broadband infrastructure to enable smart cities: emerging
TRANSCRIPT
Broadband Infrastructure to Enable Smart Cities: Emerging Strategies and Partnership Models
Peter Young
A capstone thesis paper submitted to the Executive Director of the Urban & Regional Planning Program at Georgetown University’s School of Continuing Studies in partial fulfillment of the
requirements for Masters of Professional Studies in Urban & Regional Planning.
Faculty Advisor: Daniel Carol Academic Advisor: Uwe S. Brandes, M. Arch
© Copyright 2017 by Peter Young
All Rights Reserved
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ABSTRACT
As advances in digital technology largely driven by the private sector continue to reshape
society in a rapidly urbanizing world, it has become an economic, social, and environmental
necessity for local municipal authorities to find ways to effectively finance and build the high-
speed broadband infrastructure assets that must serve as the backbone of the 21st century "smart
city." Underlying the promise of the connected digital technologies that form the common vision
of the smart city, are the pragmatic constraints of building and financing the broadband
infrastructure assets needed to support them. This paper analyzes different models for improving
wired and wireless connectivity through a rigorous context-specific review of project criteria and
outcomes across six high-speed broadband projects in communities of varying sizes and
circumstances. Findings include a set of project planning, policy, and finance practices that city
officials can employ to lay the necessary building blocks to enable technological solutions that
help city officials tackle their largest challenges through data collection, real-time monitoring,
better planning, and the more efficient provision of city services. This paper argues that city
officials need to proactively embrace innovative partnership and financing models that suit their
specific context in order to provide requisite connectivity in the digital age.
KEYWORDS
Broadband, Broadband Infrastructure, Smart City, IoT, Public-Private Partnerships, Digital
Infrastructure, Digital Technology, Infrastructure Finance, Economic Development, Fiber-Optic
Broadband, High-Speed Broadband, 5G, Wireless Technology
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RESEARCH QUESTIONS
1. What is the local economic development case for investing in broadband infrastructure,
and what are the quantitative and qualitative benefits of these projects?
2. How do current infrastructure finance and partnership models establish a series of
context-specific practices that can inform how municipalities approach expanding their
broadband infrastructure?
3. When observed through a long-term city planning and management lens, what is the ideal
local model for leveraging broadband infrastructure investments to advance sustainable
urban development?
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TABLE OF CONTENTS ABSTRACT....................................................................................................................................................1
KEYWORDS..................................................................................................................................................1
RESEARCHQUESTIONS................................................................................................................................2
TABLEOFCONTENTS...................................................................................................................................3
LISTOFTABLES............................................................................................................................................4
LISTOFFIGURES..........................................................................................................................................4
TERMINOLOGY.............................................................................................................................................5
INTRODUCTION...........................................................................................................................................7
CHAPTERONE:LITERATUREREVIEW...........................................................................................................9
WhatIsASmartCity?................................................................................................................................10
ThePromiseoftheSmartCity...................................................................................................................12
SmartCityManagementandAccessToData...........................................................................................18
TheCriticalityofBroadbandInfrastructure...............................................................................................21
High-SpeedBroadbandImplementation:Challenges&EmergingModels...............................................30
CHAPTER2:RESEARCHMETHODOLOGY...................................................................................................37
A.Methodology.........................................................................................................................................37
B.ParametersforComparativeAnalysis...................................................................................................38
C.SelectedCaseStudiesforComparativeAnalysis...................................................................................39
CHAPTER3:RESEARCHANALYSISANDFINDINGS.....................................................................................40
ProjectAnalysis:Leverett,MA...................................................................................................................40
ProjectAnalysis:Westminster,MD...........................................................................................................50
ProjectAnalysis:Chattanooga,TN.............................................................................................................61
ProjectAnalysis:LosAngeles,CA..............................................................................................................83
ProjectAnalysis:NewYork,NY..................................................................................................................91
CHAPTERFOUR:PRACTICESYNTHESISANDEMERGINGSTRATEGY........................................................102
CHAPTER5:ARGUMENTS—FUTUREIMPERATIVES.................................................................................116
CHAPTER7:CONCLUSION.......................................................................................................................119
Bibliography.............................................................................................................................................122
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LIST OF TABLES Table 3.1: Leverett, MA (Quick Facts) ......................................................................................... 49Table 3.2: Leverett, MA Analysis Summary ................................................................................ 49 Table 3.3: Westminster, MD (Quick Facts) .................................................................................. 50Table 3.4: Wesminster, MD Analysis Summary .......................................................................... 59Table 3.5: Chattanooga, TN (Quick Facts) ................................................................................... 61Table 3.6: Chattanooga, TN Analysis Summary .......................................................................... 70Table 3.7: Kansas City, MO (Quick Facts) ................................................................................... 72Table 3.8: Kansas City, KS (Quick Facts) .................................................................................... 72Table 3.9: Kanas City, MO/KS Analysis Summary ..................................................................... 81Table 3.10: Los Angeles, CA (Quick Facts) ................................................................................. 83Table 3.11: Los Angeles, CA Analysis Summary ........................................................................ 89Table 3.12: New York, NY (Quick Facts) .................................................................................... 91Table 3.13: New York, NY Analysis Summary ......................................................................... 100
LIST OF FIGURES Figure 1.1: Smart City Overview .................................................................................................. 11Figure 1.2: Areas Without Access to Broadband Speeds (In Blue) .............................................. 23Figure 3.1: Current Progress of Westminster's Fiber Network ..................................................... 52Figure 3.2: Public and Private Partners Behind LinkNYC ........................................................... 92Figure 4.1: Broadband Infrastructure Maturity Model For Smart Cities .................................... 104Figure 4.2: SWOT Analysis-Municipal Broadband Network .................................................... 106Figure 4.3: SWOT Analysis-Private Investment + Public Support ............................................ 107Figure 4.4: SWOT Analysis-Public-Private Partnerships ........................................................... 108
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TERMINOLOGY
5G-The fifth generation of mobile wireless technology, which is expected to be rolled out by the
year 2020. Draft specifications mandate high-speed, low latency connections.
4G/4G LTE-The fourth generation of mobile wireless technology that supports high-speed
connections.
Bandwidth-The rate at which a broadband network is able to transmit information—the greater
the bandwidth the more data can be transferred in a given amount of time.
Broadband and High-Speed Broadband-In this paper, broadband refers to Internet speeds that
support the Federal Communication Commission’s benchmark for broadband: 25Mbps
download/3Mbps upload. High-speed broadband is used in this paper to refer to Internet speeds
that achieve speeds faster than the FCC’s benchmark up towards gigabit speeds.
Coaxial cable or cable broadband-Broadband infrastructure technology that is limited in terms
of the speeds and capacity it can provide for local communities. Where possible, cable is being
replaced by fiber-optic broadband technologies.
Conduit-A tube through which wired broadband cables run to protect them from damage.
DOCSIS 3.1-A technical specification that enables greater speeds over coaxial cable broadband
connections.
Fiber or fiber-optic broadband- A high-bandwidth broadband infrastructure technology that
transmits large amounts of data at high speeds. Fiber broadband is the primary means through
which gigabit speeds are provided to communities.
Fiber-to-the-home (FTTH)- Fiber-optic cable deployments designed to connect homes,
businesses, and government institutions directly to fiber broadband throughout a community.
The term has been used to refer only to residential connections, but is used in this paper to refer
to all connections to building across a community.
Gbps or gigabit(s)-Gigabits per second, a measure of Internet connection speeds. One Gbps is
equal to 1000 Mbps.
High-Capacity Broadband-In this paper, high-capacity broadband is meant to refer to
broadband connections that support high levels of bandwidth—which allows for large amounts
of information to be transferred in a given amount of time.
ISP-Internet service provider.
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Last-mile network-Wired broadband connections installed directly into homes, businesses, and
government institution across the community.
Latency-The amount of time it takes for information transferred over a network to get from
point A to point B. Lower latency connections are ideal for video, teleconferencing, and virtual
reality.
Mbps-Megabits per second, a measure of Internet connection speeds.
Middle-mile network-A segment of wired broadband infrastructure that extends the underlying
infrastructure out from more populated urban areas closer to rural areas so that last-mile
connections can be made more easily.
Open access network-When a broadband infrastructure network is leased at a wholesale level to
competing Internet service providers at the same rates.
Small cell technology-Wireless technology infrastructure that supports mobile wireless
networks by bringing connectivity closer to the end user. Small cells are miniature versions of
traditional macro cell towers and will become increasingly important with the advent of 5G
mobile wireless technology.
Symmetrical speeds-Refers to comparable upload and download speeds offered via an Internet
connection.
Tech-Used in this paper as an abbreviation to refer to technology-related companies or high-tech
companies.
Telecom-Used in this paper as an abbreviation to refer to large telecommunications companies
that offer broadband services.1
1 "Glossary," Community Networks, https://muninetworks.org/glossary#letterm; "Gartner IT Glossary," Gartner, http://www.gartner.com/it-glossary/. Both sources were consulted to help ensure the accuracy of the terminology defined in this section.
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INTRODUCTION
Cities and regions must consider whether they will be able to economically compete and sustainably grow without fully integrating digital technology into their built environments. –Adie
Tomer and Robert Puentes, “Getting Smarter About Smart Cities”2
This paper operates under the premise that the growth of digital technology is an
inevitable trend that will continue to transform our world in much the same way that the
Industrial Revolution and the automobile changed almost every aspect of the way we live. What
is not obvious, however, is exactly how cities in the United States (U.S)—where nearly 90% of
the population is projected to be located in urban areas by 2050–will be able to leverage
advancements in digital technology for the public good in a sustainable, equitable, and
economically viable manner.3 Digital technology as it manifests itself via the Internet of Things
(IoT) and advances in information and communications technology (ICT) has tremendous
potential to improve city life in a rapidly urbanizing world. The concept of the so-called smart
city has received so much attention partially because it is viewed as a solution to many of the 21st
century challenges cities face, which range from resource scarcity and traffic congestion to
pollution and sub-par city services.
With so much buzz around the promise of smart cities, this paper seeks to avoid putting
the cart before the horse by highlighting the importance of the high-speed, high-capacity
broadband infrastructure assets that must form the backbone of any digitally connected city.
Building this new infrastructure need is often expensive, but many cities will struggle to ensure
access to connected systems if they do not take a proactive stance toward implementation.
2 Adie Tomer and Robert Puentes, "Getting Smarter About Smart Cities," Brookings Institution, April 23, 2014, https://www.brookings.edu/research/getting-smarter-about-smart-cities/. 3 United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects: The 2014 Revision, 2014, https://esa.un.org/unpd/wup/Country-Profiles/.
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Throughout the course of this research it has become apparent that there is no one way for
municipalities to move forward. However, analyzing how communities have been able to
improve connectivity provides a sense for how other municipalities should advance based on
their own specific context.
Therefore, this research will provide a series of practices that cities can use to guide their
strategy for planning, building, and financing wired and wireless broadband infrastructure assets.
This emerging strategy has materialized through a rigorous comparative analysis of six high-
speed broadband infrastructure projects assessed across the three-legged stool of technology,
policy, and finance. Findings from this analysis are bolstered and supported through a robust
review of existing literature and additional use cases related to broadband implementation, smart
cities, and emerging digital technologies. There are admittedly inherent limitations to crafting a
definitive argument based on an analysis of such an emerging, complex, and context-specific
field. However, this paper seeks to provide coherent recommendations for urban planners and
city officials to use as a framework for moving forward based on emerging principles and best
practices surfaced throughout the research process.
Achieving the promise of the digitally connected city is no simple task, and most
municipalities across the U.S. are still at the beginning stages of realizing those possibilities, if
they are doing so at all.4 The following research details why the private sector’s historical
leadership in this space necessitates that public officials take on a greater leadership role. It
argues that they need to do so by developing plans and strategies to enable ubiquitous
connectivity, improve public-private collaboration, and ease the burden of broadband
4 Don Deloach, “U.S. lags behind in global smart-cities race: 4 ways we can catch up,” VentureBeat, July 3, 2016, https://venturebeat.com/2016/07/03/u-s-lags-behind-in-global-smart-cities-race-4-ways-we-can-catch-up/.
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implementation. Instead of passively relying on private sector infrastructure upgrades,
communities need to proactively plan for their broadband futures in order to take advantage of
the economic, social, and environmental opportunities that a digitally connected smart city can
provide.
The author’s interest in this topic stems from a profound interest in how rapid advances
in technology are reshaping every facet of daily life from the nature of our economy to the way
we interact with each other and the environment around us. I am equally enthusiastic and
humbled by how quickly Internet-enabled technologies are changing the nature of our society.
My hope is that emerging technological advances can be leveraged for the betterment as opposed
to the detriment of people in communities around the world. It is with a commitment to that
optimistic vision of a smart, connected future, that I have conducted this research to explore how
communities can best gain access to (and leverage) digital technologies in an age where Internet
access has emerged as a vital necessity as important as running water or electricity.
CHAPTER ONE: LITERATURE REVIEW
The digital revolution didn’t kill cities. In fact, cities everywhere are flourishing because new technologies make them even more valuable and effective as face-to-face gathering places.
–Anthony Townsend, Smart Cities
The potential benefits of ubiquitously connected cities are numerous, but the challenges
to realizing that future are many. This chapter details those challenges along with the promise of
the digitally enhanced city. It makes the case for local leadership in the building of the high-
speed, high-capacity broadband infrastructure that will serve as its backbone. It also provides
insight into relevant financing and implementation concerns, and itemizes emerging strategies
for effective broadband implementation including municipally financed networks and public-
private partnerships based on academic research and well-documented use cases.
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What Is A Smart City?
The expeditious growth of digital technology has led to the development of the term
“smart city”—which is generally meant to refer to intelligent, connected technology solutions
that enable cities to provide services more efficiently, consume resources more sustainably, and
connect people more effectively to both their government and the rest of the world. However,
“there is not yet a formal and widely accepted definition of a ‘Smart City.’” 5 Depending on your
interest or proclivity, you are bound to define the concept based on your own idea of what the
future city should look like. Even though the smart city is still just a concept waiting to be fully
realized across a number of different areas ranging from energy conservation to government
efficiency (see Figure 1.1), the general idea is plain to see if you break it down into two simple
truths:
1. The advancement of digital technology is changing our world in a variety of ways.
2. Cities have an enormous opportunity to take advantage of that technology to solve major
21st century challenges and improve urban life.
5 Andrea Zanella et al., "Internet of Things for Smart Cities," IEEE Internet of Things Journal 1, no. 1 (February 2014): 22, http://ieeexplore.ieee.org/document/6740844/.
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Figure 1.1: Smart City Overview
Source: Rolta India Limited
Most experts and practitioners are beginning to understand what digital technology
makes possible, and many of these possibilities are coming to fruition across the world. There
are examples of cities leading the charge—whether it is Los Angeles, CA which has helped the
city save $9 million annually on energy costs by installing a connected LED lighting system, or
New York City’s sensor-and camera-based approach to traffic management, which resulted in a
10% improvement in travel speeds in a section of Midtown Manhattan.6 That being said, “there
6 Teena Maddox, "How LA Is Now Saving $9M a Year with LED Streetlights and Converting Them into EV Charging Stations," TechRepublic, July 7, 2016, http://www.techrepublic.com/article/how-la-is-now-saving-9m-a-year-with-led-streetlights-and-converting-them-into-ev-charging-stations/; New York City, Department of Transportation, "NYC DOT Announces Expansion of Midtown Congestion Management System, Receives National Transportation Award," News release, June 5, 2012, http://www.nyc.gov/html/dot/html/pr2012/pr12_25.shtml.
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is still much work to be done to make smart city development the norm rather than the exception,
and to match the deployments to the hype.”7
The Promise of the Smart City
Before detailing the importance of the broadband infrastructure assets that will support
the smart city, it is important to gain a clear understanding of why it is so important to enable
these digital infrastructure solutions. In short, it is because smart and connected technologies are
designed to tackle some of the most complex challenges cities face. In doing so, they can also
save time and money for city governments, businesses, and residents.
For example, population growth and urbanization trends mean that cities will need to be
increasingly cognizant of numerous issues including resource consumption and the efficient
movement of people. By 2050, the population of the U.S. is projected to grow by 89 million
residents—increasing its population to approximately 401 million people, according to
projections from the United Nations (UN).8 Nearly 90% of the U.S. population is expected to be
located in urban areas by 2050.9
These projections are not just a reflection of the largest cities growing bigger either. In
fact, the UN predicts that the majority of population growth in the U.S. between 2010 and 2030
will occur in smaller cities. The UN estimates that cities with populations between 1 million and
2.5 million people will grow 15% faster than their 2010 proportion of the population, and those
with residents numbering between 500,000 and 1 million will grow 20% more.10 For
7 Tomer and Puentes, "Getting Smarter About Smart Cities." 8 United Nations, World Urbanization Prospects: The 2014 Revision. The UN defines urban areas as areas with over 300,000 people. 9 Ibid. 10 Wendell Cox, "UN Projects 2030 US Urban Area Populations," New Geography, August 7, 2014, http://www.newgeography.com/content/004464-un-projects-2030-us-urban-area-populations.
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municipalities with under 500,000 people, that number is almost 50%.11 This means that
common problems associated with urbanization related to the environment, waste, crime,
congestion, and service provision will need to be dealt with across more urbanized regions than
ever before. Connected technology solutions are one tool in the toolbox that municipalities can
use to handle this future growth in a sustainable manner, while also more effectively managing
the many challenges they face today.
For instance, traffic congestion is a major problem in the U.S. that contributes to
numerous issues including extra time behind the wheel—the average urban commuter wastes
about 42 hours a year stuck in traffic.12 Through smart traffic management and other measures,
cities could save approximately 4.2 billion man-hours annually by 2021, according to estimates
by Juniper Research.13 For example, a pilot project in Pittsburgh used artificial intelligence,
sensors, and cameras at each traffic light to move traffic more efficiently—reducing travel times
by 25% and idling time by 40% in the testing area.14 Idling in traffic also contributes to GHG
emissions, but a smart parking initiative in San Francisco, CA used smart meters and parking
sensors to improve parking availability—GHG emissions in the pilot areas dropped by 30%—
11 Ibid. 12 United States, Executive Office of the President, President’s Council of Advisors on Science and Technology, Report to the President: Technology and the Future of Cities, February 2016, https://www.whitehouse.gov/sites/whitehouse.gov/files/images/Blog/PCAST%20Cities%20Report%20_%20FINAL.pdf. 13 Steffen Sorrell, Worldwide Smart Cities: Energy, Transport & Lighting 2016-2021, Juniper Research, May 17, 2016, https://www.juniperresearch.com/researchstore/key-vertical-markets/smart-cities/energy-transport-lighting. 14 Prachi Patel, "Pittsburgh's AI Traffic Signals Will Make Driving Less Boring," IEEE Spectrum, October 17, 2016, http://spectrum.ieee.org/cars-that-think/robotics/artificial-intelligence/pittsburgh-smart-traffic-signals-will-make-driving-less-boring.
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compared to 6% across the control areas.15 In addition, the movement toward connected
autonomous vehicles could result in further emissions reductions depending on how they are
used. If autonomous vehicles are electrified and are shared widely, it could reduce
transportation’s carbon impact by 80%, according to 2017 report by the University of California,
Davis.16 The hope is that a more connected city—where citizens can hail shared cars via mobile
devices and view mass transit options in real-time—will enable a wider variety of transportation
options that will reduce congestion, lower emissions, and improve city life.17
Another major challenges of this century will be to figure out how to efficiently provide
clean energy for the power generation needs of people—particularly given the realities of climate
change in an increasingly digitized world that will require even more energy to support it.18 The
implementation of smart ICT solutions can help cities make energy systems more efficient and
resilient while providing numerous ways to monitor and control energy consumption to save
money.19 For instance, smart grids “use digital communications technology to collect and
disseminate data about energy usage…that data can then be used to improve energy efficiency,
15 San Francisco, CA, The San Francisco Municipal Transportation Agency, SFpark: Pilot Project Evaluation Summary, June 2014, http://sfpark.org/wp-content/uploads/2014/06/SFpark_Eval_Summary_2014.pdf. 16 Lew Fulton et al., Three Revolutions in Urban Transportation, Institute for Transportation & Development Policy, University of California, Davis, May 3, 2017, https://www.itdp.org/wp-content/uploads/2017/04/UCD-ITDP-3R-Report-FINAL.pdf. 17 United States, Executive Office of the President, President’s Council of Advisors on Science and Technology, Report to the President: Technology and the Future of Cities. 18 Orchestrating Infrastructure for Sustainable Smart Cities, International Electrotechnical Commission, February 26, 2015, http://www.iec.ch/whitepaper/pdf/iecWP-smartcities-LR-en.pdf. 19 Smart Cities Readiness Guide, Smart Cities Council, 2013, http://www.swenergy.org/Data/Sites/1/media/documents/programs/government/SmartCitiesCouncil-ReadinessGuide-11.18.13a.pdf.
