While states and local communities are gearing up for the disbursement of $42.5 billion from the federal BEAD program courtesy of the bipartisan infrastructure law, Bountiful joins a growing list of cities who have figured out a way to build a municipal broadband network without relying on grant funds, providing yet another example how publicly-owned, locally controlled networks can still be built and financed even without federal or state subsidies.
The business model and financing scheme employed in Bountiful, Utah offers states a model to use in their planning for universal service mandated by the National Telecommunications and Information Administration’s (NTIA) Broadband Equity, Access and Deployment (BEAD) program – part of the Infrastructure Investment and Jobs Act (IIJA). States must develop Five-Year Action Plans this year that include “a comprehensive, high-level plan for providing reliable, affordable, high-speed internet service throughout the (state) including the estimated timeline and cost for universal service.” Additionally, the plans must include an estimated timeline and cost for universal service and planned utilization of federal, state, and local funding sources to pay for it.
In Bountiful’s model, the municipality finances and owns the distribution fiber. A separate entity – the Utah Telecommunication Open Infrastructure Agency (UTOPIA) -- was selected by a competitive bidding process to build, operate, and maintain the network. The city leases access to providers to deliver services over the open access network.
The city is issuing a $48 million bond to finance construction costs, with end user fees servicing the bond debt. While the project is municipal in scope, the business model is also employed on a regional basis like UTOPIA in Utah and by California’s Golden State Connect Authority. Regional entities -- similar to the bell operating companies formed in the 1980s offering analog voice and long distance service -- offer enhanced economies of scale beyond that of a single municipality or county. That's an important consideration to reduce costs and produce greater revenue to service bond debt obligations.
As the excerpted article above notes, this model provides a sustainable funding mechanism that does not depend on one off grant subsidies such as the BEAD grants allocated by the NTIA to states in June. Those funds are most likely to be awarded to large incumbent telephone and cable companies to selectively edge out their distribution infrastructure in less densely populated exurban and rural areas lacking wireline advanced telecommunications infrastructure or served by legacy ADSL over copper.
The Bountiful model could also be employed in less densely populated areas with state and federal grant subsidies used opportunistically for qualifying construction. It also comes with the cost advantages of not having to generate profits or pay income taxes unlike investor owned entities, making subsidy funding go farther. It also builds in a source of local funding that states can include in their Five-Year Action Plans.
No comments:
Post a Comment