County's public-private partnership with telco looks more like a pass through federal subsidy and not a PPP

AT&T Takes the Public-Private Broadband Partnership Plunge - Telecompetitor: This AT&T public-private project still needs final funding approval from the County, which will trigger finalization of a contract between the two parties. No terms have been disclosed. Public-private partnerships are growing in momentum, as cities, towns, and localities look to ensure their communities have the adequate broadband infrastructure and are willing to put up funds to accomplish it. Increasingly, incumbent carriers like AT&T are interested in partnering.

But is this truly a public private partnership? Per the story below, it looks more like a pass through federal subsidy for a proprietary closed access network in which the county would have no partnership interest.

EVANSVILLE, Ind. — Unincorporated Vanderburgh County will now be the focus of a nearly $40 million investment into broadband service provided by AT&T. 

AT&T was selected following its response to a Vanderburgh County request for proposal and unanimously approved Tuesday by the Vanderburgh County Commissioners. Four companies responded to the request, a jump from the county’s previous broadband project, which had one response. 

The total investment will be $39.6 million, of which $9.9 million is public money through the American Rescue Plan Act and $29.7 million is investment by AT&T.

New telecom infrastructure financing model struggles to emerge in Utah

A new public-private model to finance the construction and operation of modern fiber to the premise (FTTP) telecommunications infrastructure is struggling to emerge in Utah. Of 11 Utah cities that would be part of a public-private partnership to build out an existing FTTP network serving their region, only half have agreed to participate in the partnership as of this week’s deadline to decide. (See story here)

The sticking point is on the public side of the proposed partnership that entails a $20 monthly utility fee to finance construction and operating costs over a 30-year period. Since the Utah Telecommunications Open Infrastructure Agency (UTOPIA) network is an open access network that will build a fiber telecommunications highway to about 160,000 premises, the utility fee is based on the principle that like paved roads, all properties benefit from its presence directly or indirectly, both in the present and the future.

Those cities that have declined to participate in the UTOPIA partnership should revisit their decision. For four reasons:

1. FTTP telecommunications infrastructure is needed to serve burgeoning demand for Internet connectivity and high capacity performance both now and in the future. Premise Internet service is shifting into a new phase where it is an essential telecommunications service like telephone service was in the 20^th century and not an add-on feature to telephone or cable service in those limited areas where it is offered.
2. Like roads, telecommunications infrastructure is expensive to build and maintain. That prevents the formation of a healthy competitive market since these high costs make it a natural monopoly. The existing private telephone and cable companies thus have no competitive incentive to upgrade and build out FTTP infrastructure. Private investor-owned providers are also highly risk averse when it comes to expansion since they owe a primary duty to their shareholders to generate profits and dividends with customer needs subordinate to that duty.
3. Given high construction and operating costs, neither the private sector nor state and local government can shoulder the burden alone. Both must pool their financial resources into a public-private partnership to generate the large sums of necessary capital.
4. The $240 annual utility fee needed to make the deal pencil out is a modest amount that approximates what many households are already paying every two months for telecommunications services.

U.K.-backed FTTP builder plans first U.S. projects in California

According to the story in the Monterey County Weekly, SiFI Networks will construct fiber to the premise infrastucture in Pacific Grove using a mixed architecture apparently designed to lower deployment costs using aerial lines and existing municipal infrastructure: the sewerage system.

The Monterey County Weekly reports SiFi has London-based backers interested in U.S. projects and has targeted two California cities as the first ones.

Under the public-private partnership with Pacific Grove, the city is providing in kind services in the form of staff time for planning and permitting. SiFI Networks is seeking funding for the estimated $30 million to $40 million capital cost of constructing the network.