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helping consumers use less energy and save money.”20 Smart grid demonstration projects funded
by the U.S. Department of Energy (DOE) via the 2009 American Recovery and Reinvestment
Act (ARRA) illustrated the power of various connected smart metering, transmission, and
distribution technologies by documenting significant cost savings and improved grid reliability
across 32 projects.21 Automated switches at one of those projects in Chattanooga, TN helped its
electric utility save $1.4 million in one storm through a 55% reduction in outage duration.22 An
added bonus, the fiber-optic technologies typically used to connect smart grids can be used to
provide high-speed broadband as well.23
Smart grids are just one solution for saving energy through digital infrastructure
solutions. Most buildings can save 10-to-30 percent on energy just by installing an intelligent
building management system to manage devices such as occupancy sensors, light dimmers, and
smart thermostats.24 Through a public-private partnership with Verizon and Duke Energy,
Charlotte, NC uses smart meters to monitor energy in commercial buildings in the city’s uptown
20 Michael Miller, The Internet of Things: How Smart TVs, Smart Cars, Smart Homes, and Smart Cities Are Changing the World (Indianapolis: Pearson Education, 2015), http://proquestcombo.safaribooksonline.com.proxy.library.georgetown.edu/book/hardware-and-gadgets/9780134021300/about-this-ebook/pref00_html#X2ludGVybmFsX0h0bWxWaWV3P3htbGlkPTk3ODAxMzQwMjEzMDAlMkZjb3B5cmlnaHRfaHRtbCZxdWVyeT0=. 21 United States, Department of Energy, Office of Electricity Delivery & Energy Reliability, The American Recovery and Reinvestment Act Smart Grid Highlights, October 2014, https://energy.gov/sites/prod/files/2014/12/f19/SGIG-SGDP-Highlights-October2014.pdf. The American Recovery and Reinvestment Act was federal stimulus package passed in the wake of the Great Recession to provide a boost to the U.S. economy. The stimulus included over $800 billion in funding for healthcare, education, infrastructure, and other important priorities. 22 Katherine Tweed, "Smart Grid Saves EPB Chattanooga $1.4M in One Storm," Greentech Media, August 1, 2013, https://www.greentechmedia.com/articles/read/distribution-automation-saving-epb-millions. 23 Chattanooga, TN has leveraged its smart grid to offer high-speed broadband. The city’s experience will be detailed later in this paper. 24 Smart Cities Readiness Guide, Smart Cities Council.
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district.25 As of December 2016, the project has reduced power usage by almost 18% and saved
more than $17 million for the buildings in the pilot area.26 In addition, LED street lighting can
generate energy savings of 50%-to-70%, with savings of an additional 10% if the lights are
digitally connected so they can be dimmed or turned off remotely based on certain conditions.27
Connected digital infrastructure can also be applied to water and sewer systems. San
Francisco has rolled out about 178,000 smart water meters across the city that transmit
consumption data hourly to the water utility via a wireless network.28 This real-time water usage
information lets the utility and customers monitor use and detect leaks faster than other
automated systems, and faster than manually read meters. This is useful in a world where water
line breaks cost public water utilities around $2.8 billion annually.29 Some places are
experimenting with installing digital sensors in the pipes themselves to prevent leakage and
monitor performance.30 The city of South Bend, IN uses similar technology—a network of
sensors and smart valves—to determine where water levels are rising in its combined sewer
25 "Economic Development Through Sustainability," Envision Charlotte, http://envisioncharlotte.com/energy-program/. 26 Chuck Brooks and David Logsdon, "Smart Technology Can Get Us to the 21st Century Infrastructure We Need," The Hill, December 15, 2016, http://thehill.com/blogs/pundits-blog/technology/310649-we-need-21st-century-infrastructure-smart-technology-can-get-us. 27 Jerry Fireman, "Cash-Strapped Cities Turn Smart Street Lighting into Profits," Product Lifecycle Report (blog), January 27, 2016, http://www.ptc.com/product-lifecycle-report/cash-strapped-cities-turn-smart-street-lighting-into-profits. 28 Ucilia Wang, “Water Meters Begin to Get Smarter,” The Wall Street Journal, May 5, 2015, https://www.wsj.com/articles/water-meters-begin-to-get-smarter-1430881505 29 Brooks, "Smart Technology Can Get Us to the 21st Century Infrastructure We Need." 30 Jesse Berst, "Patching up the Pipes: How Smart Technologies Help Cities Prevent Leaks and Save Money," WaterWorld Magazine, July 23, 2014. http://www.waterworld.com/articles/print/volume-30/issue-7/editorial-features/patching-up-the-pipes-how-smart-technologies-help-cities-prevent-leaks-and-save-money.html.
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system to divert it elsewhere.31 The cloud based wastewater management system has practically
eliminated dry weather wastewater overflows and reduced wet weather overflows by 23%.32
Numerous cities have installed IoT applications to collect better data and make more
informed decisions. For example, Chicago’s “Array of Things” project is installing nodes with
sensors on traffic light poles to monitor air quality alongside cameras to collect data on foot and
vehicular traffic.33 Barcelona is also monitoring air quality via sensors in its LED streetlights,
which often double as Wi-Fi hot spots.34 Boston, Los Angeles, and Miami have installed benches
that include solar panels with ports to charge mobile devices in addition to sensors that monitor
temperature, air quality, radiation, and traffic.35
There is understandably a lot of excitement around how these connected technologies can
improve the urban environment. Some experts predict that that global smart city market will be
valued at around $1.56 trillion by 2020.36 Smart cities are expected to house 9.7 billion IoT
devices by that same year, and about 1.39 billion of them will be used to help cities deliver on
31 David Morris, “Smart Cities think big with $160 million White House Program,” Fortune, September 16, 2015, http://fortune.com/2015/09/16/smart-cities-160-million-white-house-program/. 32 Geoff Zeiss, “Smart wastewater system enables city to avoid $100 million sewer expansion,” Between the Poles (blog), March 12, 2014, http://geospatial.blogs.com/geospatial/2014/03/smart-wastewater-system-enables-city-to-avoid-100-million-sewer-expansion.html 33 Robert Mitchum, "Chicago Becomes First City to Launch Array of Things," University of Chicago News, August 29, 2016, https://news.uchicago.edu/article/2016/08/29/chicago-becomes-first-city-launch-array-things. 34 Dallon Adams, "These Smart Cities Are Building Infrastructures for the 23rd Century," Digital Trends, January 1, 2017, https://www.digitaltrends.com/home/smartest-cities-in-the-world/. 35 Chris Bousquet, "3 Ways Cities Are Using the Internet of Things to Map Air Quality," FutureStructure, April 20, 2017, http://www.govtech.com/fs/3-Ways-Cities-Are-Using-the-Internet-of-Things-to-Map-Air-Quality.html. 36 Frost & Sullivan, "Frost & Sullivan: Global Smart Cities Market to Reach US$1.56 Trillion by 2020," News release, November 26, 2014, https://ww2.frost.com/news/press-releases/frost-sullivan-global-smart-cities-market-reach-us156-trillion-2020.
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sustainability and climate change goals.37 However, in order for most cities to fully take
advantage of these emerging technologies on a large scale, they must address two major issues:
1. Their ability to extract insight and drive action from the vast amounts of data being
collected across the urban environment.
2. Their ability to build the robust broadband infrastructure assets that form the backbone of
this massive connected ecosystem while also providing connectivity to residents and
businesses.
Before moving onto the latter issue in more detail, the former will be addressed briefly so that
this paper’s future recommendations and arguments are framed within the proper context.
Smart City Management and Access To Data
The increased use of digital sensors to monitor the urban environment creates reams of
data waiting to be analyzed. However, “as…[data] comes to inform more and more policy
decisions, city leaders will have to become more sophisticated in how they evaluate data, whose
indications are far more subtle than even the simple statistics they have relied on for many
years,” writes Anthony Townsend in his book Smart Cities.38 It is true that embedding
technology into the urban environment via smart phone apps and digital censors isn’t
automatically going to solve all of a city’s problems. Access to treasure troves of data doesn’t
mean that decision makers will be able to make good use of vast data sets.
37 Natalie Gagliordi, "Smart Cities Will House 9.7 Billion IoT Devices by 2020: Gartner," ZDNet, March 18, 2015, http://www.zdnet.com/article/smart-cities-will-house-9-7-billion-iot-devices-by-2020-gartner/; Gartner, "Gartner Predicts That by 2020, Half of Smart City Objectives Will Include Climate Change, Resilience and Sustainability KPIs," News release, November 8, 2016, http://www.gartner.com/newsroom/id/3507317. 38 Anthony Townsend, Smart Cities: Big Data, Civic Hackers, And The Quest For A New Utopia (New York: W.W. Norton & Company, 2014), 211-212.
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This isn’t to say that there aren’t tangible benefits of digital technology embedded in
smart grids or in smart sewer systems. However, it is still difficult to grasp exactly how
monitoring the more intricate details of city life will lead to insightful information that drives
more effective city management. Greater access to data will likely prove useful, but determining
what to track and analyze will likely be an iterative process that requires significant trial and
error. Even in places where robust monitoring systems are in place like Songdo, South Korea and
Rio de Janeiro, there are still questions about what exactly to do with all the data.39 After all,
many government agencies lack the ability to handle the information they have, and it is unclear
how well-equipped local governments are to manage real-time data.40
The fact of the matter is that outdated city governance structures will need to adapt as
technology changes the world around us. In their book, The Responsive City, Susan Crawford
and Stephen Goldsmith argue that the rule-bound approach of 20th century urban governments is
now an “obstacle to effective action” in a world where new technologies allow data to flow more
freely and at a more rapid pace than was ever possible before.41 That is not to say there isn’t
hope, however. Cities like Boston, Kansas City, New York and L.A. are making significant
investment in analytic capabilities to collect, analyze, and leverage the data being generated
across their cities.42 Goldsmith and Crawford not only lay out how technology can be used to
39 Townsend, Smart Cities. 40 Scott Canon, "Big Data Meets Big Government: Big Promise, Big Challenges," The Kansas City Star, September 1, 2016, http://www.kansascity.com/news/politics-government/article99171002.html. 41 Stephen Goldsmith and Susan Crawford, The Responsive City: Engaging Communities Through Data-Smart Governance (San Francisco: Jossey-Bass, 2014), 3. 42 Stephen Goldsmith, "Incentivizing Excellence in Boston Through Results-Driven Contracting," Data-Smart City Solutions, April 25, 2017, http://datasmart.ash.harvard.edu/news/article/incentivizing-excellence-in-boston-through-results-driven-contracting-1028; Nicholas Fearn, "Kansas City Becomes Officially ‘smart’ with IoT, AI and Big Data," Internet of Business, February 8, 2017, https://internetofbusiness.com/kansas-
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streamline archetypal bureaucratic processes, but they also convincingly show how smart city
technology and access to information can be used to catalyze economic, social, and
environmental strategies in the cities of the 21st century.43 However, fundamental governance
issues cannot be ignored, and everything from city planning to procurement will need to become
more flexible and agile in a world driven by instantaneous access to data that begs to be used to
drive action and results.
In terms of the enabling technologies themselves, Anthony Townsend argues that local
governments must strike a balance between cure-all off-the-shelf solutions advertised by large
corporations, and bottom-up innovations unique to individual spaces created by civic hackers,
programmers, and local firms.44 In essence, while technology offers promise, cities need to be
wary of technology solutions described as a panacea. The rush to build smart cities shouldn’t
come at the expense the individual needs of a particular city or region. While the scalability of
large corporate systems can prove useful, cities must also be open to technologies that have been
surfaced from “grassroots smart-city technologies—mobile apps, community wireless networks,
and open-source [platforms]” more in-tune with the needs of the citizenry.45 What’s more, city
support for local start-ups and entrepreneurs will only serve to improve the city’s economic
prospects. City leaders shouldn’t let the rush to build smart cities turn into a one-size-fits-all
mandate where the puzzle pieces fit for some cities, but don’t for others. The frantic rush
smart-city-iot-ai/; Viktor Schönberger and Kenneth Cukier, "Big Data in the Big Apple," Slate, March 6, 2013, http://www.slate.com/articles/technology/future_tense/2013/03/big_data_excerpt_how_mike_flowers_revolutionized_new_york_s_building_inspections.html; John Kamensky, "Why Big Data Is a Big Deal for Cities," Governing, January 19, 2017, http://www.governing.com/blogs/bfc/col-cities-big-data-better-decisions.html. 43 Goldsmith, The Responsive City. 44 Townsend, Smart Cities. 45 Ibid, 153.
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shouldn’t prevent cities from doing the work required to build flexible and varied smart city
implementation models that make sense for a given community.
Promises of new technology have advocates hoping for streamlined bureaucracy, better
data, better planning, improved efficiency, cost savings, and more interactive local
government—but fiscal austerity combined with inefficient relationships with private sector
providers makes change slow and clunky.46 These solutions are within our grasp, and many
already exist; the next step is to implement them on a large scale with these principles and
challenges in mind. The reality is that “the development of smart city technology is often driven
by the convergence of broadband deployment, low-cost connected sensors, and emerging
machine intelligence to analyze and interpret the collected data.”47 In addition to creating
mechanisms for analyzing data, recognizing this convergence will necessitate that cities build a
strong broadband infrastructure backbone to support connected technology solutions in a way
that fits each municipality’s specific needs and objectives.
The Criticality of Broadband Infrastructure
In the quest to implement the various connected solutions that will make up the smart
city, “the first step for any policymaker is to foster the development of a rich environment of
broadband networks that support digital applications, ensuring that these networks are available
throughout the city and to all citizens.”48 This imperative is critical because cities not only need
to focus on building infrastructure to support connected technologies, but also need to ensure that
all residents and businesses have access to high-speed broadband. If not, cities and their residents 46 Goldsmith, The Responsive City; see also Townsend, Smart Cities. 47 United States, Department of Commerce, International Trade Administration, Smart Cities, Regions & Communities: Export Opportunities, Summer 2016, http://www.trade.gov/markets/smartcities.pdf. 48 Five ICT Essentials for Smart Cities, Escher Group, 2015, https://www.eschergroup.com/files/8914/4491/8222/Smart_City_Planning.pdf.
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will be left behind as the world becomes increasingly reliant on the digital realm for everything
from education to inventory management.
Relative to its global economic standing, the U.S. as a whole lags behind in terms of
average Internet connection speeds, ranking 14th globally, according to Akamai’s Q4 2016 State
of the Internet Report.49 In fact, 10% of the U.S. population representing 34 million people does
not have access to fixed broadband speeds, according to the U.S. Federal Communications
Commission’s (FCC) 2016 Broadband Progress Report.50 Of those that have access, more than
half (51%) of Americans must rely on only one provider for broadband, regardless of whether or
not they are satisfied with their service.51 The FCC’s benchmark for broadband speeds is
25Mbps for downloads and 3Mbps for uploads.52 While some onlookers have claimed that the
FCC’s benchmark is too aggressive, the FCC contends that these “commenters…ignore the
realities of today’s broadband marketplace.”53 In fact, the FCC states that the U.S. “has seen a
rapid expansion in service offerings far exceeding the 25Mbps/3Mbps threshold…[and]
consumers have increasingly flocked to these higher-speed services.”54 This expansion has been
concentrated in large urban areas, however (see figure 1.2).
49 Akamai’s State of the Internet: Q4 2016 Report, Akamai Technologies, March 8, 2017, https://www.akamai.com/us/en/multimedia/documents/state-of-the-internet/q4-2016-state-of-the-internet-connectivity-report.pdf. 50 United States, Federal Communications Commission, 2016 Broadband Progress Report, January 29, 2016, https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-6A1.pdf. 51 Ibid. 52 United States, Federal Communications Commission, 2016 Broadband Progress Report. 53 Ibid, 24. 54 Ibid, 24.
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Figure 1.2: Area Without Acccess to Broadand Speeds (In Blue)
Source: U.S. Federal Communications Commission, 2016
In fact, many believe that the FCC’s threshold isn’t forward-looking enough. While
FCC’s definition of broadband may suffice today, much faster networks will be needed to
support the capacity needs of the future. Reflecting on his experience at a consumer electronics
show in 2013, former FCC commissioner Julius Genachowski wrote the following in a guest
post for Forbes:
“All the Internet-connected, data hungry gadgets that are coming to market sent a strikingly clear message: we’re going to need faster broadband networks. Making sure the U.S. has super-fast, high-capacity, ubiquitous broadband networks delivering speeds measured in gigabits, not megabits isn’t just a matter of consumer convenience…It’s essential to economic growth, job creation and U.S. competitiveness.”55
Genachowski goes on to praise the success of some of the first U.S. communities to adopt
gigabit speeds, which include Chattanooga, TN, Kanas City, MO/KS, and Lafayette, LA.56 He
55 Eric Savitz, "Faster, Sooner: Why The U.S. Needs 'Gigabit Communities'," Forbes, January 18, 2013, https://www.forbes.com/sites/ciocentral/2013/01/18/faster-sooner-why-the-u-s-needs-gigabit-communities/#3881cc7a2988. 56 Ibid.
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claims that more “gigabit test beds” are needed and that a “critical mass of gigabit communities
will spur innovation and investment.”57 Genachowski challenges large telecom providers that
call gigabit speeds unnecessary; “greater network speeds will certainly lead to unexpected new
inventions,” he claims.58 “We need U.S. innovators to develop tomorrow’s technologies here,”
he says—citing the promise of being able to use gigabit networks to develop innovations in
medicine, distance learning, and big data analytics.59
Even large telecoms that originally resisted calls to upgrade their networks are beginning
to get the message. Today, Verizon now offers 940Mbps download speeds in select cities,
Comcast is in the process of offering gigabit connection in 15 cities, AT&T plans to expand its
gigabit services, and Time Warner Cable is upgrading its top speed from 50Mbps to 300Mbps.60
In large part, it is because of Google Fiber’s entry into the marketplace. When the company
began offering fiber-enabled gigabit services in 2010, it began to put pressure on telecoms to
upgrade their networks in a much more powerful way than any FCC bureaucrat’s musings about
American competitiveness could.61 “The day after Google made their announcement…I got
phone calls from both Time Warner people and AT&T saying they were going to do the same
57 Ibid. 58 Ibid. 59 Ibid. 60 Chaim Gartenberg, "Verizon Fios Now Offers Near-gigabit Internet Speeds for $70 per Month," The Verge, April 24, 2017, https://www.theverge.com/2017/4/24/15406146/verizon-fios-gigabit-connection-almost-gigabit-speeds-internet; Jon Brodkin, "Comcast’s Gigabit Cable Will Be in 15 Cities by Early 2017," Ars Technica, November 2, 2016, https://arstechnica.com/information-technology/2016/11/comcasts-gigabit-cable-will-be-in-15-cities-by-early-2017/; Timothy B. Lee, "Google Is Forcing Big Broadband Providers to Boost Speeds," Vox, April 4, 2015, https://www.vox.com/2015/4/4/8341199/google-comcast-broadband-race. 61 Ibid.
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thing,” Mayor Lee Leffingwell of Austin, TX told Ars Technica.62 Indeed, Google Fiber success
stories coming out of Kansas City, Austin, TX, and Provo, UT helped change the mindset around
what gigabit speed broadband could enable on city streets, in living rooms, or at a tech startup.
To achieve improved speeds, most large incumbent telecoms are upgrading their
networks by laying new high-capacity fiber-optic cables and/or making improvements to their
existing coaxial cables through a new standard called DOCSIS 3.1.63 Without diving too much
into the details, it is important to understand that former is a much more sustainable and effective
way to upgrade broadband infrastructure than the latter. Fiber-optic cables are the ideal
technology to support high-speed, high-capacity broadband networks in our cities for two
primary reasons. First, fiber has lower latency than any other kind of broadband connection—
which will enable new innovations in video communication, virtual reality, and augmented
reality.64 Second fiber is more future-proof than any other technology on the market including
satellites and updated cable.65 Fiber has virtually unlimited capacity and the infrastructure itself
lasts a long time with limited maintenance costs.66 While many telecoms and cities are striving to
offer one gigabit speeds today, connectivity requirements will likely demand 10 gigabits by
62 Jon Brodkin, "Fed Up, US Cities Take Steps to Build Better Broadband," Ars Technica, October 27, 2014, https://arstechnica.com/business/2014/10/fed-up-us-cities-try-to-build-better-broadband/2/. 63 Adam Clark Estes, "Comcast's New Gigabit Service Isn't the Internet of the Future You've Been Waiting For," Gizmodo, February 22, 2017, http://gizmodo.com/comcasts-new-gigabit-service-isnt-the-internet-of-the-f-1792627554. 64 Jason Hiner, "Fiber Broadband: Is It a Waste with 5G and Elon Musk's Satellites on the Horizon?," ZDNet, February 5, 2017, http://www.zdnet.com/article/fiber-broadband-is-it-a-waste-with-5g-and-elon-musks-satellites-on-the-horizon/. 65 Ibid. 66 Tom Collins, “8 Advantages of Fiber-Optic Internet vs. Copper Cable,” Atlantech Online (blog), December 28, 2015, https://www.atlantech.net/blog/8-advantages-of-fiber-optic-internet-over-copper-cable.
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2025-2030—“fiber will find it much easier to scale up to meet that demand than these other
types of connectors will.”67
Unfortunately, many network upgrades advertised by large incumbent telecoms tend to
rely on DOCSIS 3.1 to provide faster speeds over old copper wires.68 In order to reach gigabit
speeds, consumers need to purchase a special router, and because connections are made over
aging infrastructure—it isn’t guaranteed that the speeds will even reach those that are
advertised.69 “It feels like a ploy for ISPs to squeeze every last bit of business from soon-to-be
obsolete networks,” writes one Gizmodo reporter. It is understandable that profit-driven
companies in a free market economy would make such a choice as opposed to the much more
expensive proposition of laying down fiber. This also isn’t to say that the network upgrades
aren’t a welcome development in the broadband space. However, over the long-term, fiber will
be a necessary backbone for any city that wants to leverage ubiquitously connected IoT devices
and additional advances in ICT.70 Therefore, municipalities should focus on facilitating a
transition toward fiber-optic broadband infrastructure, and shouldn’t rely solely on short-term
fixes like those exemplified by DOCIS 3.1.
