Thursday, March 14, 2024

Like private investor owned providers, revenue bond financed publicly owned fiber networks seek urban and suburban density.

In Colorado, municipally-owned Pulse was able to fund its network through revenue bonds which were backed by the Loveland electric utilities enterprise fund. A revenue bond is a type of municipal bond typically used to fund projects that are expected to generate revenue, like public utilities. Unlike general obligation bonds, which are backed by the taxing power of the issuing government, revenue bonds are supported by the income generated from the project they are financing.

This type of financing is feasible when the d (density) factor is sufficient such that bond underwriters are willing to underwrite knowing the density equates with sufficient revenues to service the debt. A locality like Loveland offers that with a population of 2,219 per square mile according to 2020 U.S. Census data.

As the linked blog post above notes, it’s difficult to meet that underwriting standard in less densely populated exurban areas. That’s where publicly owned fiber to the premise (FTTP) advanced telecommunications infrastructure is most needed since the return on investment isn’t there for investor owned companies.

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