice over Internet Protocol (VOIP) and full motion interactive video -- lies with local governmental entities such as counties, municipalities and utility districts working in partnership with private telecommunications providers to form open access networks. It's already happening in places like Utah with The Utah Telecommunication Open Infrastructure Agency (UTOPIA) and in rural Southern Oregon. Smart folks in these places realize they won't likely see fiber deployed in these areas for many more years if they wait on the big telco/cable duopoly, which for business reasons must concentrate on densely populated urban regions. They correctly realize they must take matters into their own hands. As UTOPIA's name suggests, the foundation of the private/public arrangement is the systems open infrastructure as contrasted to the wholly privately owned systems of the telco/cable duopoly. That model allows for creative deal making involving valuable public rights of way and the investments of private sector players.

These kinds of public/private partnerships at the local level must be encouraged and supported. Telcos and cable companies should set aside their need for hegemony over their markets and instead of fighting them, find out how they can help them along. They too can come out winners since these public/private fiber projects put in place proven, state of the art fiber optic technology for them, saving them money while opening up a big pipe for them to reach customers with advanced services they currently cannot offer. They might not have total ownership of the fiber infrastructure that results from these public/private partnerships. But access to fiber sooner rather than much later raises all boats, boats that in too many areas of the U.S. remain stuck in the mud without broadband access.