In addition to laying wired fiber-optic cables, broadband infrastructure planning for the
smart city must also consider the facilitation of high-speed wireless networks.71 Both wired and
wireless broadband will increasingly support each other, as you cannot realistically run fiber
67 Hiner, "Fiber Broadband: Is It a Waste with 5G and Elon Musk's Satellites on the Horizon?" 68 Adam Clark Estes, "Comcast's New Gigabit Service Isn't the Internet of the Future You've Been Waiting For." 69 Ibid. 70 Colin Neagle, "CES 2016: Why the IoT Needs Fiber-optic Broadband to Succeed," Network World, January 5, 2016, http://www.networkworld.com/article/3019428/internet-of-things/ces-2016-internet-of-things-iot-smart-home-fiber.html. 71 Five ICT Essentials for Smart Cities, Escher Group.
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cabling to all of the sensor and monitoring devices across a connected city.72 Therefore, fiber
serves the dual purpose of connecting homes, businesses, and government buildings directly,
while also serving as a backhaul network for wirelessly connected devices.73 The U.S.
Networking and Information Technology Research and Development Program get its right when
stating how important it is to explore “new wireless devices, communication techniques,
networks, systems, and services to enhance high-speed, software-defined connectivity and
leverage the emerging Internet of Things (IoT).”74
Another reason to ensure that a robust fiber broadband backbone exists is the movement
toward the fifth generation (5G) of mobile wireless technology. What is 5G? In short, “it is
expected to connect billions of machines—kitchen appliances, medical devices and automobiles,
to name a few—to one another and the Web, creating the much-hyped Internet of Things.”75 If
the promise of 5G were applied to smart city solutions like traffic management and electrical
grids, it estimated that it could produce an estimated $160 billion in benefits and savings for
local communities.76 However, 5G should be viewed as supplement to, rather than a replacement
for, a wired fiber-optic backbone. For instance, to handle the rapid growth in data traffic,
72 Max Burkhalter, "3 Essential Network Considerations for Smart Cities," Perle (blog), March 21, 2016, https://www.perle.com/articles/3-essential-network-considerations-for-smart-cities-40117618.shtml. 73 Ibid. 74 United States, Executive Office of the President, Office of Science and Technology Policy, National Science and Technology Council, Networking and Information Technology Research and Development Subcommittee, Smart Cities and Communities Federal Strategic Plan: Exploring Innovation Together, January 2017, https://www.nitrd.gov/drafts/SCC_StrategicPlan_Draft.pdf. 75 Elena Malykhina, "Who Cares about 5G Wireless? —You Will," Scientific American, September 22, 2016, https://www.scientificamerican.com/article/who-cares-about-5g-wireless-you-will/. 76 Smart Cites: How 5G Can Help Municipalities Become Vibrant Smart Cities, Accenture, January 12, 2017, https://www.accenture.com/t20170222T202102__w__/us-en/_acnmedia/PDF-43/Accenture-5G-Municipalities-Become-Smart-Cities.pdf.
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“networks need to be ready for a 1,000-fold increase in data volumes across the first half of the
2020’s,” according to estimates cited in The Economist.77 Therefore, the “full realization of
economic growth and cost savings from leveraging Smart City solutions built on 5G
infrastructure will…depend on how robustly 5G networks are deployed locally.”78
There are two key, interrelated components of this deployment locally that all planners
and city officials should be aware of when devising broadband infrastructure plans. First, fiber is
a key enabler of 5G because it will need to serve as its backhaul network in much the same way
it does for existing wireless technologies.79 The demand for fiber is expected to rise because of
the speeds required to support 5G’s specifications.80 Draft specifications dictate that a single 5G
mobile device must be capable of 20Gbps download capacity and 10Gbps upload capacity with a
maximum latency of 4 milliseconds.81
Second, 5G networks will need to be supported by small cell sites that are integrated
throughout the built environment as a supplement to macrocell towers that have traditionally
supported the majority of existing mobile traffic.82 Small cells are essentially mini-cell towers
deployed closer to end users to help ensure continuous connectivity.83 In short, more highly
77 "Wireless: The next Generation," The Economist, February 20, 2016, http://www.economist.com/news/business/21693197-new-wave-mobile-technology-its-way-and-will-bring-drastic-change-wireless-next. 78 Smart Cites: How 5G Can Help Municipalities Become Vibrant Smart Cities, Accenture,1. 79 Brian Larson, "Reader Forum: Building Blocks for 5G – What Is Fiber’s Role?" RCR Wireless News, August 22, 2016, http://www.rcrwireless.com/20160822/opinion/reader-forum-building-blocks-5g-fibers-role-tag10. 80 Ibid. 81 Sebastian Anthony, "5G Specs Announced: 20Gbps Download, 1ms Latency, 1M Devices per Square Km," Ars Technica, February 24, 2017, https://arstechnica.com/information-technology/2017/02/5g-imt-2020-specs/. 82 Brian Lavallée, "5G Wireless Needs Fiber, and Lots of It," Ciena Corporation (blog), May 31, 2016, http://www.ciena.com/insights/articles/5G-wireless-needs-fiber-and-lots-of-it_prx.html. 83 Pankaj Gandhi, “What Exactly Is A Small Cell?,” Commscope, June 2, 2014, http://www.commscope.com/Blog/What-Exactly-Is-a-Small-Cell/.
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concentrated wireless networks supported by small cells closer to mobile users and connected
devices will be necessary to make the high-performance promises of 5G a reality. What’s more,
these small cell deployments will need fiber “to provide backhaul from these sites.”84 Wireless
densification efforts through the deployment of small cells will require collaboration between
municipalities and private actors to handle access to public rights- of-way and manage issues
related to permitting and fee structure.85 To support 5G, there is estimated to be a need for 10
times as many small cells installed across the built environment than there are today.86 “That’s
hundreds of thousands, maybe even millions of new antennas. That’s hundreds of thousands, if
not millions of siting decisions,” former FCC Chairman Thomas Wheeler quipped during his
keynote address at a Las Vegas conference in 2016.87
The emergence of these new technologies coupled with increased network capacity
requirements mean that building the broadband infrastructure to support smart cities is necessary,
complicated, and multi-dimensional. Not only will it require high-speed connections to homes
and business, but also will necessitate the creation of Wi-Fi networks and small cell installations
supported by a high capacity wired backbone. There is no single technological answer in that a
hybrid approach to deploying various wired and wireless solutions based on the needs of a
particular location will be required. Luckily, all of these technologies can help support one
another—and no single municipality will be responsible for enabling all of them on its own.
However, cities able to proactively to ensure these broadband infrastructure assets are in place
84 Larson, "Reader Forum: Building Blocks for 5G – What Is Fiber’s Role?" 85 Smart Cites: How 5G Can Help Municipalities Become Vibrant Smart Cities, Accenture. Many communities currently charge the same fees for small cell and macrocell permits without regard to larger number of small cell sites that will need to be deployed to support 5G. 86 Tom Wheeler, "Remarks of FCC Chairman Tom Wheeler," Speech, CTIA Super Mobility Show 2016, Las Vegas, September 7, 2016, https://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db0907/DOC-341138A1.pdf. 87 Wheeler, "Remarks of FCC Chairman Tom Wheeler."
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will be most likely to take advantage of the long-term cost savings, environmental benefits,
efficiencies, and access to data that a connected smart city will provide.
High-Speed Broadband Implementation: Challenges & Emerging Models So far, this investigation has explored the many benefits that can accrue from
implementing digital technology across the built environment along with the importance
connectivity and capacity requirements for enabling them. Now, this paper turns to focus on how
to actually finance and build broadband infrastructure. Even for city leaders and planners that
fully grasp how important robust wired and wireless networks are to the future of the smart city,
it is not always clear what they should do with that information.
Broadband infrastructure deployments face three major challenges. First and foremost, it
is expensive to build fiber—the upfront costs are “hundreds of millions for a local network.”88
Second, complications related to permitting fees and access to public rights of way can serve as
disincentive for market actors and/or delay deployment.89 This impediment will become
increasingly problematic for 5G deployments that require small cell installations throughout the
urban environment.
Third, there is no political consensus around whether or not (or how much) the public
sector should be involved in broadband financing, construction, and service provision. About 19
states laws are intended to prevent municipally financed broadband networks either by
88 Meghan Neal, "Why It’s So Hard to Bring Gigabit Internet to the US," Motherboard, April 7, 2014, https://motherboard.vice.com/en_us/article/why-its-so-hard-to-bring-gigabit-internet-to-the-us. 89 Holly Trogdon, "Lessons from Google Fiber: Why Coordinated Cost Reductions to Infrastructure Access Are Necessary to Achieve Universal Broadband Deployment," Federal Communications Law Journal 66, no. 1 (December 2013): 103-38, http://search.proquest.com.proxy.library.georgetown.edu/docview/1496059440?pq-origsite=summon&accountid=11091.
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prohibiting them entirely or erecting significant barriers to discourage investment.90 However, in
many communities, municipal broadband infrastructure may be the only option they have
because they do not possess the requisite market demand. As a whole, state and local
governments face numerous fiscal challenges, which make it difficult to invest in any kind of
infrastructure—let alone the broadband connectivity backbone needed to support smart digital
technology.
Fiscal conditions at the state and local level are “cautious and uncertain,” according to a
January 2017 analysis performed by Moody’s Analytics.91 “In periods of elevated uncertainty,
responsible policymakers are loath to add new recurring spending items when they are not
confident that future revenues will be there” the Moody’s report concludes.92 It is challenging for
many municipalities to find the money to support smart city initiatives in general. In fact, only
16% of cities say they could self-fund a smart city initiative, according to a 2017 report released
by Black & Veatch.93 Budget constraints, coupled with a lack of certainty around ROI, are
hindering smart city efforts in spite of excitement about the potential promises of such
90 Christopher Mitchell, "Community Network Map," Community Networks, May 2017, https://muninetworks.org/communitymap; Jon Brodkin, “States win the right to limit municipal broadband, beating FCC in court,” Ars Technica, August 10, 2016, https://arstechnica.com/tech-policy/2016/08/in-blow-to-muni-broadband-fcc-loses-bid-to-overturn-state-laws/; Jason Koebler, "The 21 Laws States Use to Crush Broadband Competition," Motherboard, January 14, 2015, https://motherboard.vice.com/en_us/article/the-21-laws-states-use-to-crush-broadband-competition. This number varies depending on who is counting because there is a certain level of subjectivity associated with performing this analysis. 91 Dan White,” An Uncertain New Year for States and Local Governments,” Moody’s Analytics, January 2017, 1. 92 Ibid 93 2017 Strategic Directions: Smart City/Smart Utility Report, Black & Veatch, January 2017, https://www.bv.com/docs/reports-studies/sdr-smart-city-smart-utility.pdf?mkt_tok=3RkMMJWWfF9wsRoluarIZKXonjHpfsX96%252BokWaKg38431UFwdcjKPmjr1YAAT8F0aPyQAgobGp5I5FEBS7bYVbp2t6MMWg%253D%253D.
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investments.94 However, there is an economic case to be made for investing in the broadband
infrastructure that will make future smart city initiatives easier and less costly to deploy—every
10% increase in broadband penetration increases GDP by 0.24%-1.5%, according to the World
Bank.95
The federal government has lent a helping hand in the past. In the wake of the Great
Recession, the 2009 American Recovering and Reinvestment Act (ARRA) set aside billions of
dollars to fund infrastructure projects across the country.96 The passing of this legislation gave
birth to the Broadband Technology Opportunities Program (BTOP), which was given $4.7
billion to improve broadband access in unserved or underserved communities.97 While the
implementation wasn’t perfect during a time of economic stress after the financial crisis, the
ARRA’s broadband program did help to bring increased broadband coverage across the
country.98 Of particular long-term potential have been the various middle-mile fiber projects that
were completed as a result of BTOP grant funding.99 The existence of the middle-mile backbone,
which brings high-speed fiber closer to cities and towns, has prompted municipalities across the
country to develop innovative ways to bring last-mile fiber to homes and businesses where it
94 Adam Stone, "Funding Is Key Hangup in Deploying Smart City Projects," FutureStructure, February 15, 2017, http://www.govtech.com/fs/Funding-is-Key-Hangup-in-Deploying-Smart-City-Projects.html. 95 Michael Minges, “Exploring the Relationship Between Broadband and Economic Growth,” The World Bank, January 2015, http://pubdocs.worldbank.org/en/391452529895999/WDR16-BP-Exploring-the-Relationship-between-Broadband-and-Economic-Growth-Minges.pdf 96 "Overview of the American Recovery and Reinvestment Act of 2009 (Recovery Act)," National Telecommunications and Information Administration, https://www.ntia.doc.gov/legacy/recovery/index.html. 97 Ibid. 98 Robert LaRose et al., "Public Broadband Investment Priorities in the United States: An Analysis of the Broadband Technology Opportunities Program," Government Information Quarterly 31, no. 1 (January 2014): 53-64, http://www.sciencedirect.com.proxy.library.georgetown.edu/science/article/pii/S0740624X13000439. 99 Ibid.
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may not have been economically feasible beforehand. Some local areas have taken advantage of
this network to build their own municipal broadband systems, while others have turned to public-
private partnerships to make that vision a reality with the right private sector partner(s). Public-
private partnerships (often referred to as P3 or PPPs) present another option for communities that
want to take a proactive stake in broadband infrastructure deployment without taking on all the
project’s risks.
Indeed, more proactive models for deploying wired and wireless broadband infrastructure
are challenging a historical approach that primarily “left broadband infrastructure build-out,
ownership, and management to the telecommunications industry.”100 The reality is, “ever since
browsing the Web required more than a modem and a dial-up connection, vast swaths of the
United States have struggled to get the state-of-the-art infrastructure they need to keep up with
new technology.”101 In general, larger cities command enough market demand to incent private
sector infrastructure upgrades, but many smaller cities and town have been left behind.102
As a result, more than 400 cities and towns (mostly with their own electric utilities) have
built their own broadband networks.103 Public networks have had varying degrees of successes
and failures across the country, and many have run into legal roadblocks via telecom-pushed
state legislation to stifle competition from the public sector. The existence of this dichotomy has
led many to believe that broadband is either “a private-sector service or a publicly-owned and
100 Greta Byrum, Building Broadband Commons, Open Technology Institute, March 15, 2014, 3, https://na-production.s3.amazonaws.com/documents/building-broadband-commons.pdf. 101 Daniel Vock, "New P3s May Finally Bridge the Digital Divide," Government Technology, May 3, 2017, http://www.govtech.com/network/New-P3s-May-Finally-Bridge-the-Digital-Divide-.html. 102 Ibid, Larger cities still have problems, but the scale is much less than in smaller municipalities. 103 Ibid.
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operated utility.”104 However, broadband infrastructure deployments don’t have to fit neatly into
one of those buckets. Public-private partnership models for delivering broadband infrastructure
are increasingly touted as a means through which cities can deploy broadband by leveraging the
expertise of the private sector through innovative agreements that use performance-based
language and mutual assurances to help ensure that the community achieves its goals.
At a high-level, public-private partnerships are a means through which public officials
can “bring private sector capital and management expertise” to the challenges associated with
building and maintaining infrastructure assets.105 They have been used to attract private capital to
infrastructure investments, especially given fiscal shortfalls for infrastructure at the federal, state,
and local level.106 In a public-private partnership, the government contracts with a private sector
entity to “design, finance, construct, operate, and maintain (or any subset of those roles) an
infrastructure asset on behalf of the public sector.”107
The method relies on properly allocating risk across these phases of the project lifecycle
among public and private sector actors. The trick to making these deals work is to share risks in a
way that aligns incentives for maximum value. Risk should be allocated to the entity or entities
best able to manage it—“when a PPP transfers risks to the private sector that it can manage more
cost effectively, it creates value for taxpayers by lowering long-term projects costs, improving
104 Byrum, Building Broadband Commons. 105 United States, Department of Treasury, Office of Economic Policy, Expanding the Market for Infrastructure Public-Private Partnerships: Alternative Risk and Profit Sharing Approaches to Align Sponsor and Investor Interests, April 2015, https://www.treasury.gov/resource-center/economic-policy/Documents/2_Treasury%20Infrastructure%20White%20Paper%20042215.pdf. 106 Performance-Based Infrastructure: An Acceleration Agenda for the United States, Georgetown University, Beeck Center for Social Impact + Innovation, May 20, 2016, http://beeckcenter.georgetown.edu/wp-content/uploads/2016/04/Performance-Based-Infrastructure_Working-Paper_BeeckCenter_5.20.2016.pdf. 107 United States, Department of Treasury, Office of Economic Policy, Expanding the Market for Infrastructure Public-Private Partnerships.
35
the quality of services, or both.”108 In a well-structured public-private partnership, all public and
private actors have a vested interest via their financial stake in all phases of the process from
design to construction, operations, and maintenance.
So, can the public-private partnership model provide a solution for cities that lack the
ability to finance broadband infrastructure projects? More specifically, can these partnerships
help cash-strapped cities play a more active role in taking control of its own destiny to ensure
that all of its citizens and businesses have the levels of Internet connectivity required in the city
of the future?
The sheer size of the potential smart city market coupled with the availability of private
capital make it fair to say that both public and private sectors have a shared interest in enabling
the smart, digitally-connected city of the future. Public-private partnerships are a method through
which communities can build the robust broadband infrastructure backbone that enables
additional smart city layers to be added on top. Ultimately, some deals make sense and some
deals don’t depending on a particular municipality’s circumstances.
It is important to understand that public-private partnerships for broadband represent a
spectrum of different possibilities. On the more traditional end of the spectrum, local
municipalities can work to encourage Internet service provider’s (ISPs) to finance network
investments through incentives and cost-reducing measures. This approach barely constitutes a
true partnership—it represents more of a public-enablement of a private sector deployment. It is
lower risk for the public sector, but it affords limited control over the project’s outcomes and
108 United States, Department of Treasury, Office of Economic Police, Expanding Our Nation’s Infrastructure through Innovative Financing, September 2014, https://www.treasury.gov/resource-center/economic-policy/Documents/3_Expanding%20our%20Nation's%20Infrastructure%20through%20Innovative%20Financing.pdf.
36
limits its potential benefit. However, more and more models are emerging where the city and
private partner creatively share costs and risks related to capital, operations, and maintenance.109
These partnerships often constitute higher risk for the public sector, especially if public financing
is involved, but also provide the potential for greater reward, particularly if the public sector
maintains control of the underlying broadband infrastructure.
Even if a network is publicly financed, it doesn’t mean that the public sector needs to be
fully on the hook for the project’s risk. One common way to do this is to separate the ownership
of the fiber itself from the service layer. In this model, “the city pays for and owns the broadband
infrastructure and leases out capacity to service providers.”110 This model is all about
orchestrating mutually beneficial outcomes, and each partnership can vary greatly based on the
motivations of each partner. Ultimately, “the partners share costs, risks, and control—and the
community is able to achieve its policy goals and desired benefits without bearing 100 percent of
the risk as it does in the traditional public funding model.”111 This model also allows the public
sector to assert control over specific performance outcomes related to speed and equitable access.
The promise is of public-private partnerships for broadband is well-summarized in a
report produced by the Benton Foundation and the Coalition for Local Internet Choice:
“With the exception of communities fortunate enough to attract investment from a private sector partner that will pay the capital cost of fiber deployment, most public–private partnerships will require some amount of public investment. But as public funding increases, so does the potential leverage the public has to exert control over the project
109 Joanne Hovis et al., The Emerging World of Broadband Public–Private Partnerships: A Business Strategy and Legal Guide, Evanston, IL: Benton Foundation, February 2016, https://www.benton.org/sites/default/files/partnerships.pdf. 110 Esme Vos, "City-owned Fiber plus Private Sector Service Providers: A Better Public Broadband Model for Cities?" MuniWireless, February 3, 2016, http://muniwireless.com/2016/02/03/city-owned-fiber-better-model-for-cities/. 111 Hovis et al., The Emerging World of Broadband Public–Private Partnerships, 16.
37
itself, including the ability to focus on specific outcomes. This might lead to greater benefits for the community.” 112
Public-private partnerships certainly offer a viable option for communities moving
forward, but there is not one ideal model to build connectivity across different communities. In
some situations, a private sector-led approach could be sufficient, whereas in other cities, a
municipally financed and owned system can serve that particular community’s needs. Public-
private partnerships simply provide another option “for the many communities that lack the
capital or expertise to deploy and operate fiber networks, or to act as Internet service providers
(ISP), on their own.”113 However, very few public-private partnerships have been completed for
the construction of broadband infrastructure, but recent successes have thrust this approach into
the spotlight.114 In the following pages, various public-private partnership models will be
analyzed in more detail alongside approaches for building public networks and incenting private
sector broadband investment.
CHAPTER 2: RESEARCH METHODOLOGY
A. Methodology
Credible literature sources, professional best practices, and analysis of case studies
surface two major takeaways. First, wired and wireless broadband solutions that provide gigabit
speeds will serve as the building blocks of the smart city. Second, there is no one-size fits all
solution to financing and building this enabling infrastructure, and communities must rely on
112 Hovis et al., The Emerging World of Broadband Public–Private Partnerships, 11. 113 Ibid, 7. 114 Patrick Lucey and Christopher Mitchell, Successful Strategies for Broadband Public-Private Partnerships. Institute for Local Self-Reliance, July 2016, https://ilsr.org/wp-content/uploads/downloads/2016/08/PPP-Report-2016-1.pdf.
38
their own specific requirement and objectives to determine what is and is not possible (or
advisable). Some cities are able to finance municipal systems, or rely on sufficient broadband
coverage from the private sector, but many will have to develop innovative partnerships with the
private sector to facilitate implementation.
This research intends to provide a framework to help city leaders and planners determine
how they should move forward. The subsequent research findings are grounded in a comparative
analysis of completed high-speed wired and wireless broadband projects based on pre-
determined variables. This analysis is supplemented by an understanding of project failures and a
view into what some of the smartest cities around the world are doing to provide connectivity. It
makes the case for proactive municipal action so that communities can reap the benefits of
burgeoning connected technologies so that all citizens can participate equally in the digital age.
B. Parameters for Comparative Analysis The comparative analysis assesses variables across the three pillars of technology, policy,
and finance. These broad-based categories include sub-categories based on important variables
that make each project work. The analysis of each project is supplemented by contextual detail as
deemed necessary. Furthermore, all projects are evaluated holistically based on outcome metrics
related to the achievement of stated project goals, connectivity levels, economic benefits, and the
equity of implementation. The variables included in this analysis were determined based on
rigorous study of broadband implementation use cases coupled with existing academic and
professional literature on the topic.
Technology: An assessment and documentation of the community’s broadband technology
starting point, objectives, chosen solution, and outcomes. Analysis of how the project has
contributed to (or been influenced by) the community’s technology sector is included.
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• Access to broadband prior to project • Chosen broadband solution • Broadband technology goals • Degree to which technology goals were met • Tech sector, pre-and post-implementation
Policy: An assessment and documentation of the community’s broadband policy and how that
relates and contributes to the project’s objectives and outcomes. Analysis includes a discussion
of implementation roadblocks and strategies for garnering community support.
• Main policy goal(s) • Degree to which main policy goals were met • Importance of other local/state/federal plans to project enablement • Importance of local champions • Extent to which implementation roadblocks were removed • Extent to which project has contributed to additional smart city/broadband initiatives
Finance: An assessment and documentation of the community’s approach to project financing
and risk allocation. When applicable, this category also includes an analysis of non-financial
assurances and performance-based language in public-private partnership agreements.
• Primary project financing • Public-private spectrum • Main project partners • Ownership of asset • Risk allocation and responsibilities • Existence of performance-based language in agreement • Revenue/funding sources
C. Selected Case Studies for Comparative Analysis The following case studies have been selected for analysis based on their ability to
provide a sampling of projects across U.S. cities and towns of different sizes and varying
circumstances. The contrast of these different communities as it relates to municipal versus
private financing, and other important contextual factors are meant to illuminate different
possibilities and surface common threads that can serve as a framework for future planning
practice. Each project is listed below in order of municipal population size.
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• Project 1: Leverett, MA-Wired Fiber-Optic Broadband
• Project 2: Westminster, MD-Wired Fiber-Optic Broadband
• Project 3: Chattanooga, TN-Wired Fiber-Optic Broadband
• Project 4: Kansas City, MO-Wired Fiber-Optic Broadband
• Project 5: Los Angeles, CA-Mobile Wireless Broadband
• Project 6 New York City, NY-Wireless Broadband
CHAPTER 3: RESEARCH ANALYSIS AND FINDINGS
The following case studies serve to illustrate different ways city leaders and planners can
ensure that their communities are able to finance and build broadband infrastructure that will
support future digital technology applications. The following projects are analyzed using the
aforementioned criteria to provide a sense for what is and isn’t possible. The analysis will begin
with the smallest municipality and work its way up toward the largest.
Project Analysis: Leverett, MA I couldn't tell any of my clients what my office situation was, before broadband…I'd have to go
to the library for downloads. It's totally different now—Kathleen Lafferty, resident of Leverett.115
Table 3.1: Leverett, MA (Quick Facts)
QuickFacts
Population OccupiedHousingUnits MedianHouseholdIncome
1,993 824 $83,333.00 115 Larry Parnass, "Leverett's Fiber-Optic System a Model for Rural Towns," USA Today, April 3, 2017, https://www.usnews.com/news/best-states/massachusetts/articles/2017-04-03/leveretts-fiber-optic-system-a-model-for-rural-towns.
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Overview
The small, affluent town of Leverett, MA occupies 23 square miles in rural western
Massachusetts.116 For years, local cable providers neglected Leverett because the town’s low
population density and hilly terrain made commercial investment unattractive.117 The
municipality is about a 15-minute drive from the main campus of the University of
Massachusetts, and “being in such close proximity to a larger university community made local
residents especially aware of the technology and services they lacked.”118 Over time, it became
apparent to town leaders that Verizon, the incumbent telecom provider, had no interest in
providing better broadband services.119 Through a series of contracts with public and private
entities, in addition to public financing for construction of the network, the town built
LeverettNet—a municipally owned last-mile fiber network that supports gigabit speeds.120
Technology
Before the construction of LeverettNet, there was virtually no traditional cable Internet
access available in town.121 Most residents relied on slow connections via satellite or dial-up
technologies.122 Mobile coverage was also shaky and practically non-existent except when
residents could pick up 4G connections via a cell tower located in the neighboring town.123
Children had trouble completing their homework at home, and many were forced to go to their
116 Susan Crawford and Robyn Mohr, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts," Berkman Center Research Publication, no. 26 (December 17, 2013), https://cyber.harvard.edu/publications/2013/internet_to_leverett. 117 Ibid. 118 Lucey, Successful Strategies for Broadband Public-Private Partnerships, 26. 119 Ibid. 120 Ibid. 121 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." Sub-par Verizon DSL was available to select households beginning in 2008. 122 Ibid. 123 Ibid.
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local library to do so.124 In lieu of private investment, the town realized that it needed to do
something in order to provide adequate broadband services so that its citizens could live in town
without feeling disconnected from the rest of the world.
Leverett’s situation represents the baseline technology requirements for any community
in today’s society—the ability to participate in the digital world through reliable Internet
connections. The town recognized it could remain relevant by forming multiple partnership
agreements that leveraged a nearby middle-mile fiber backbone to build a high-speed network in
Leverett. The resultant fiber network offers symmetrical gigabit speeds—a key service
expectation dictated in the town’s contract with Crocker Communications—LeverettNet’s sole
ISP.125
Policy
Leverett started planning in earnest to bring high-speed broadband access to its residents
back in 2008 when then Massachusetts Governor Deval Patrick signed the Broadband Act.126
The act created the Massachusetts Broadband Institute (MBI)—an organization designed to bring
broadband services to all residents and businesses across the state.127 Under MBI’s direction, a
combination of state and federal funds were devoted to the “MassBroadband 123” initiative to
construct an open access, middle-mile fiber-optic network across Western and Central
Massachusetts.128 The federal funds were in the form of a $45.4 million grant awarded by the
124 Ibid. 125 Ibid; Parnass, "Leverett's Fiber-Optic System a Model for Rural Towns." In April 2017, Leverett chose a new ISP. Early documentation shows that the agreement will remain largely the same, but the new ISP, OTT Communications is able to drop consumer prices by five dollars a month. This analysis focuses on the original contract with Crocker, which the author believes still remains relevant as a model for other communities. 126 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." 127 Ibid. 128 Ibid.
43
U.S. National Telecommunications and Information Administration as part of the 2009
ARRA.129 The resulting open-access network allows any ISP to connect by purchasing
“wholesale services on the network at the same rates, no matter how big they are or where they
are located.”130 It is unlikely that LeverettNet would exist today if it weren’t for the construction
of this middle-mile network, which allowed the town to construct and connect a last-mile fiber
network via its chosen ISP. In this sense, the town’s plan was part of the state’s long-term
broadband policy vision, but the goals of local officials did not extend beyond simply providing
high-quality Internet access to their citizens.
Leverett’s local leaders did not hesitate once the reality of the middle-mile opportunity
came to light. In 2011, the Leverett Select Board submitted a grant application to MBI to support
broadband planning and deployment for last-mile solutions in the town.131 The town was
subsequently awarded a $40,000 planning grant later that year, which they used (in part) to hire a
fiber-optic network design contractor.132 During this time, the Leverett Select Board created a
Broadband Advisory Committee made up of five individuals to advise and oversee broadband
planning.133
Eventually, the Broadband Committee put forth its proposal at a town meeting—which
called for the issuance of a $3.6 million general obligation bond to finance the construction of
the network.134 As part of the proposal, the committee had to convince residents to accept a 6%
129 United States, U.S. Department of Commerce, National Telecommunications and Information Administration, BroadbandUSA: An Introduction to Effective Public-private Partnerships for Broadband Investments, January 2015, http://www2.ntia.doc.gov/files/ntia_ppp_010515.pdf. 130 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts," 10. 131 "History of LeverettNet Build," LeverettNet, https://lmlp.leverettnet.net/. 132 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." 133 "History of LeverettNet Build," LeverettNet. 134 Lucey, Successful Strategies for Broadband Public-Private Partnerships.
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increase in property taxes to cover the project’s capital costs.135 The members of the Broadband
Committee purposefully compared the tax increase to current expenses residents incurred for
telecom services—many residents were paying a lot while receiving little in return.136 The
Committee also emphasized the importance of the town not being left behind in the digital
age.137 Employing this strategy, local officials effectively sold the project; it was approved
overwhelmingly, receiving 90% of the vote at the town hall meeting.138 A separate vote to
enable the town to raise property taxes at a higher rate than what is allowed by Massachusetts
state law was approved during a subsequent meeting.139 “This shows that the town is really
invested in this,” D’Ann Kelty, Leverett’s Assistant Town Clerk said at the time.140 The network
was completed in August 2015 after two years of construction, and was designed to connect all
the town’s homes, businesses, and government offices.141 By November 2015, 80% of the town’s
households were connected to the network.142 That number has risen to about 85% today.143
When evaluating this project, it is important to note that Leverett’s median household
income is nearly $30,000 above the national average.144 Many less affluent communities would
have a harder time accepting the property tax increases that made this project work. That being
said, the increase in property taxes to pay for the network have been lower than expected—
coming in a $219 per year, per household, as opposed to original estimates of nearly $300 per
135 Ibid. 136 Ibid. 137 Ibid. 138 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." 139 Ibid. 140 Ibid. 141 "History of LeverettNet Build," LeverettNet. 142 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 143 Parnass, "Leverett's Fiber-Optic System a Model for Rural Towns." 144 "US Household Income," Department Of Numbers, http://www.deptofnumbers.com/income/us/.
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household annually.145 In fact, the increase in property taxes are an improvement on what people
were already paying for less reliable services. Estimates project that the network saves the
median satellite, DSL, and wireless users $528, $66, and $408 respectively on an annual basis.146
A key component of the town’s partnership agreement with Crocker Communications is
that the town itself is able to set the price for services.147 Current prices for stand-alone Internet
are about $75 a month for Internet-only subscribers.148 As a matter of policy, in exchange for the
town to be able to set network prices, Leverett did everything in its power to make it as easy as
possible for Crocker Communications to offer services.149 For example, the ISP is not
responsible for any capital expenses or operational concerns.150 Crocker Communications only
upfront costs related to the network were the initial investments it made in core router and
reporting software before beginning operations.151
Finance
The town of Leverett took a big risk by issuing a general obligation bond to construct the
network, but its ability to secure the property tax increase to pay the debt service helps to
minimize that risk. From a financing perspective, the property tax increase was a vital step for
the town because under its chosen partnership model, revenues generated from subscribers to the
145 Scott MerzBach, "Leverett Will Drop Price of Municipal Internet While Upgrading Bandwidth," The Recorder, March 2, 2016, http://www.recorder.com/Archives/2015/12/LeverettBroadband-GR-121215. 146 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." 147 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 148 "Basic Information," LeverettNet, https://lmlp.leverettnet.net/. It is unclear whether or not current information takes into account new ISP’s promise to drop prices by five dollars per month. If not, the current price would be $70 per month. 149 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 150 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 151 MLP Board of the Town of Leverett, MA, “The Leverett Municipal Broadband Model” (presentation, March, 6 2016), http://wiredwest.net/2015s2/wp-content/uploads/2016/05/Leverettnet-Presentation-16-03-06.pdf
46
network are not used to pay the debt service. Instead revenues are split between the network’s
sole ISP and the Leverett Municipal Lighting Plant (MLP), which serves as custodian of the
infrastructure asset and reinvests revenues into the network’s maintenance.152 This is different
than many other municipally financed broadband projects that rely on revenues generated from
the network to pay the debt service on bonds issued to finance construction. In that sense, relying
on a property tax increase removes some of demand risk from the equation.
Leverett chose to create the Leverett MLP so that a separate public entity could maintain
the infrastructure while the municipality continued to own the asset.153 In Massachusetts,
municipalities can create their own gas and electric companies with a majority vote, and these
MLP entities can include services related to electricity (like broadband).154 The creation of the
MLP helps to ensure that any revenues generated from the network are reinvested entirely back
into the maintenance of the network—as designated by state laws related to MLPs.155 Crocker
Communications is responsible for collecting all payments from subscribers to the network, and
must pay the MLP a baseline fee for each subscriber. This fee is tacked onto the price for
residents—residents pay about $25 to the ISP and $50 for network maintenance.156 The
maintenance costs are split among a pool of subscribers and could go down as more people
152 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." 153 Ibid. 154 Ibid. 155 Ibid. 156 "Basic Information," LeverettNet.
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subscribe.157 The Massachusetts department of public utilities reviews annual reports submitted
by Leverett MLP to ensure that revenues are reinvested properly back into the network.158
In terms of establishing partnerships to bring the project to fruition, Leverett solicited
separate RFPs to contract with different parties to build, operate, maintain, and act as a service
provider for the network.159 The construction of the network was awarded to Millennium
Communications Group via a standard contract to build the network according to the city’s
plan.160 Municipal financing for construction put risks related to complications or delays
squarely on the town’s shoulders. To help mitigate this risk, Leverett smartly chose to consult
with Holyoke Gas & Electric (HG&E)—a regional electric utility with broadband experience—
to assist with procurement and project management during the construction phase.161 For
instance, HG&E helped the town efficiently lease access to utility poles where the fiber was to
be mounted.162 A deal was struck so that the owners of the leased poles (Verizon and Eversource
Energy) regularly inspected them.163
HG&E was also selected to operate and maintain LeverettNet under a 5-year contract
with the Leverett MLP.164 HG&E also contracted separately with the operator of Massachusetts’s
157 Karl Bode, "After A Decade Of Waiting For Verizon, Town Builds Itself Gigabit Fiber For $75 Per Month," Techdirt, December 29, 2015, https://www.techdirt.com/articles/20151215/07583533085/after-decade-waiting-verizon-town-builds-itself-gigabit-fiber-75-per-month.shtml. 158 MLP Board of the Town of Leverett, MA, “The Leverett Municipal Broadband Model.” 159 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 160 Crawford, "Bringing Municipal High-Speed Internet Access to Leverett, Massachusetts." 161 Ibid. 162 Masha Zager, "LeverettNet Launches Fiber-to-the-Home Service," Broadband Communities Magazine, November/December 2015, http://www.bbcmag.com/2015mags/Nov_Dec/BBC_Nov15_LeverettNet.pdf. 163 MLP Board of the Town of Leverett, MA, “The Leverett Municipal Broadband Model.” 164 Ibid.
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middle-mile network to ensure adequate backhaul services were provided for LeverettNet.165 As
mentioned earlier, the finances for the project would have been too daunting if it weren’t for the
state and federal funds allocated to building out the state’s middle-mile network. The town was
also aware that it was creating a broadband monopoly by contracting solely with one ISP to
provide network services.166 To combat potential issues, Leverett laid out clear performance
expectations in its agreement with Crocker Communications. For example, Crocker must offer
symmetrical speeds of one Gbps to all connected households, businesses, and government
buildings, and Leverett is able to set network prices.167 Crocker must also have high-quality
customer service—which means having trained employees answering the phones for customer
support.168 The town has also contracted with three local electric companies to handle emergency
service calls at local residences.169 Leverett reserves the right to terminate its partnership with
Crocker Communications without cause with 6 months written notice.170
Summary
For Leverett, the main broadband implementation roadblock was that no private sector
provider was willing to build the underlying infrastructure in a rural town with limited market
demand. The town overcame that issue by proactively seeking state funds for planning,
leveraging existing regional infrastructure, and then soliciting public support for a debt issuance
and tax increase to finance the project. Ultimately, Leverett’s connectivity predicament was so
165 Ibid. 166 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 167 Ibid. 168 Ibid. 169 MLP Board of the Town of Leverett, MA, “The Leverett Municipal Broadband Model.” 170 Lucey, Successful Strategies for Broadband Public-Private Partnerships. Leverett has since terminated its contract with Crocker Communications on the basis that OTT Communications could provide services at lower prices. This development illustrates the town’s ability to switch providers to provide more cost-effective services for residents, and illustrates the power of owning the underlying infrastructure asset.
49
dire that residents were willing to accept tax increases to help pay for the network. Leverett’s
situation highlights the importance of federal and state investments in regional broadband
infrastructure so that rural areas are able to find solutions to gain access to 21st century
broadband speeds. Leverett’s partnership model is complicated in that requires multiple contracts
with multiple different entities, but it ultimately succeeded for the town based on its own unique
circumstances and narrow ambition to provide better access to broadband for all of its citizens.
Table 3.2: Leverett, MA Analysis Summary
Analysis Summary Technology
Access to broadband prior to project No access to broadband speeds (based on 25Mbps threshold defined by the FCC).
Chosen broadband solution Wired FTTH network. Broadband technology goals Ubiquitous access to 1 Gbps broadband.
Degree to which technology goals were met High: All homes and businesses have access, 85% connected.
Tech sector pre- and post-implementation Non-existent throughout.
Policy
Main policy goal(s) Gain access to high-speed broadband.
Degree to which main policy goals were met High: All homes and businesses have access.
Importance of other local/state/federal plans to project enablement
Critical: State and federal investment in middle-mile network.
Importance of local champions Critical: Convince public to support tax increase to pay debt service.
Extent to which implementation roadblocks were removed
Moderate: Made it as low cost as possible for ISP to provide services. Worked with HG&E
to secure access to privately owned utility poles quickly.
Extent to which project has contributed to additional smart city/broadband initiatives
Low: Primarily residential town just needed Internet access.
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Finance Primary project financing Municipal general obligation bond
Public-private spectrum Public-private partnership (public-led contracting)
Main project partners Town, Leverett MLP, HG&E, Crocker
Communications, and Millennium Communications Group.
Ownership of asset City (Fiber)
Risk allocation and responsibilities
CAPEX Planning: Town, HG&E Finance: Town
Build: Millennium Communications O&M: HG&E and 3 local electric companies
ISP: Crocker Communications Network Custodian: Leverett MLP
Existence of performance-based language in agreement
Substantial: Mandates related to speed, ubiquitous access, and customer Service.
Revenue/funding sources ISP subscribers and property taxes approved to pay for debt service.
Project Analysis: Westminster, MD All local governments build and maintain roads, and fiber networks are the roads of the future—
Dr. Robert Wack, Westminster’s City Council President.171
Table 3.3: Westminster, MD (Quick Facts)
Quick Facts
Population Occupied Housing Units Median Household Income
18,646 7,070 $55,122.00 Source: 2015 ACS estimates
171 Robert Wack, "The Westminster P3 Model." Broadband Communities Magazine, November/December 2015, http://www.bbpmag.com/MuniPortal/EditorsChoice/1115editorschoice.php.
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Overview
Westminster, MD is a town located in Carroll County, MD about 40 miles from
Washington, DC and Baltimore, MD.172 Westminster's fiber-to-the-home (FTTH) network is a
municipally financed project that involves a public-private partnership with Ting, a small
Toronto-based ISP.173 The partnership agreement, which won the Community Broadband
Innovative Partnership of the Year Award in 2015, is designed to share risks between the public
and private sectors.174 The project broke ground in 2014, began offering services the following
year, and had connected hundreds households by the end of Q1 2016.175 The partnership is built
around the idea of incremental expansion across four phases with the goal of universal access.176
Once a completed a phase reaches 20% of possible subscribers, the city must begin the next
phase of construction.177 The city has completed its first phase of construction and is proceeding
with second phase of construction to be completed by the end of summer 2017.178 The entire
network is expected to be complete by 2019 or 2020 (see figure 3.1).179
172 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 173 Ibid. 174 Ibid. The National Association of Telecommunications Officers and Advisors gave the award. 175 Ibid. 176 Ibid. 177 Ibid. 178 "Westminster Fiber Network." Westminster, MD, http://www.westminstermd.gov/419/Westminster-Fiber-Network. 179 Lucey, Successful Strategies for Broadband Public-Private Partnerships.
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Figure 3.1: Current Progress of Westminster's Fiber Network
Source: Westminstermd.gov
Technology
Prior to the inception of the project, the town lacked access to high-quality Internet
service—relying mostly on sub-par speeds from Comcast cable and Verizon DSL.180 To improve
the situation and foster economic development, Westminster sought to build a FTTH network
that would connect all homes and businesses to symmetrical gigabit speeds. The Westminster
Fiber Network (WFN) connects to the Carroll County Public Network (CCPN), a middle-mile
fiber network that connects 120 community anchor institutions.181 CCPN consists of 160 miles of
180 Ibid. 181 Bob Kuntz, "Tech Tips: Carroll County Public Network Celebrates 10 Years," Carroll County Times, December 21, 2014,
53
fiber, but doesn’t serve residences or businesses in the County directly—it was built with extra
capacity so last-mile connections could be made.182
The technology goals of CCPN’s middle-mile backbone and WFN’s last-mile solution
are intimately linked because Westminster is the home of the Carroll County government. For
instance, the Carroll County Community College, which is located in Westminster, was one of
the original investors in CCPN.183 The college is also an educational partner in a national
network of TechHire communities, which is led by a White House technology initiative.184 Since
the construction of the network began, a technology sector is emerging in Westminster, and there
are concerted efforts underway to take advantage of the WFN and CCPN to foster further
growth.185 One example of this is the Mid-Atlantic Gigabit Innovation Collaboratory (MAGIC),
a non-profit technology incubator focused on leveraging the fiber network to support tech
entrepreneurs and existing businesses.186 MAGIC also serves as an educational program for local
students focused on building technology skills and fostering a tech culture in the region.187
Ultimately, the project’s goals in terms of leveraging the fiber technology are directly linked to
http://www.carrollcountytimes.com/columnists/features/technology/ph-cc-tech-tips-1221-20141220-story.html. 182 Ibid. 183 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 184 Carroll Technology Council, "Carroll County TechHire," News release, December 21, 2016, https://carrolltechcouncil.org/cctechhire/. 185 Michel Elben, "Westminster 'stroll' Aims to Shine Light on Local Technology," Carroll County Times, September 8, 2016, http://www.carrollcountytimes.com/news/business_technology/ph-cc-westminster-tech-stroll-20160908-story.html. 186 Julie Miller, "Gigabit Fiber: A Virtual Incubator & Future-Proofing Westminster," MDBizNews, September 6, 2016, https://mdbiznews.commerce.maryland.gov/2016/09/gigabit-fiber-virtual-incubator-future-proofing-westminster/. 187 "More ‘Magic’ in Westminster, Maryland," Community Networks, May 13, 2016, https://muninetworks.org/content/more-%E2%80%9Cmagic%E2%80%9D-westminster-maryland.
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the town’s broader efforts to remain economically competitive in a digital world. In the words of
City Council President Dr. Robert Wack: “if you don’t have good broadband you’re going to be
left behind…Westminster is not going to be left behind.”188
Policy
Just like in Leverett, the ability for Westminster to build out its FTTH network was
enabled by state and federal policies designed to build out the region’s middle-mile fiber
infrastructure. The Carroll County government, public schools, and community college created a
consortium to combine resources, expertise, and shared purchasing power to build CCPN.189 In
turn, CCPN was connected to the broader Inter-County Broadband Network (ICBN), which was
funded through a combination of state and federal stimulus money from the ARRA.190
The middle-mile network was an important enabling mechanism, but the project would
have struggled to get off the ground without concerted efforts of Wack, Westminster’s City
Council President. Wack ardently believes that last-mile broadband solutions should be publicly
owned and leased out on an open access based where multiple ISPs could compete.191 Writing
about Westminster’s model in Broadband Communicate Magazine, Wack wrote: “Public
ownership is the starting point. As in all business relationships, ownership equals control, and
control is absolutely necessary for a community to ensure that it achieves the economic
development goals of a fiber project.”192
188 Stephen Babcock, "How Fiber Broadband Factors into This Maryland Town’s Future," Technicaly, May 16, 2016, https://technical.ly/baltimore/2016/05/16/fiber-broadband-factors-maryland-towns-future-westminster-ting/. 189 Elben, "Westminster 'stroll' Aims to Shine Light on Local Technology." 190 Len Lazarick, "Officials Celebrate $72 Million from Feds for Broadband Network," Maryland Reporter, June 14, 2011, http://marylandreporter.com/2011/06/14/officials-celebrate-72-million-from-feds-for-broadband-network/. 191 Wack, "The Westminster P3 Model." 192 Ibid.
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City officials, led by Wack, took a leadership role in how the project was piloted and
funded, along with how the eventual partnership with Ting was negotiated. The pilot phase
encompassed a retirement community, a residential neighborhood, and two commercial
centers.193 This pilot cost $1.8 million and used existing capital assessment funds.194 The
attention and positive feedback generated for the pilot project helped the town prove there was
significant untapped demand for high-quality broadband.195 “The pilot projects allowed the city
to stick our toe in the water to see how this works and is hopefully a first step toward doing it for
the entire city,” Wack said at the time.196
Shortly after, Westminster City Council voted to issue a $21 million general obligation
bond to finance the construction of the network throughout the entire town.197 The decision was
made by local leaders to vote on the bond issuance before selecting an ISP partner to provide
credibility during negotiations.198 The city’s RFP for the project partner stated that the network
must be publicly owned and managed on an open access basis.199 At the time, many private
sector providers were skeptical of these demands, but the “the city did not give up the vision for
a locally owned, open access network.”200
Finance
The town’s persistence paid off when Westminster found Ting, which agreed to serve as
the network operator and ISP for 10 years with an automatic renewal option.201 The partnership
193 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 194 Ibid. 195 Ibid. 196 Ibid, 12. 197 Ibid. 198 Ibid. 199 Ibid. 200 Ibid, 13. 201 Ibid.
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is designed so that both “partners depend on each other through a series of milestones related to
construction and signing up subscribers.”202 Westminster is responsible for its fiber network’s
financing, engineering, construction, and maintenance across four phases.203 The city will work
with Ting to determine the timing and scope of each phase. Built into the contract is the
requirement for the city to begin the next phase of construction once a completed section of the
network reaches a 20% subscriber take rate.204 As part of the partnership, both parties share
responsibility to educate residents and businesses about the network’s construction and pre-
subscription thresholds.205 Eventually, the network is expected to reach 7,000 homes and
businesses within Westminster.206 The town has completed its first phase of construction, which
serves several hundred businesses and residences.207 The second phase is expected to bring
access to 2,000 additional addresses.208 The goal is to provide ubiquitous gigabit access across
the town by 2019 or 2020.209
An important component of the contract imposes a $6 lease fee per month for every home
passed, which increases to $17 for every active subscriber on the network.210 This ensures a
baseline rent for the city while incentivizing Ting to connect more homes to the network. The
partnership agreement allows for the lease fees to be adjusted annually after one year (or after
Ting has activated 1,500 subscribers).211 The fees will be determined based on average revenue
per unit—which divides Ting’s gross revenues collected via the WFN by the total number of
202 Ibid, 13. 203 Ibid. 204 Ibid. 205 Ibid. 206 Wack, "The Westminster P3 Model." 207 Ibid. 208 Ibid. 209 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 210 Ibid. 211 Ibid.
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subscribers.212 These lease fees can be passed on to other ISPs as well. It is important to note that
unlike Leverett, Ting will not be the sole service provider for Westminster. As the network
operator, Ting is mandated to provide access to the network on an open access basis to other
ISPs.213 That means that Ting must treat all service providers the same and charge them the same
rate. However, Ting has an initial period of exclusivity as the sole ISP on the network to help the
company achieve a greater ROI while WFN is in its infancy.214 This period of exclusivity last for
two years, or until the company signs up 3,000 customers to the network.215 After that, Ting is
“contractually obligated to structurally separate its wholesale and retail services and begin
admitting additional service providers to the network.”216 Part of what makes Ting a good choice
for a partner was that it had previous experience leasing access to fiber in Sandpoint, Idaho and
Holly Springs, North Carolina before the partnership with Westminster began. 217 This is a good
example of allocating a project risk to the party best able to manage it.
There are various mutual assurances in the contract that help to make Westminster’s
agreement work well for both parties. For example, the town’s largest project risk is the debt
service payments for the bonds issued to construct the network. The contract is designed so that
Westminster and Ting share the burden if network revenues are unable to pay for the debt
service.218 If there is a funding shortfall between network revenues and debt service payments,
Westminster is responsible for the first $50,000 and Ting must cover up to $150,000 after that.219
212 Ibid. 213 Ibid. 214 Ibid. 215 Ibid. 216 Wack, "The Westminster P3 Model." 217 Lucey, Successful Strategies for Broadband Public-Private Partnerships. 218 Ibid. 219 Ibid.
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After that point, Westminster is responsible for all additional debt service payments.220 This
arrangement helps to ensure that both partners are invested in the network’s overall financial
success.
If Westminster chooses to opt out or sell the network because of significant economic
hardship, the town has the right to terminate its contract with Ting if it gives six months written
notice.221 If it does so, it must buy all of Ting’s networking equipment, or allow Ting to remove
it.222 In addition, if the town sells the network, Ting must be given the option to continue to act
as the network operator regardless of who buys it.223 The initial agreement between Ting and
Westminster is for a period of 10 years, which automatically renews for another 10 years if
network revenues are 10% greater that the debt service obligation in the fiscal quarter before the
end of the terminating year.224
Performance-based language in the contract mandates that Ting provides access to one-
gigabit speeds and has real people (not machines) managing its customer service lines.225 As part
of the partnership, Ting agreed to help fund a public space where residents would have public
access to gigabit speeds along with new technologies like 3-D printers.226
Summary
Westminster’s public-private partnership model is intriguing for municipalities that
would like to maintain control over its broadband infrastructure without exposing itself entirely
to all the risks associated with a purely municipal network. In spite of the need to provide
220 Ibid. 221 Ibid. 222 Ibid. 223 Ibid. 224 Ibid. 225 Ibid. 226 Ibid.
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significant upfront financing, mutual assurances in the contract help to share the risks between
the public and private sector partners. Many open access networks have had problems because
ISPs don’t have incentive to maximize the customers it connects to the network.227 By adopting a
baseline fee for every home passed, Ting has a vested interest in connecting as many customers
as possible.
Just like in Leverett, this project was fundamentally enabled by public funds devoted to
building middle-mile fiber infrastructure. Wherever these networks exist across the country,
municipalities have the opportunity to take control over their own broadband destiny when they
may not have been able to otherwise. As for Westminster, the city plans to continue its effort to
support economic growth by leveraging the network’s high speeds to support a burgeoning tech
community and to attract more businesses to the town.228
Table 3.4: Wesminster, MD Analysis Summary
Analysis Summary Technology
Access to broadband prior to project Limited access.
Chosen broadband solution Wired FTTH network.
Broadband technology goals Ubiquitous access to 1 gigabit broadband.
Degree to which technology goals met On Track: Phase 1 complete, project is
planned to provide gigabit access to all by 2019 or 2020.
Tech sector pre- and post-implementation LimitedèEmerging.
Policy
227 Ibid. 228 Babcock, "How Fiber Broadband Factors into This Maryland Town’s Future."
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Main policy goal(s) Access to high-speed broadband and economic development.
Degree to which main policy goals were met
In Progress: First phase built. Project is supporting a growing tech community and access for all residents and businesses is
expected.
Importance of other local/state/federal plans to the project
Critical: County investment in middle-mile network. Federal and state investment in
regional middle-mile network.
Importance of local champions
Critical: City Council President pushed for innovative public-private partnership model
and garnered public support for the project by vocally championing the importance of
broadband to the town’s future.
Extent to which implementation roadblocks were removed
Moderate: Partnership dictates an incremental build based on take rates across the community
relieving pressure to build the network all at once.
Extent to which project has contributed to additional smart city/broadband initiatives
Moderate: Partnership required public space with gigabit speeds/3-D printers. Creation of
non-profit business incubator focused on leveraging fiber for economic development.
Finance
Primary Project Financing Municipal general obligation bond
Public-private spectrum Public-private partnership (risk-sharing and mutual assurances).
Main project partners City, Ting Ownership of asset City (Fiber)
Risk allocation and responsibilities DBFM: City
Network Operator & ISP: Ting Note: City +Ting share debt service burden.
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Existence of performance-based language in agreement
Substantial: Mandates related to speed, customer service, and leasing fiber on an open
access basis.
Revenue/funding source Subscribers to ISP and leasing fiber to ISP(s).
Project Analysis: Chattanooga, TN Our fiber goes to each and every home…We can’t have digital gated communities. If we do that …we will see technology widen the gulf between people as opposed to bridging it. —Andy Berke,
Mayor of Chattanooga, TN229
Table 3.5: Chattanooga, TN (Quick Facts)
Quick Facts
Population Occupied Housing Units Median Household Income
174,483 70,228 $40,177.00
Overview
In Chattanooga, TN, every home and business has access to symmetrical gigabit Internet
speeds. When service began in 2010, Chattanooga was the first city in the U.S. with a municipal
network that offered 1-gigabit speeds—the city now offers speeds up to 10 gigabits.230 Despite
requiring over $220 million in public financing from EPB (a municipally-owned electric utility),
the fiber network is estimated to have created between $865.3 million and $1.3 billion in city
229 Jamie McGee, “Chattanooga Mayor: Gigabit Speed Internet Helped Revive City," The Tennessean, June 14, 2016, http://www.tennessean.com/story/money/2016/06/14/chattanooga-mayor-gigabit-speed-internet-helped-revive-city/85843196/. 230 Peter Moskowitz, "Chattanooga Was a Typical Postindustrial City. Then It Began Offering Municipal Broadband," The Nation, June 3, 2016, https://www.thenation.com/article/chattanooga-was-a-typical-post-industrial-city-then-it-began-offering-municipal-broadband/.
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benefits, according to an independent study conducted by the University of Tennessee at
Chattanooga (UTC).231 Before implementing the project, Chattanooga was struggling to retain
young professionals, but has seen an influx of this group with a number of jobs beings created in
the tech industry.232 EPB is the network’s ISP; its broadband business currently serves 77,000
residential and 6,500 commercial customers.233
Technology
Prior to the project’s implementation, Comcast provided broadband Internet service
downtown, but there was limited access to broadband speeds outside of the city’s core.234
Chattanooga was a relatively small market for Comcast so the city had little control over the
nature of the Internet service it was receiving, according to Ron Littlefield, the city’s Mayor
when the broadband project was being designed and implemented.235 The city’s municipal fiber
network is directly linked to EPB’s efforts to build a smart energy grid across the city, which
enabled Chattanooga to upgrade both its energy and telecommunications infrastructure
simultaneously. In 2010, the U.S. Department of Energy (DOE) contributed $111.7 million to the
231 Mari Sibley, “Gigabites: Big ROI for EPB’s Gigabit,” LightReading, September 18, 2015, http://www.lightreading.com/gigabit/gigabit-cities/gigabites-big-roi-for-epbs-gigabit/d/d-id/718286. 232 Christopher Mitchell and Harold DePriest, “The Deep History of Chattanooga’s Fiber Network—Community Broadband Bits Podcast 230,” Community Networks (audio blog), November 2, 2016, https://muninetworks.org/content/deep-history-chattanoogas-fiber-network-community-broadband-bits-podcast-230. 233 2016 Annual Report, EPB, 2016, https://static.epb.com/annual-reports/2016/media/EPB_2016_Annual_Report.pdf. 234 Jason Koebler, "The City That Was Saved by the Internet," Motherboard, October 27, 2016, https://motherboard.vice.com/en_us/article/chattanooga-gigabit-fiber-network. 235 Ibid.
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project to support the building of a smart grid using stimulus funding from the American
Recovery and Reinvestment Act (ARRA).236
EPB’s smart grid project provided an opportunity for city leaders to begin to take control
of the city’s broadband destiny. EPB’s smart grid uses fiber optic technology as a means for the
smart grid’s equipment, metering infrastructure, web portal, and distribution automation system
to communicate.237 With homes being connected to EPB’s fiber-optic network anyway, the
electric utility could then use that infrastructure to provide gigabit speed Internet to the citizens
of Chattanooga simultaneously.
The project has helped foster start-up culture in Chattanooga, which has earned the
nickname: “Gig City.”238 Since the completion of the network, Chattanooga went from having
almost no venture capital presence in 2009, to having “more than five organized funds with
investable capital of over $50 million by 2014.”239 Gigabit Internet speeds have “attracted dozens
of tech firms to the city…for things like telehealth-app development and 3D printing.”240 This
growth is catalyzed by the fact that Chattanooga is ranked as the city with the lowest startup
236 Dave Flessner, "Chattanooga Utility’s Smart Grid Generates Over $865 Million for ‘Gig City,’" FutureStructure, September 15, 2015, http://www.govtech.com/fs/Chattanooga-Utilitys-Smart-Grid-Generates-Over-865-Million-for-Gig-City.html. 237 United States, Department of Energy, Office of Electricity Delivery & Energy Reliability, Electric Power Board of Chattanooga (EPB), September 2014, https://www.smartgrid.gov/files/EPB_Project_Description.pdf. 238 Koebler, "The City That Was Saved by the Internet." 239 Dominic Rushe, "Chattanooga's Gig: How One City's Super-fast Internet Is Driving a Tech Boom," The Guardian, August 30, 2014, https://www.theguardian.com/world/2014/aug/30/chattanooga-gig-high-speed-internet-tech-boom. 240 Moskowitz, "Chattanooga Was a Typical Postindustrial City. Then It Began Offering Municipal Broadband."
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costs in the U.S., according to a study by SmartAsset.241 A range of local resources have
emerged to support the burgeoning tech community, which range from GIGTANK, a startup
accelerator focused on creating high-bandwidth applications, to the Lamp Post Group—a venture
incubator which helps startups secure investment funding242. The high-speed network is also
credited in helping to attract the likes of Amazon and Volkswagen, which have created more
than 3,700 local jobs.243
The existence of the fiber has done more than attract private investment—it has also
helped position the city as a research hub for future smart city applications. Having a critical
mass of users on a gigabit network allows researchers to test applications that require high-
capacity connections. 244 For example, the National Science Foundation’s Global Environment
for Network Innovations initiative has partnered with the University of Tennessee at
Chattanooga to test smart city solutions ranging from education to public safety in collaboration
with 60 other universities across the globe.245
Policy
Like many large public projects that were implemented in the wake of the Great
Recession, Chattanooga’s broadband network received a significant boost from the federal
government’s policy decision to use stimulus funding to upgrade the nation’s infrastructure. The
241 Amanda Dixon, "The Cities with the Lowest Startup Costs – 2016 Edition," SmartAsset, August 10, 2016, https://smartasset.com/mortgage/the-cities-with-the-lowest-startup-costs-2016-edition. 242 Charles Wood, "Startups Are Moving to Chattanooga Because of Its City-owned Gigabit Network," Technicaly, October 26, 2016, https://technical.ly/2016/10/26/chattanooga-startups-gigabit-network/. 243 Savitz, "Faster, Sooner: Why The U.S. Needs 'Gigabit Communities.'" 244 Doug Cooley, "Chattanooga’s Fast Internet Service Racks up Another Win," Smart Cities Council, February 18, 2015, http://smartcitiescouncil.com/article/chattanooga%E2%80%99s-fast-internet-service-racks-another-win. 245 Ibid.
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$111.7 million provided by the U.S. DOE to support EPB’s smart grid deployment was taken
from $4.5 billion in stimulus funding allocated to modernize the nation’s energy infrastructure in
the ARRA.246 The federal money “was like icing on the cake; by the time EPB applied, it had
already reaches it initial targets and with additional funds cut a 10-year construction plan down
to three years.”247 Luckily, local leaders had the foresight to see that the energy technology
upgrades could double as means to provide high-speed broadband to residents and businesses.
Ultimately, because the smart grid project was already underway, the main policy-level
challenges for broadband implementation came in the form of incumbent cable providers.
Comcast and AT&T fought vigorously against the idea that Chattanooga’s public utility should
be able to compete with them for customers.248 At the time, company representatives tried to
convince acting Mayor Ron Littlefield not to go forward with the broadband component of the
smart grid upgrade before both firms took more aggressive actions against the city.249 The main
arguments from the telecom companies were twofold: 1) nobody needs services that fast and 2) it
is not fair for the government to compete with private industry.250
In response, Mayor Littlefield claims to have told the industry representatives that he
could remember when people told him the old computer in his house years ago was the only
computing power he would need.251 Littlefield could see a future need for high-capacity fiber,
246 United States, Department of Energy, Office of Electricity Delivery & Energy Reliability, A Smarter Electric Circuit: Electric Power Board of Chattanooga Makes the Switch, https://www.smartgrid.gov/files/EPB_Profile_casestudy.pdf. 247 Brian Fung, "How Chattanooga Beat Google Fiber by Half a Decade," Washington Post, September 17, 2013, https://www.washingtonpost.com/news/the-switch/wp/2013/09/17/how-chattanooga-beat-google-fiber-by-half-a-decade/?utm_term=.af5eef55a581. 248 Koebler, "The City That Was Saved by the Internet." 249 Ibid. 250 Ibid. 251 Ibid.
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and believed that the city could not afford not to take advantage of the opportunity.252 A negative
public relations campaign from the Tennessee Cable Telecommunications Association was just
the beginning—the city was sued by telecoms four times, but eventually won.253 EPB, under a
1999 Tennessee law, is allowed to sell telecom and video services to its energy customers, but it
cannot expand the provision of broadband services beyond that point.254 This works fine for the
city of Chattanooga, but it has been a major roadblock for nearby towns in Tennessee that desire
access to EPB’s broadband services.255 EPB asked the FCC to step in, and while the FCC
initially ruled in the city’s favor, EPB lost its case on appeal in the summer of 2016.256
Chattanooga’s contentious fight to provide municipal Internet services reflects a broader power
struggle between incumbent ISPs and communities that would like to provide municipal
broadband services—there are currently about 19 states that limit a community’s ability to do so
in some way, shape, or form.257
In terms of equity policy, the city announced in 2015 that it would begin offering access
to 100Mbps speeds to low-income households for 26.99 per month.258 Comcast offer services to
low-income families for $10 per month, but at much lower speeds.259 Chattanooga is unable to
provide more competitive pricing for low-income households because the aforementioned 1999
252 Ibid. 253 Ibid. 254 Ibid. 255 Ibid. 256 Ibid. 257 Mitchell, "Community Network Map;” Brodkin, “States win the right to limit municipal broadband, beating FCC in court;” Jason Koebler, "The 21 Laws States Use to Crush Broadband Competition." This number varies depending because there is a certain level of subjectivity associated with performing this analysis. 258 Kathleen Hickey, "Chattanooga Now Has Two High-speed Internet Options," GCN, May 21, 2015, https://gcn.com/articles/2015/05/21/chattanooga-internet.aspx. 259 Ibid.
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Tennessee law doesn’t allow government-owned networks to provide services at rates lower than
the cost of providing services.260
In Chattanooga’s case, it is clear that its successful investment in high-speed municipal
broadband has increased competition in the marketplace—Comcast now offers 2Gbps broadband
speeds in Chattanooga.261 Across the country, when municipalities have built public fiber
network, incumbent telecoms have increased speeds and dropped prices below cost.262 For
example, after Wilson, North Carolina built a municipal fiber network; Time Warner dropped its
rates within the city and subsidized the loss by increasing prices in neighboring communities.263
There is still considerable debate about what the public sector’s role in providing broadband
services should be. Some observers have argued that municipal broadband could ultimately
decrease competition and private sector investment over the long run.264 The experience of
Chattanooga and other communities across the country reflect the need for a broader policy
debate around whether or not local municipal officials should have the freedom to choose to
provide public broadband services if it is deemed appropriate for their community.
It can be argued that Chattanooga’s model isn’t particularly replicable elsewhere because
of federal funding the project received and its implementation and operations run by EPB—only
260 Koebler, "The City That Was Saved by the Internet." 261 Mitra Malek, "Comcast to Bring 2-gig Internet Service to Chattanooga," Times Free Press, May 1, 2015, http://www.timesfreepress.com/news/local/story/2015/may/01/comcast-bring-2-gig-internet-service-chattano/301810/. 262 Jason Koebler, "Six Ways Big Telecom Tries to Kill Community Broadband," Motherboard, July 29, 2014, https://motherboard.vice.com/en_us/article/six-ways-big-telecom-tries-to-kill-community-broadband. 263 Todd O’Boyle and Christopher Mitchell, How National Cable and DSL Companies Banned The Competition in North Carolina, Institute for Local Self-Reliance, July 2013, http://ilsr.org/wp-content/uploads/2013/01/nc-killing-competition.pdf. 264 George Ford, "Why Chattanooga Is Not the 'Poster Child' for Municipal Broadband,” Perspectives: Phoenix Center for Advanced Legal & Economic Public Policy Studies 15, no. 1 (January 20, 2015), http://www.phoenix-center.org/perspectives/Perspective15-01Final.pdf.
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about 14% of the country is served by municipal power companies.265 However, cities like
Chattanooga should ultimately be able to choose to provide broadband services if it has a
financially sustainable model for doing so in a world where next-generation Internet access is
becoming a necessity rather than a luxury. In Chattanooga’s case, the results speak for
themselves. Chattanooga’s unemployment rate was 10% after the economic downturn, and is
now at about 5%—current Mayor Andy Burke believes that the fiber investment helps to insulate
the city from future downturns.266 The fiber optic network is estimated to have created between
2,800 and 5,200 new jobs in the region in addition to estimated billions of dollars in city
benefits.267 In a market like Chattanooga, where there is limited enabling state legislation for
public-private partnerships, publicly operated broadband services may be the only choice some
cities have to wire their communities properly. 268
Finance
As mentioned above, financing for the project came entirely from the public sector with
over $220 million revenue bonds issued by EPB, and $111.7 million from the U.S. DOE for the
smart grid upgrade.269 The broadband component of the project was also assisted by a $50
million loan made to EPB”s broadband division from the utility’s electric division.270 Projects
revenues are derived from subscribers to the network’s services, and cost savings are achieved
by the smart grid’s efficiencies.271
265 Ibid. 266 Koebler, "The City That Was Saved by the Internet." 267 Flessner, "Chattanooga Utility’s Smart Grid Generates Over $865 Million for ‘Gig City.’" 268 "Tennessee P3 Bill Signed Into Law," The National Council for Public-Private Partnerships, April 29, 2016, http://www.ncppp.org/tennessee-p3-bill-signed-into-law/. 269 McGee, “Chattanooga Mayor: Gigabit Speed Internet Helped Revive City." 270 Ford, "Why Chattanooga Is Not the 'Poster Child' for Municipal Broadband.” 271 2016 Financial Report, EPB, 2016, https://static.epb.com/annual-reports/2016/media/EPB_2016_Financial_Report.pdf.
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By all measures, the investment has achieved a positive return on investment for EPB.
The utility has recognized about $23.6 million in annual costs savings and revenue since it
implemented the smart grid and began providing broadband services.272 In part, because of the
growth in EPB’s fiber-optic business, Fitch ratings upgraded the electric utilities bond rating to
AA+, which allowed it to refinance its debt with lower interest rates—leading to $19.8 million in
savings.273 EPB’s fiber optic business grew 12.4% from 2015 to 2016.274
Summary
Chattanooga’s municipal broadband project greatly benefitted from federal stimulus
funds and its financially stable municipal utility with significant experience providing services to
customers. The city’s experience raises broader policy questions about whether or not
municipalities should have the right to build and operate their own networks. Critics claim that
such projects are generally boondoggles that waste taxpayer money on a service that is more
effectively provided by the private sector. Others maintain that Chattanooga’s success proves
that such networks can be run effectively and generate tremendous benefits for the city.
Ultimately, city leaders should be afforded the right to choose whether or not
Chattanooga’s model is something that is in their best interest. However, such an endeavor
should not be entered into lightly because all of the projects risks are placed on the public sector.
While full control over the project’s outcomes are promising for cities focused on increasing
equity of access to low income residents—restrictive laws in many states limit the ability of the
municipality to subsidize its services beyond the cost of providing service. This makes it
272 David Talbot and Maria Paz-Canales, Smart Grid Paybacks: The Chattanooga Example, Berkman Klein Center for Internet & Society Research: February 6, 2017, https://cyber.harvard.edu/publications/2017/MF/Chattanooga. 273 2016 Annual Report, EPB. 274 2016 Financial Report, EPB.
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difficulty even for municipal projects to achieve objectives related to connecting all residents to
decrease the digital divide. Overall, Chattanooga’s approach worked well for Chattanooga, but in
many cases the right partnership model has a better chance for success in terms of making
implementation a reality while reducing the overall risk borne by the municipality.
Table 3.6: Chattanooga, TN Analysis Summary
Analysis Summary Technology
Access to broadband prior to project Limited access.
Chosen broadband solution Wired FTTH network.
Broadband technology goals Ubiquitous access to 1 gigabit broadband.
Degree to which technology goals were met High: All homes and business have access to speeds of up to 10Gbps.
Tech sector pre- and post-implementation LimitedèEmerging
Policy
Main policy goal(s) Access to high-speed broadband and economic development.
Degree to which main policy goals were met High: Ubiquitous access coupled with an estimated $865 million-$1.3 billion in city
benefits.
Importance of other local/state/federal plans to the project
Critical: Local and federal investments in smart grid infrastructure
Importance of local champions Critical: Strong leadership to battle lawsuits and support forward-looking vision.
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Extent to which implementation roadblocks were removed
Moderate: The major implementation roadblock was legal, which was difficult to avoid. However, integration with smart grid
project made fiber deployment easier.
Extent to which project has contributed to additional smart city/broadband initiatives
High: Influx of tech firms seeking to take advantage of the network. Emerging research
hub for smart city innovations.
Finance
Primary project financing Municipal revenue bond and federal funding.
Public-private spectrum Fully public.
Main project partners EPB (municipal electric utility)
Ownership of asset City (fiber)
Risk allocation and responsibilities DBFOM: EPB (municipal)
Existence of performance-based language in agreement Not applicable.
Revenue/funding source Subscribers to ISP. Cost efficiencies from smart grid to EPB.
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Project Analysis: Kansas City, MO/KS
Table 3.7: Kansas City, MO (Quick Facts)
Table 3.8: Kansas City, KS (Quick Facts)
Kansas City, MO Quick Facts Kansas City, KS Quick Facts
Population Occupied Housing
Units
Median Household
Income Population
Occupied Housing
Units
Median Household
Income 467,990 195,033 $45,821.00 148,855 54,629 $38,749.00
Overview
In March 2011, Kansas City, KS was named the first test site for Google Fiber’s gigabit
speed broadband deployment, which was expanded to include Kansas City, MO just two months
later.275 Despite stated goals of bridging the digital divide with the eventual objective of
providing ubiquitous access to high-speed broadband, the results have been mixed since first
deployments began in 2012.276 That being said, Google’s investment has connected thousands of
homes and businesses to gigabit speeds, and has been linked to a continued growth in the city’s
tech sector.277 What’s more, the city has leveraged its improved reputation to build partnerships
to expand access to public Wi-Fi and integrate digital technologies into the built environment.278
Technology
Before implementation began in 2012, 25% of residents in the Kansas City metropolitan
area did not have a broadband Internet connection in their homes, and 17% had no Internet
275 Trogdon, "Lessons from Google Fiber: Why Coordinated Cost Reductions to Infrastructure Access Are Necessary to Achieve Universal Broadband Deployment." 276 Ibid. 277 Patrick Sisson, "In Kansas City, Google Fiber Has Mixed Results," Curbed, January 17, 2017, https://www.curbed.com/2017/1/17/14298148/kansas-city-google-fiber-tech-hub. 278 Kristen Hall-Geisler, "Kansas City Is Now a Smart City," Tech Crunch, February 7, 2017, https://techcrunch.com/2017/02/07/kansas-city-is-now-a-smart-city/.
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access of any kind, according to a survey conducted by Google.279 About 8% of residents used
dial-up or slow wireless connections.280 Despite poor connectivity in pockets of the city, Kansas
City already had an emerging tech sector before Google Fiber came to town. The metropolitan
areas had the third biggest increase in high-tech startup density among the largest metropolitan
areas in the U.S. from 1990-2010.281 One of the reasons Google chose Kansas City was because
of its “deep roots in education, healthcare, technology, and entrepreneurship.”282 After Google
Fiber announced it was bringing gigabit speeds to Kansas City, the mayors on both sides of the
state line created a bi-state innovation team.283 That team created a playbook to “determine ways
to take advantage of Google’s investment in high-speed fiber.”284 Today, KC Digital Drive, a
local non-profit, is tasked with implementing that playbook, which focuses on closing the digital
divide, expanding digital infrastructure, and driving economic development through leadership in
technology.285 In terms of start-up activity, Kansas City continues to improve, jumping from 29th
to 18th in the most recent rankings from the Ewing Marion Kauffman Foundation.286
279 The State of Internet Connectivity in KC, Google and Mayor's Bi-State Innovation Team, June 22, 2012, https://docs.google.com/file/d/0BzFtF8hfXfXDczN6TXVyT2VDajQ/edit. 280 Ibid. 281 Dane Stagler, Path-Dependent Startup Hubs: Comparing Metropolitan Performance: High-Tech and ICT Startup Density, Ewing Marion Kauffman Foundation, September 2013, http://www.kauffman.org/~/media/kauffman_org/research%20reports%20and%20covers/2013/09/pathdependentstartuphubscomparingmetropolitanperformancehightechandictstartupdensity.pdf. 282 Sisson, "In Kansas City, Google Fiber Has Mixed Results." 283 Colin Wood, "The Google Perspective: Gigabit Internet in Local Governments," Government Technology, May 28, 2013,. http://www.govtech.com/wireless/The-Google-Perspective-Gigabit-Internet-in-Local-Governments.html. 284 Mayors’ Bistate Innovation Team Google Fiber Playbook, Mid-America Regional Council, Mayors’ Bi-State Innovation Team, October 19, 2011, 1, http://marc.org/Government/pdf/MBITPlaybook.aspx. 285 Playing to Win in America's Digital Crossroads, Mid-America Regional Council, Mayors’ Bi-State Innovation Team, June 2012, http://www.kcdigitaldrive.org/wp-content/uploads/2014/10/PLAYBOOK_1.pdf. 286 E.J. Reedy et al., The Kauffman Index: Startup Activity. Ewing Marion Kauffman Foundation, August 2016,
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Google’s investment in the Kansas City metro area has led to a number of positive
developments—including a startup village that straddles state lines, co-working spaces provided
by Think Big Partners, and Digital Sandbox KC (a proof-of-concept lab for entrepreneurs).287
Last year, Kansas City, MO announced a $15 million public-private partnership with Cisco,
Sprint, and Think Big Partners to implement a smart city initiative to provide free public Wi-Fi,
connected LED streetlights, and interactive kiosks along the city’s new streetcar line.288 This
emerging “smart” corridor now consists of free Wi-Fi across 50 blocks, 125 connected LED
streetlights, and about a dozen kiosks.289 The city uses these connected technologies to display
information on the streetcar’s location, available parking spaces, and traffic speeds on a live map
that anyone can access online.290 In lights of these developments, it is hard to see Google Fiber’s
investment as anything other than a catalyst for Kansas City’s emergence as a U.S. leader in
smart city innovations.
Policy
In terms of policy, the Kansas City approach to improving its broadband connectivity was
to leverage as much economic benefit as possible from Google’s investment while making it as
low-cost and painless as possible for Google to build its fiber network. Before implementation,
both Kansas City and Google also stated the goal of bridging the digital divide by providing
http://www.kauffman.org/~/media/kauffman_org/microsites/kauffman_index/startup_activity_2016/kauffman_index_startup_activity_metro_trends_2016.pdf. 287 Leslie Collins, "'We're No Longer Flyover Country' — KC Looks Back on Progress since Google Fiber," Kansas City Business Journal, August 19, 2015, http://www.bizjournals.com/kansascity/news/2015/08/19/kansas-city-google-fiber-progress-future.html. 288 "Kansas City Launches World’s Most Connected Smart City," News release, May 5, 2016, Kansas City, MO. http://kcmo.gov/news/2016/kansas-city-launches-world-most-connected-smart-city/. 289 Hall-Geisler, "Kansas City Is Now a Smart City." 290 Ibid.
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access to Google Fiber’s network across the community. In general, the Kansas City
metropolitan area has done a better job leveraging the investment for economic development
than it has at bridging the digital divide between rich and poor residents.
The efforts of both local governments to take advantage of the Google’s investment are
illustrated through its support for organizations like KC Digital Drive—which grew out of the bi-
state innovation team that was created when Google selected Kansas City.291 While Google
Fiber’s investment wasn’t directly connected to other specific smart city projects, the existence
of the fiber network has helped to grow Kansas City’s reputation as an innovative city, allowing
numerous tech-related businesses and digital infrastructure projects to take route.292 The
metropolitan area has positioned itself as a leader in smart city innovation—and plans to play
host to the third annual Gigabit City Summit in August 2017—a meeting organized by KC
Digital Drive that attracts city leaders from across the country.293
City officials in both states chose to provide Google Fiber access to public rights-of-way
without charging fees.294 When building broadband networks, a major cost for ISPs are the fees
291 Michael Stacy, "With Digital Drive, KC Leadership Continues Push to Make Most of Fiber," Silicon Prairie News, November 5, 2012, http://siliconprairienews.com/2012/11/with-digital-drive-kc-leadership-continues-push-to-make-most-of-fiber/. 292 Brady Dale, "New Google Fiber Expansion Ups Kansas City’s Tech Rep," Next City, November 20, 2014, https://nextcity.org/daily/entry/google-fiber-kansas-city-business-news; Jenny Che, "The Stone Age Is Over. Kansas City Definitely Got The Memo," Huffington Post, May 6, 2016, http://www.huffingtonpost.com/entry/kansas-city-smart-technology_us_572cf566e4b016f37895d160; Andrew Hawkins, "Kansas City Just Installed Free Public Wi-Fi and Dozens of 'smart' Streetlights," The Verge, May 9, 2016, https://www.theverge.com/2016/5/9/11640558/kansas-city-free-public-wifi-smart-streelights-google-sprint-cisco. 293 KC Digital Drive, "Leaders in Smart City Innovation, Tech and Economic Development to Convene in Kansas City for Third Annual Gigabit City Summit," News release, April 4, 2017, Gigabit City Summit, http://gigabitcitysummit.com/leaders-in-smart-city-innovation-tech-and-economic-development-to-convene-in-kansas-city/. 294 Trogdon, "Lessons from Google Fiber: Why Coordinated Cost Reductions to Infrastructure Access Are Necessary to Achieve Universal Broadband Deployment."
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charged by state-and-local governments to access public rights-of-way (e.g. poles, conduits,
roads, power lines).295 In waiving the rights-of-way fees, Kansas City proactively removed a
common implementation roadblock to broadband deployment on both sides of the state line. City
officials also expedited the permitting process and assigned staff to help Google through this
process.296 In the words of Fred Campbell, a former FCC official: “Google received stunning
regulatory concessions and incentives… including free access to virtually everything the city
owns or controls.”297 “The key element for Google was that Kansas City officials promised to
stay out of the way,” Campbell added.298 In addition, both the Kansas and Missouri governments
allowed Google to make installations in certain areas based on pre-determined demand for its
services as opposed to building the network out to everyone as a matter of course.299 Google
sectioned off Kansas City into “fiberhoods,” where it was able to institute minimum
requirements for providing services based on population density.300 This approach ultimately put
control over project outcomes directly in the hands of the private sector, limiting the city’s ability
to drive equitable access. “Google avoided building out infrastructure until it was assured that a
large enough consumer based wanted the product,” writes Holly Trogdon in her analysis of the
project published in the Federal Communications Law Journal.301
295 Ibid. 296 Fred Campbell, "What Google Fiber Says about Tech Policy: Fiber Rings Fit Deregulatory Hands," Technology Liberation Front, August 7, 2012, https://techliberation.com/2012/08/07/what-google-fiber-says-about-tech-policy-fiber-rings-fit-deregulatory-hands/. 297 Ibid. 298 Ibid. 299 Franzen, "Broadband Gap: Google Fiber Isn't the Only Revolution In Kansas City." 300 Ibid. 301 Trogdon, "Lessons from Google Fiber: Why Coordinated Cost Reductions to Infrastructure Access Are Necessary to Achieve Universal Broadband Deployment," 116.
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In response to this reality, the national media criticized the project for overselling the
concept of using Google’s investment to decrease the digital divide in Kansas City.302 Aaron
Deacon of KC Digital Drive wrote a response to this national narrative that yields insight into the
reality of the situation, and illustrates the challenges associated with providing equitable access
(in general). First, 96% of the designated fiberhoods across Kansas City, KS and Kansas City,
MO have qualified for Google Fiber deployment in spite of pre-subscription thresholds.303 There
has not been any direct exclusion of poorer neighborhoods, but the take rate in those
neighborhoods is only about 11%.304 Second, even though Google’s investment has not been
able to solve all issues related to digital inclusion, it is a false narrative to say that the company is
responsible for the problem, according to Deacon.305 In fact, Google Fiber does offer lower-
speed, lower-priced options, which include a $15-a-month broadband connection.306 Google has
also partnered with U.S. Department of Housing and Urban Development to wire select housing
projects across the city.307 In addition, Google helped to establish a Digital Inclusion Fund that
boasts over one million dollars committed to local projects.308
These realities provide two main takeaways. First, in choosing to cede control over
project outcomes to the private sector, Kansas City was never going to be able to ensure that all
residents were able to connect to high-speed services regardless of income. No matter how
302 Alistair Barr, "Google Fiber Leaves a Digital Divide," The Wall Street Journal, October 2, 2014, https://www.wsj.com/articles/google-fails-to-close-kansas-citys-digital-divide-1412276753. This article is a representative example of how the national media has critiqued the project. 303 Aaron Deacon, "The Truth About Google Fiber and the Digital Divide in Kansas City," KC Digital Drive (blog), April 3, 2015, http://www.kcdigitaldrive.org/article/the-truth-about-google-fiber-and-the-digital-divide-in-kansas-city/. 304 Ibid. 305 Ibid. 306 Sisson, "In Kansas City, Google Fiber Has Mixed Results." 307 Ibid. 308 Deacon, "The Truth About Google Fiber and the Digital Divide in Kansas City."
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benevolent Google may or may not be, it still has fiduciary obligation to its shareholders that
limit its ability to make investments that will not achieve a positive return. Second, larger
problems exist in Kansas City—and many other cities—that supersede attempts by the city and
its private partner to improve access to broadband services. The central issue is that many
residents simply don’t perceive the need for broadband services, or simply choose to spend there
limited cash in other areas.309
Closely evaluating these issues ultimately challenges a policy approach built around the
assumption that lowering common barriers to implementation will enable a private sector ISP to
provide services that truly connect all residents. For instance, Holly Trogdon’s study of Kansas
City’s fiber rollout concluded that: “The market has demonstrated, at least in the bubble that is
Google Fiber and Kansas City, that eliminating fees for rights-of-way access does not lead to
universal service.”310 What’s more, Google Fiber has faced legal challenges in some areas;
incumbent telecoms have sued cities for providing Google with easier access to utility poles.311
This legal gray area further calls into question whether or not a project and financing model
reliant on preferential municipal treatment is viable over the long-term. Google Fiber has also
run into its own financial troubles, announcing in October of 2016 that it would be pausing or
ending its fiber operation in ten cities.312 While the company said it would continue deployment
309 Barr, "Google Fiber Leaves a Digital Divide." 310 Trogdon, "Lessons from Google Fiber: Why Coordinated Cost Reductions to Infrastructure Access Are Necessary to Achieve Universal Broadband Deployment," 138. 311 Jon Brodkin, "Google Fiber Division Cuts Staff by 9%, “pauses” Fiber Plans in 11 Cities," Ars Technica, October 25, 2016, https://arstechnica.com/information-technology/2016/10/google-fiber-laying-off-9-of-staff-will-pause-plans-for-10-cities/. 312 Ibid.
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in cities where it had already deployed services, reports of Google cancelling planned
installations surfaced in Kansas City in early 2017.313
Even after taking these factors into account, the Kansas City metropolitan region is much
better off today than it was before Google entered the picture. In terms of incenting competition,
AT&T has since offered gigabit services in the Kansas City metropolitan region.314 Google
doesn’t publish details about the amount of customers in the region using its fiber network, but
we do know that Google Fiber’s investment has yielded significant benefits for the city even if
the project hasn’t yet been able to solve all the problems related to the digital divide. For its part,
Kansas City has recently adopted a digital equity strategic plan, which focuses on access to
computing devices and digital skills training, in addition to providing connectivity.315 This
concerted municipal focus on equity reflects the realization that simply providing access to high-
speeds isn’t enough. More needs to be done if cities across the country want to truly provide
access to broadband connectivity as a means to help all residents participate in the growing
digital economy.
Finance
From a financial perspective, the risks for the project are almost entirely borne by
Google. The best estimates available show that total cost for Google to pass 149,000 households
313 Jon Brodkin, "After Years Waiting for Google Fiber, KC Residents Get Cancellation E-mails,” Ars Technica, March 20, 2017, https://arstechnica.com/information-technology/2017/03/google-fiber-reportedly-canceling-installations-in-kansas-city/. 314 AT&T, "AT&T Launches Ultra-Fast Internet Speeds in Four Cities," News release, May 10, 2016, http://about.att.com/newsroom/ultrafast_gigabit_internet_speeds_may_2016.html. 315 Kansas City, MO, City Manager's Office, "Digital Equity Strategic Plan." News release, March 9, 2017, http://kcmo.gov/citymanagersoffice/digital-equity-strategic-plan/.
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across Kansas City was $94 million.316 These high upfront costs are just one of the reasons why
cities tend to rely on private sector investment to expand high-speed broadband access. Within
that context, it makes sense that Kansas City was willing to give up potential revenues collected
from rights-of-way fees in exchange for Google bearing the cost of constructing the fiber
network. It also makes sense that Google Fiber has significantly slowed down its expansion
given the costs of deployment and the legal roadblocks it has run into.
Revenue for the project is the same as that provided to any ISP—a subscription model for
those who will pay for Google Fiber’s services. While Google Fiber has worked with the city to
promote digital inclusion, support non-profit groups, and offer lower-priced packages to low-
income residents, none of these efforts were specifically mandated as part of Google’s contract
with Kansas City.317 The performance-based language in the agreement related to Google’s
obligations are vaguely worded around providing “high-speed Internet access,” and the only
detailed requirements are related to passing fiber by designated government buildings so that
they can connect to the network “free of charge.”318
Summary
Kansas City’s broadband implementation model with Google Fiber is best described as
providing public support for private implementation. Lofty goals related to digital inclusion are
yet to be fully realized, but Kansas City’s situation illustrates the economic development benefits
typically harvested after high-speed broadband is deployed. What’s more, Kansas City has been
316 Jay Yarow, "It's Surprisingly Inexpensive For Google To Build Its Cable-Destroying Google Fiber Network," Business Insider, April 8, 2013, http://www.businessinsider.com/the-cost-of-building-google-fiber-2013-4. 317 Deacon, "The Truth About Google Fiber and the Digital Divide in Kansas City." 318 Kansas City, MO, Development Agreement: Final Execution Version, 7, http://www.netcompetition.org/wp-content/uploads/Google-Kansas-Agreement1.pdf. The Kansas City, MO agreement is nearly identical to the Kansas City, KS agreement.
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able to position itself as a cutting-edge city that is willing and able to experiment with smart city
technologies to improve the lives of its citizens. The city’s smart corridor along its newly built
streetcar line is just one example of how Google’s investment has paid dividends for the city,
even if it has done so indirectly.
Table 3.9: Kanas City, MO/KS Analysis Summary
Analysis Summary Technology
Access to broadband prior to project Limited access.
Chosen broadband solution Wired FTTH network.
Broadband technology goals Improved access to 1 Gigabit broadband.
Degree to which technology goals were met
Moderate: Thousands of homes and businesses connected, unclear how the project will proceed after Google’s plans to scale back
its fiber business.
Tech sector pre- and post-implementation EmergingèThriving
Policy
Main policy goal(s) Improved access to high-speed broadband,
bridging digital divide, and economic development.
Degree to which main policy goals were met
Moderate-High: Many low-income residents still lack access, but investment has catalyzed city's burgeoning tech sector and has built its
reputation as a smart city hub.
Importance of other local/state/federal plans to the project
Less Important: Minimal related efforts outside of submitting Google Fiber application.
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Importance of local champions Critical: Both Mayors set up bi-state team to garner most from Google's investment.
Extent to which implementation roadblocks were removed
High: Waived rights-of ways fees and expedited permitting process.
Extent to which project has contributed to additional smart city/broadband initiatives
High: Tech start-up village. Organizations to address the digital divide. Wireless
experiments including a partnership for free Wi-Fi and other digital innovations along its
"smart" transit corridor.
Finance
Primary project financing Private sector capital allocation.
Public-private spectrum Private-led investment, public support.
Main project partners City, Google Fiber Ownership of asset City (fiber)
Risk allocation and responsibilities DBFOM: Google Fiber
Existence of performance-based language in agreement
Limited: Vague language around providing high-speed Internet services.319
Revenue/funding source Subscribers to ISP.
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Project Analysis: Los Angeles, CA Table 3.10: Los Angeles, CA (Quick Facts)
Quick Facts
Population Occupied Housing Units Median Household Income
3,900,794 1,342,761 $50,205.00
Overview
Los Angeles (L.A.) is expanding mobile 4G LTE wireless connectivity across the built
environment by installing “smart poles” through a public-private partnership with Royal Philips
and Ericsson.320 Philips has contracted with Ericsson to integrate its small cell mobile wireless
technology into every pole.321 The pilot project involves the eventual installation of 600 poles
with possibility for more of the city’s streetlight infrastructure to be equipped with the
technology in the future.322
Technology
The government of L.A. owns over 800 miles of fiber and the network has significant
spare capacity.323 The city’s ownership of fiber enables it to easily connect each smart pole to its
underlying fiber network.324 The smart pole project serves as an example of the kinds of smart
city technologies that cities are able to deploy if they have a fairly robust broadband backbone in
320 "‘Smart Poles’ Will Earn City Money While Improving Quality of Life," The National Council for Public-Private Partnerships, November 6, 2015, http://www.ncppp.org/smart-poles-will-earn-city-money-while-improving-quality-of-life/. 321 David Curry, "Cell Phone Towers Might Be Getting Replaced by Philips' New Streetlights," Digital Trends, November 10, 2015, https://www.digitaltrends.com/cool-tech/los-angeles-4g-streetlights/. 322 "‘Smart Poles’ Will Earn City Money While Improving Quality of Life," The National Council for Public-Private Partnerships. 323 Hernán Galperin et al., "America’s Broadband Market Needs More Competition," GCN, March 6, 2017, https://gcn.com/Articles/2017/03/06/broadband-competition.aspx?Page=1. 324 "Los Angeles CityLinkLA," FOA News, March 2016, http://www.thefoa.org/foanl-3-16.html.
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place. What’s more, integrating small cell technology into existing infrastructure assets is widely
seen as one of the most promising ways to support 5G wireless networks when the technology
becomes available in the early 2020s.325 This project positions the city as a leader in expanding
wireless connectivity throughout the built environment to enable the smart city applications of
the future.
The technology sector in L.A. has been fairly strong for some time—high-tech in the city
accounts for 9% of all employment and almost 17% of all payroll wages.326 In general, L.A. has
positioned itself as one the more progressive smart cities in the United States via experiments
with open data, connected sensors, and urban mobility solutions.327 The smart pole pilot project
is connected to the city’s various streetlight modernization efforts, which include LED
conversions, solar paneling, connected monitoring, and electric vehicle charging stations.328
However, just because L.A. is experimenting with intelligent, connected technologies,
does not mean it does not have more basic connectivity issues. In spite of the fact that city leases
its excess fiber capacity to businesses and government entities, approximately 30% of L.A.’s
residents do not have access to broadband speeds. 329 The city ranked 113th out of 493 U.S. cities
325 Larson, "Reader Forum: Building Blocks for 5G – What Is Fiber’s Role?" 326 High Tech in LA: Its Employment and Economic Contribution In 2013, Institute for Applied Economics, Los Angeles County Economic Development Corporation, October 2014, http://laedc.org/wp-content/uploads/2014/10/High-Tech-in-LA_20141006_FF.pdf. 327 Zach Baliva, “L.A. is a Smart City on the Rise,” Profile Magazine, December 15, 2016, http://profilemagazine.com/2016/city-of-los-angeles/. 328 Maddox, "How LA Is Now Saving $9M a Year with LED Streetlights and Converting Them into EV Charging Stations." 329 "Fiber Optics," Los Angeles Department of Water and Power, https://www.ladwp.com/ladwp/faces/ladwp/partners/p-fiberoptics;jsessionid=ZyRYZWBHzYnmGsDmYZFmRRT3SDQ2NLL10QnS1dN3TL0mD5yz1Ppp!-676004608?_adf.ctrl-state=h6byrfeu3_4&_afrLoop=23439985835698&_afrWindowMode=0&_afrWindowId=z#%40%3F_afrWindowId%3Dz%26_afrLoop%3D23439985835698%26_afrWindowMode%3D0%26_adf.ctrl-state%3Dab4gxhv1e_4; Los Angeles, Information Technology Agency, Request for
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in terms of Internet speeds, according to a 2014 report by the Open Technology Institute.330 To
tackle these challenges, the city launched the CityLinkLA initiative to encourage the private
sector to build wired and wireless technology to connect every resident and business in LA to
high-speed broadband.331 The city’s ownership of fiber and streetlight poles are valuable public
assets. For instance, in the RFP for CityLinkLA, the city offers excess fiber to the prospective
private sector partner under a long-term lease in addition to making street poles available for the
installation of wireless technologies.332
Policy
The smart pole project is integrated into a L.A. Bureau of Street Lighting (BSL) initiative
to upgrade the city’s 219,000 municipally owned streetlights—which BSL is responsible for
operating and maintaining.333 As part of this initiative, approximately 170,000 of the city’s
streetlights have been converted into LED lights.334 In spite of a $57 million price tag to convert
the streetlights to LED, the city is now saving almost nine million dollars per year on energy
costs.335 The project has received considerable public support from Mayor Eric Garcetti, and has
Participants CityLinkLA Initiative for Deployment of Advanced Broadband Systems, June 23, 2015, http://citylinkla.org/rfp/RFP-CityLinkLA-6-16-15-c2.pdf. 330 Nick Russo et al., The Cost of Connectivity 2014, Open Technology Institute, October 2014, https://na-production.s3.amazonaws.com/documents/the-cost-of-connectivity-2014.pdf. 331 "About," CityLinkLA, http://citylinkla.org/about/index.htm. 332 Los Angeles, Information Technology Agency, Request for Participants CityLinkLA Initiative for Deployment of Advanced Broadband Systems. 333 Los Angeles, Department of Public Works, Annual Report Fiscal Year 2015 – 2016, March 10, 2017, http://dpw.lacity.org/sites/g/files/wph731/f/DPW_REVISED_FINAL%20ANNUAL%20REPORT%20FOR%20PRINTER%2015-16%20FINAL%2003-10-17.pdf. 334 Ibid. 335 Maddox, "How LA Is Now Saving $9M a Year with LED Streetlights and Converting Them into EV Charging Stations"; Julie Kim, Handbook on Urban Infrastructure Finance, New Cities Foundation, 2016, http://www.newcitiesfoundation.org/wp-content/uploads/2016/03/PDF-Handbook-on-Urban-Infrastructure-Finance-Julie-Kim.pdf. The city financed the upfront costs
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been spearheaded by Ed Ebrahimian, the Director of the L.A.’s BSL. This city’s partnership with
Philips for the smart pole project is actually an extension of an existing partnership it has with
the company to install Philips’ CityTouch technology into streetlights across the city.336 The
CityTouch technology consists of a connector node that can be installed on both LED and legacy
streetlights, which allows the city to monitor and dim streetlights remotely via a central control
center.337
The city has installed 100 smart poles across the city —with plans to install 500
additional poles over the next four years.338 As a matter of policy, the partnership with Philips
and Ericsson isn’t exclusive in the sense that the city is open to working with other companies as
well to build its mobile wireless network across thousands of available poles across the city.339
About 140,000 streetlight poles are good candidates for mounting wireless technology, according
to specifications developed by the city.340 In total, there are about 415,000 poles in L.A. (ranging
from streetlights to utility poles) that are candidates for future small cell deployments like those
used in Philips’ smart poles, according to Ebrahimian.341 In essence, city officials see this project
through loan and rebate funds from the city’s Department of Water and Power, but was able to repay the loan within seven years with no adverse impact on its general fund. 336 Curry, "Cell Phone Towers Might Be Getting Replaced by Philips' New Streetlights." 337Blazing the Trail for Connected Street Lighting. Philips, 2015. http://images.philips.com/is/content/PhilipsConsumer/CaseStudies/CALI20151102_001-en_AA-PHI20009-citytouch-la-brochure-final.PDF. This allows the city instantly see if a streetlight is malfunctioning instead of having to rely on citizens to report outages. 338 Maddox, "How LA Is Now Saving $9M a Year with LED Streetlights and Converting Them into EV Charging Stations." 98 were officially installed as of June 2016: Los Angeles, Department of Public Works, Annual Report Fiscal Year 2015 – 2016. 339 Kayla Nick-Kearney, "L.A. Installs Next-gen, Wireless-enabled Street Lights," State Scoop, November 18, 2015, http://statescoop.com/l-installs-next-gen-wireless-enabled-street-lights/. 340 Los Angeles, Information Technology Agency, Request for Participants CityLinkLA Initiative for Deployment of Advanced Broadband Systems. 341 Nick-Kearney, "L.A. Installs Next-gen, Wireless-enabled Street Lights."
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as just the beginning of a larger transformation of the city’s public assets into a massive network
that supports wireless connectivity.
Finance
As part of the public-private partnership agreement, Phillips covers the costs of installing
the poles and provides L.A. a portion of the fee it will charge wireless carriers for the access.342
This portion amounts to $1,224 per year for each smart pole, and Philips must pay a $400
permitting fee for each smart pole installed, according to the contract.343 Permits are issued for a
five-year term with four five-year options, and there is a mutual cancellation clause that is
available at the start of each term.344
The partnership is a low-risk situation for the city of L.A., as Philips is financing the
project at no additional costs to taxpayers. Each pole contains two-to-three small cell
compartments, which are leased to one wireless carrier, but competing carriers can access nearby
poles.345 The project also benefits from the fact that L.A. owns and operates its own power
utility, which allowed the city to waive the need for separate metering equipment often required
for small cell installations in streetlights.346 Instead, L.A.’s power utility simply provides the
requisite power to Philips, and then Philips reimburses the city.347
342 "‘Smart Poles’ Will Earn City Money While Improving Quality of Life," The National Council for Public-Private Partnerships. 343 San Jose, California, Philips Smartpole Update and Proposed Agreement, November 21, 2014, http://sanjoseca.gov/DocumentCenter/View/37953. L.A.’s official agreement with Philips is not publicly available. However, key components of L.A’s partnership are detailed in San Jose’s similar agreement with Philips, which has been made available publicly. 344 Ibid. 345 Curry, "Cell Phone Towers Might Be Getting Replaced by Philips' New Streetlights." 346 San Jose, California, Philips Smartpole Update and Proposed Agreement. 347 Ibid.
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When the network is expanded to 600 smart poles by 2018, project revenues for the city
should rise to approximately $720,000 annually.348 Given the sheer number of poles the city
owns, this pilot project could serve as a model to generate significant future revenues for the
city—particularly as the importance of building dense wireless networks closer to the end-user
intensifies with the need to support 5G technologies.349 It is important to note that the revenues
generated by the smart poles are in addition to significant cost savings this city is already
realizing by converting its streetlights to LED.350 The city’s partnership with Philips for digital
technology projects is continuing to expand with announcement of another pilot project to mount
acoustic and environmental noise sensors on street poles to gather data to improve traffic flows,
increase public safety, and improve air quality.351
Summary
L.A.’s public-private partnership with Philips benefits from the city’s ownership of
critical infrastructure assets (e.g. fiber, streetlights). It certainly serves as a model for how more
technologically mature cities can provide the wireless connectivity required to support the digital
technologies of the future. While the city still has significant issues in terms of ubiquitous
residential access to high-speed broadband, it is making a concerted effort to leverage its public
assets to improve connectivity while staying at the vanguard of innovation in the smart city
space.
348 "‘Smart Poles’ Will Earn City Money While Improving Quality of Life," The National Council for Public-Private Partnerships. 349 Larson, "Reader Forum: Building Blocks for 5G – What Is Fiber’s Role?" 350 Maddox, "How LA Is Now Saving $9M a Year with LED Streetlights and Converting Them into EV Charging Stations." 351 Jonathan Andrews, "LA Deploys Streetlight Sensors In New Pilot," World Smart City Community, September 27, 2015, http://www.worldsmartcity.org/la-deploys-streetlight-sensors-in-new-pilot/.
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Table 3.1: Los Angeles, CA Analysis Summary
Analysis Summary Technology
Access to broadband prior to project Adequate, but inequitable access.
Chosen broadband solution Wireless 4G LTE small cell technology installed into publicly owned streetlights.
Broadband technology goals Improve mobile wireless network as part of larger streetlight modernization project.
Degree to which technology goals were met 100 "Smart Poles" installed, 600 planned with the opportunity for additional installations.
Tech sector pre- and post-implementation Mature Throughout.
Policy
Main policy goal(s) Improved mobile wireless coverage.
Degree to which main policy goals were met
On Track: The pilot is proceeding on schedule and is a promising means through which many more poles could be connected. Project has the potential to serve as a model for 5G-supported
small cell deployments.
Importance of other local/state/federal plans to the project
Important: City's streetlight modernization efforts built existing relationship with Philips
through which it is now partnering for multiple digital technology pilot projects.
Importance of local champions
Less Important: Leadership in this space established prior to the "Smart Pole" rollout.
This project comes at no cost to taxpayers and thus did not require extensive championing to
gain support at the local level.
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Extent to which implementation roadblocks were removed
Limited: Minimal roadblocks due to the existence of a fiber backbone and the
municipal electric utility to provide requisite power. Public ownership of streetlights expedites the implementation process.
Permitting fees are still required
Extent to which project has contributed to additional smart city/broadband initiatives
Moderate: Part of larger streetlight modernization project, which includes
connected streetlights, EV charging stations, and solar panels. The smart poles are a part of
that larger project as opposed to contributing to its implementation. However, access to
streetlights was offered to partners in the city’s initiative to expand broadband access via
CityLinkLA—the smart pole project could provide a model for potential private partners to expand wireless access throughout the city in addition to serving as a model for future 5G
deployments. Finance
Primary project financing Private sector capital allocation
Public-private spectrum Public-private partnership
Main project partners City, Philips, Ericsson
Ownership of asset City (streetlight poles) Philips/Ericsson (small cell technology)
Risk allocation and responsibilities Finance: Philips
Wireless Technology: Ericsson Installation: City (paid by Philips)
Existence of performance-based language in agreement
Limited: Plans to install 600 poles, with the opportunity for additional installations.
Revenue/funding source Leasing access to wireless carriers with a
portion of those revenues paid as rent to the city.
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Project Analysis: New York, NY Table 3.2: New York, NY (Quick Facts)
QuickFacts
Population OccupiedHousingUnits MedianHouseholdIncome
8,426,743 3,113,535 $53,373.00
Overview
New York City’s old payphone infrastructure is being replaced with public Wi-Fi kiosks
via a communications network called LinkNYC. The project is made possible through a public-
private partnership between New York City and a consortium of private companies called
CityBridge, LLC (see figure 3.2).352 The privately financed project generates revenues through
advertising and sponsorships.353 Free Internet access is available to anyone within about 150 feet
of a given kiosk, and the system is currently processing 40,000 new Wi-Fi sign ups each week.354
352 LinkNYC, Fact Sheet, https://www.link.nyc/assets/downloads/LinkNYC-Fact-Sheet.pdf. 353 Ibid. 354 Nikki Mascali, “A year after launching, LinkNYC reaches 1 million users: Officials,” Metro, January 19, 2017, http://www.metro.us/new-york/a-year-after-launching-linknyc-reaches-1-million-users-officials/zsJqas---0U2zbCL7LHjuY
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Figure 3.2: Public and Private Partners Behind LinkNYC
Source: Gigaom
Technology
The availability of broadband services in New York City is widespread for many
residents, according the government’s website, but there is lower adoption rate among low-
income and older residents.355 As of 2014, 27% of the city’s households lacked broadband
Internet at home.356 High costs and poor quality broadband services are major barriers to
correcting the digital inequality that exists within the city. In 2014, the top speed available to
355 "Broadband Access," New York City Department of Information Technology & Telecommunication, https://www1.nyc.gov/site/doitt/initiatives/broadband-access.page. 356 New York City, Office of the New York City Comptroller, Internet Inequality: Broadband Access In NYC, December 2014, https://comptroller.nyc.gov/wp-content/uploads/documents/Internet_Inequality.pdf.
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New Yorkers was 500mbps at $300 a month, whereas gigabit connections in cities like Kansas
City and Chattanooga can cost about $70 per month.357
It is within this context that New York City has embarked on improving Internet service
and access to all residents. The LinkNYC project is seen as one means to expand access—
offering gigabit connection speeds for free to anyone with a mobile device. The plan is to
eventually install 7,500 kiosks across all five boroughs, but that number could climb upwards to
10,000 kiosks.358 As part of its franchise agreement with the city, CityBridge has committed to
building hundreds of miles of fiber to connect to each kiosk so that they are able to provide high-
speed wireless connections throughout the city.359
As a whole, New York City is being noticed as one of the world’s smartest cities—the
Smart City World Congress named it the “2016 Best Smart City.”360 In addition to receiving
recognition for the LinkNYC project, the city was applauded for its commitment to wire
thousands of people located in public housing projects with free high-speed Internet.361 The city
has also shown a commitment to piloting various smart city technologies including gunshot
detection sensors and a connected vehicle pilot through a partnership with the U.S. Department
of Transportation.362
357 Nick Russo et al., The Cost of Connectivity 2014. 358 Tucker Bowe, “Inside the Company Turning NYC Into a Wi-Fi Hotspot,” Gear Patrol, March 29, 2016, https://gearpatrol.com/2016/03/29/linknyc-nyc-public-wi-fi-profile/ 359 LinkNYC, Fact Sheet. 360 New York City, Office of the Mayor, "New York Named “2016 Best Smart City,” NYC To Host 2017 International Conference On Urban Technology At Brooklyn Navy Yard," News release, November 28, 2016, http://www1.nyc.gov/office-of-the-mayor/news/909-16/new-york-named-2016-best-smart-city-nyc-host-2017-international-conference-urban. 361 "New York City Named Best Smart City of 2016," Medium (blog), November 18, 2016, https://medium.com/@intersection_co/new-york-city-named-best-smart-city-of-2016-d01e47c3f26b. 362 Ibid.
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It is important to note that New York City benefits from the strength of its economy and
the sizes of its market demand for broadband services. The city’s plans to utilize digital
technology also benefits from a thriving tech sector that many onlookers believe will eventually
surpass that of Silicon Valley.363 Progressive programs like “Marketplace.nyc” (a tool to help
government agencies discover smart city solutions) and Urban Technology NYC (a startup
accelerator program), serve to help the city’s entrepreneurs test and build smart urban
solutions.364 Innovative companies like Sidewalk Labs, a subsidiary of Google, and an indirect
investor in LinkNYC, are increasingly using the city as test-bed for emerging digital
technologies.365
Policy
In general, New York City’s franchise agreement with CityBridge is typical of the city’s
policy strategy for expanding access to high-speed broadband. In general, the city has sought to
form partnerships with the private sector to help the city reach its broadband goals. For example,
in 2012, New York City’s Department of Technology and Telecommunications (DoITT) signed
a franchise agreement with Time Warner Cable to expand its fiber-optic network across business
locations in the city; the plan is to lay 20 miles of fiber per year through 2020.366
363 Taylor Majewski, "How NYC Tech Growth Is Outpacing Silicon Valley," Built in NYC, December 11, 2015, http://www.builtinnyc.com/2015/12/10/numbers-behind-new-york-techs-steady-growth. 364 Nick Michell, "New York Awarded 2016 Best Smart City," Cities Today, November 23, 2016, https://cities-today.com/new-york-awarded-2016-best-smart-city/. 365 Julie Samuels, “New York’s tech success isn’t measure just in IPOs,” Venture Beat, May 13, 2017, https://venturebeat.com/2017/05/13/new-yorks-tech-success-isnt-measured-just-in-ipos/ 366 New York City, Department of Information Technology & Telecommunication, "Department Of Information Technology and Telecommunications and Time Warner Cable Business Class Announce $25 Million Investment to Expand Fiber Optic Network to Brooklyn Navy Yard and Key Business Locations Across City," News release, August 28, 2012, https://www1.nyc.gov/site/doitt/about/pr-120828.page.
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The city’s attempts to incentivize private broadband development haven’t always gone
smoothly, however. DoITT signed a more aggressive franchise agreement in 2008 with Verizon
for the telecom to expand fiber-optic services across all five boroughs to provide residential
access to all New Yorkers.367 The results of an audit conducted by DoITT revealed that Verizon
was falling short of its end of the bargain to wire everyone by 2014.368 In March 2017, New
York City sued Verizon claiming that the telecom broke the terms of its contract.369 This legal
tussle represents a major challenge to expanding fiber-optic services. Verizon claims that it
interpreted the contract to relate to upgrading the company’s existing copper line, and that doing
what the city asked “would impose immeasurable inconvenience and hardship on countless
residents and businesses.”370 This example further illustrates how working with the private sector
does not always result in the outcomes that a city would prefer, even in a place with high
population density and strong market demand,
Nonetheless, America’s most populated city is making a concerted effort to connect all its
residences to high-speed broadband. LinkNYC is just one important piece of that puzzle through
which the city hopes to provide Internet services to those that need it most. The city recently
announced the integration of “Aunt Bertha” into each LinkNYC kiosk—a mobile app that
provides information about social services like food pantries, emergency housing, childcare, and
367 "Broadband Access," New York City Department of Information Technology & Telecommunication. 368 Ibid. 369 Catherine Shu, "New York City Sues Verizon for Not Completing Citywide Fiber Network," Tech Crunch, March 14, 2017, https://techcrunch.com/2017/03/14/nyc-sues-verizon/. 370 Ibid.
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transportation assistance.371 Each kiosk also includes access to a city-run portal to apply for
government benefits.372
Both Mayor Bill de Blasio and former Mayor Michael Bloomberg have championed
broadband connectivity efforts, embraced data as a means to improve the lives of residents, and
determined ways to ease the burden of technology implementation.373 For example, New York
became one of the first major cities in the U.S. to allow microtrenching—a technique that
enables telecoms to deploy fiber more easily through shallow installations of conduit along the
outside of city sidewalks with minimal disruption to the existing built environment.374 This is a
potentially promising policy choice—the technique has been championed by the likes of Google
and major telecoms to make fiber installation easier.375 In addition to the ability to apply
microtrenching techniques, the burden of installing LinkNYC’s kiosks has been eased by the
decision to replace existing payphone infrastructure.376 Doing so makes it easier for CityBridge
to install new fiber conduit in areas where older wires existed previously.377
371 Laura Bliss, "New York City's Wi-Fi Kiosks Now Include a 'Yelp for Social Services'," City Lab, April 13, 2017, https://www.citylab.com/tech/2017/04/new-york-citys-wifi-kiosks-now-include-a-yelp-for-social-services/522801/?utm_source=nl__link6_041317. 372 Ibid. 373 Maya Wiley, "Broadband City: How New York Is Bridging Its Digital Divide," The Nation, January 8, 2016, https://www.thenation.com/article/broadband-city-how-new-york-is-bridging-its-digital-divide/; New York City, Office of the Mayor, "Mayor Bloomberg Announces New Initiatives to Expand Wireless and Broadband Connectivity," News release, September 30, 2013, http://www1.nyc.gov/office-of-the-mayor/news/315-13/mayor-bloomberg-new-initiatives-expand-wireless-broadband-connectivity/#/0. 374 "Broadband Access," New York City Department of Information Technology & Telecommunication. 375 Sean Buckley, "Google Fiber Says Microtrenching Accelerates Fiber Installation, Minimizes Community Disruption," Fierce Telecom, December 16, 2016, http://www.fiercetelecom.com/telecom/google-fiber-says-micro-trenching-accelerates-fiber-installation-minimizes-community. 376 Kif Leswing, "A Guide to New York’s Plan to Cover the City in Wi-Fi Hotspots," Gigaom, February 1, 2015, https://gigaom.com/2015/02/01/link-nyc-explained/. 377 Ibid.
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That being said, New York has not followed in Kansas City’s footsteps in terms of
providing numerous concessions to incent the private sector to deploy broadband solutions. For
example, in its contract with CityBridge, the city retains full control of its rights-of-way and has
the authority to deny requests.378 Before installation, CityBridge is required to acquire “all
necessary permits, authorizations, approvals, consents, licenses, and certifications,” along with
paying fees to obtain such permissions.379 The project penciled out without significant
concessions for the private sector partner largely because of the advertising revenues the kiosks
are projected to generate.380
There are currently about 800 active Wi-Fi kiosks across all five boroughs in the city of
New York.381 The city is on track to reach its goal of installing 7,500 kiosks across the city by
2023. Since it was launched in February 2016, over 1.2 million unique devices have connected to
the Wi-Fi network and generated $37.3 million in advertising revenues.382 Across 2016,
LinkNYC directly created 350 full-time jobs and indirectly created 265 jobs, according to
CityBridge estimates.383 To date, the systems of kiosks have been built out at zero cost to
taxpayers.384
378 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement: For the Installation, Operation, and Maintenance Of Public Communications Structures In The Boroughs Of The Bronx, Brooklyn, Manhattan, Queens and Staten Island, December 10, 2014, https://www1.nyc.gov/assets/doitt/downloads/pdf/Franchise-Agreement-for-Public-Communications-Structures-(REVISED-FINAL-12-10-2014).pdf. 379 Ibid, 28. 380 Leswing, "A Guide to New York’s Plan to Cover the City in Wi-Fi Hotspots." 381 Adam Rowe, "How the LinkNYC Network Heralds the Rise of Smart Cities," Tech.co, May 4, 2017, http://tech.co/smart-cities-linknyc-wifi-nyc-eco-2017-05. 382 Ivan Pereira and Laura Figueroa, "LinkNYC Continues Rapid Public Wi-Fi Expansion in Brooklyn, Queens." AM New York, March 29, 2017, http://www.amny.com/news/linknyc-continues-rapid-public-wi-fi-expansion-in-brooklyn-queens-1.13335946. 383 Gerald Schifman, "After Controversy, LinkNYC Finds Its Niche," Crain's New York Business, February 15, 2017,
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Finance
In December of 2014, New York’s Franchise and Concession Review Committee
approved a non-exclusive franchise agreement between CityBridge and New York City to install,
operate, and maintain the LinkNYC network.385 CityBridge is financing the construction of the
network in its entirety. The primary cost for CityBridge is the $200 million it has pledged to
build the underlying fiber-optic cables that will support each wireless hot spot.386 Under the
terms of the agreement, CityBridge must also pay the city a franchise fee in each contract year
equal to 50% of its gross revenues for that contract year, or a minimum guaranteed payment.387
The annual guaranteed payment is $20 million in the first year, and increases every year,
reaching $65 million in year 12.388 It is estimated that the city will receive $500 million in
revenue via this franchise fee over that 12-year period.389 Meanwhile, CityBridge expects to
recoup enough money to achieve a solid return on its investment.
The terms of the agreement include mutual assurances and performance-based language
related to maintenance, speeds, and the timing of installation.390 For instance, CityBridge must
upgrade technologies in the system no later than the 6th and 10th contract years ensure that the
http://www.crainsnewyork.com/article/20170215/TECHNOLOGY/170219939/after-controversy-linknyc-wi-fi-kiosks-have-been-gaining-popularity. 384 Michael Garofalo, "LinkNYC by the Numbers," NY Press, March 15, 2017, http://www.nypress.com/local-news/20170315/linknyc-by-the-numbers. 385 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement. 386 Sam Gustin, "LinkNYC's New Free Network Is Blazing Fast. But At What Cost to Privacy?" Motherboard, February 19, 2016, https://motherboard.vice.com/en_us/article/linknycs-new-free-network-is-blazing-fast-but-at-what-cost-to-privacy. 387 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement. 388 Ibid. 389 Leswing, "A Guide to New York’s Plan to Cover the City in Wi-Fi Hotspots." 390 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement.
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kiosks are “state of the art.”391 It is mandated that 4,450 kiosks must be operational by the fourth
year of the 12-year agreement.392 CityBridge will face fines if it does not install 7,500 links over
the first 8 years of the agreement, and CityBridge reserves the right to install more kiosks than
this if it would like.393
Any emergency repair work performed by the city on the kiosks must be reimbursed to
the city within 30 days of the receipt of the invoice.394 Throughout the length of the agreement
CityBridge must assume ownership of all existing public pay telephone systems, and is
responsible for the design installation, and maintenance of both the existing and replacement
structures (kiosks).395 Each kiosk must also provide fee or pay telephone services in addition to
free public Wi-Fi. 396 The contract mandates that each kiosk must provide speeds that can support
256 devices at 1 Gbps.397 This means that areas where many users are connected at once will not
have access to consistent gigabit speeds, but it is still a “dramatic improvement over most
existing wireless networks,” writes Sam Gustin, a technology columnist for Motherboard.398
After the 12-year term is completed, there is a city option to extend the agreement to 15
years if CityBridge submits a proposal to DoITT no later than one year before the initial term
391 New York City, Department Of Information Technology & Telecommunications, Amendment No. 1 to the Public Communications Structure Franchise Agreement, December 10, 2014, https://www1.nyc.gov/assets/doitt/downloads/pdf/amendment_no_1_to_the_public_communications_structure_franchise_agreeme.pdf. 392 "WBA Industry Award Case Study: LinkNYC," Wireless Broadband Alliance (blog), January 26, 2017, http://www.wballiance.com/wba-industry-award-case-study-linknyc/. 393 Leswing, "A Guide to New York’s Plan to Cover the City in Wi-Fi Hotspots." 394 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement. 395 Ibid. 396 Ibid. 397 Gustin, "LinkNYC's New Free Network Is Blazing Fast. But At What Cost to Privacy?" 398 Ibid.
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ends.399 The city is under no obligation to extend the franchise beyond its initial term.400 Under
the agreement, the city has the right to anonymous aggregated data created from Wi-Fi
services.401 This enables the city to better understand how frequently and where citizens are
using the network, which could reveal interesting insights for city planners and officials.
Summary
In the end, the public-private partnership between the city of New York and CityBridge
will yield one of the largest free public Wi-Fi systems in the world that yields revenues to the
city and provides returns to the private sector with no projected costs to the taxpayers. The model
works largely because of the significant advertising revenue it will generate for the private sector
partners. Smaller cities may not have the ability to generate such revenues for such an expensive
endeavor. That being said, it is an interesting alternative model for expanding access to all
citizens across a city with virtually no risk borne by the public sector. For city’s that can’t
command the advertising revenues that New York City can, the model becomes more feasible if
the city first implements a strategy to build an underlying fiber network through which future
wireless installations can connect.
Table 3.3: New York, NY Analysis Summary
Analysis Summary Technology
Access to broadband prior to project Strong, but inequitable access.
Chosen broadband solution Kiosks that serve as Wi-Fi hot spots.
Broadband technology goals Free access to 1Gbps wireless speeds.
399 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement. 400 Ibid. 401 Ibid.
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Degree to which technology goals were met 800 active kiosks active. At least 7,500 planned by 2023.
Tech sector pre- and post-implementation Mature Throughout
Policy
Main policy goal(s) Provide free high-speed wireless broadband access to support digital inclusion.
Degree to which main policy goals were met
In Progress: On track to provide access across all five boroughs. It is unclear exactly how
much the project will help low-income residents that need access the most.
Importance of other local/state/federal plans to the project
Limited: Not directly connected to other plans, but the project benefits from New York City’s leadership as a city willing to experiment with
innovative digital technologies.
Importance of local champions
Important: Mayor and others willing to embrace innovative ways to provide access. An
extension of the city's efforts to expand broadband access through well-structured
franchise agreements.
Extent to which implementation roadblocks were removed
Moderate: Replacing payphones enabled kiosks to be connected where fiber is more
easily installed. Microtreneching allows CityBridge to deploy fiber more efficiently.
However, all normal permissions and fees are required.
Extent to which project has contributed to additional smart city/broadband initiatives
Emerging: Provides model for extending outdoor Wi-Fi connectivity. Fiber built by
CityBridge could be leveraged for additional integration of digital technologies into the built
environment.
Finance
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Primary project financing Private sector capital allocation
Public-private spectrum Public-private partnership
Main project partners CityBridge Consortium: Intersection, CIVIQ Smartscapes, Qualcomm, Antenna
Ownership of asset CityBridge (existing payphones and new kiosks) throughout course of agreement.
Risk allocation and responsibilities
Finance: CityBridge Design: Antenna
Build: CIVIQ Smartscapes Wireless Tech: Qualcomm
Ads: Intersection
Existence of performance-based language in agreement
Substantial: Mandates related to the timing and scale of deployment, technology upgrades,
and speeds.
Revenue/funding source Advertising for CityBridge. Franchise fee paid to city.
CHAPTER FOUR: PRACTICE SYNTHESIS AND EMERGING STRATEGY
At the most basic level, cities need to ensure that citizens have world-class Internet access at reasonable prices. Cities are now platforms, and it is crucial for economic development and
civic life that everyone be wired. —Stephen Goldsmith and Susan Crawford, The Responsive City402
The six models analyzed for building broadband infrastructure should be viewed as
components of a smart city escalation strategy for town and cities of different sizes and
economic situations. Beginning with Leverett, MA, a rural town without access to broadband
402 Goldsmith, The Responsive City.
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speeds to more populous, economically vibrant cities like L.A. and New York City. More
advanced cities in this space possess both the capability to experiment with innovative smart city
technologies and the burden of providing Internet access to a vast swath of residents.
Stemming from this analysis, in conjunction with an extensive assessment of existing
literature and additional use cases, this research puts forth a broadband infrastructure maturity
model for smart cities that planners and city officials can use to determine how to tackle
connectivity issues (see figure 4.1). This model defines different categories of connectivity
across four levels: lacking (level one), baseline (level two), expanding (level three), and
ubiquitous (level four). In doing so, this model seeks to illustrate three important factors:
1. Where each community analyzed during the comparative analysis falls on the maturity
scale. Each municipality analyzed is purposely ordered, with New York City receiving
the highest maturity ranking, and Leverett receiving the lowest.
2. What different levels of connectivity enable in terms of integrating digital technology
into the built environment, economic development, and digital inclusion.
3. How different levels of connectivity relate to (or support) a given community’s specific
goals and aspirations.
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Figure 4.1: Broadband Infrastructure Maturity Model For Smart Cities
Source: Author via Smart Draw Online
How planners and city officials choose to move forward with broadband infrastructure
implementation should depend on where they fall on this scale in relation to their own
community’s specific needs and goals. That being said, every community should seek to move
from “level one” to “level two” on this scale if they want to be able to compete economically and
provide opportunity for residents in today’s digital world. Strategies for facilitating this upward
trajectory should be guided by an understanding of the implementation models other
communities employed to get there.403
However, small residential towns like Leverett are probably satisfied with achieving
baseline connectivity, and probably do not have much interest in implementing projects similar
403 These models will be synthesized in greater detail later in this chapter.
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to those seen in L.A. or Kansas City. Meanwhile, other communities may be interested in
experimenting with smart city pilot projects or wireless technologies once they have achieved
baseline connectivity levels—an aspiration that represents a movement from “level two to “level
three” on the maturity scale. “Level four” on the scale remains primarily aspirational, but
illustrates the connectivity levels that will be required to truly achieve the vision of the smart,
connected city.
Ultimately, what this analysis makes clear is that there is no cure-all solution to
increasing access to connectivity across a municipality. Each situation is dependent on a wide
variety of variables that will impact how a city or town can move forward. However, by digging
into those variables, these example help to provide a clearer pathway for cities and towns
grappling with how to remain competitive in today’s digital society.
If a municipality wants to proactively improve it broadband infrastructure, there are
basically three overarching models for doing so—all of which are represented in some way
across the six use cases evaluated throughout this comparative analysis. The first is a fully public
model, like the one in Chattanooga, where the public sector finances the project through any
combination of local, state, and federal financing and funding mechanisms (see figure 4.2). The
fully public model enables the city to have full control over project outcomes in exchange for
accepting the full weight of all the project’s risk. The risks of fully municipal broadband projects
are many, which range from vigorous opposition from incumbent telecoms and restrictive state
legislation to inadequate consumer demand and the city’s aptitude for operating these networks.
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Figure 4.2: SWOT Analysis-Municipal Broadband Network
Source: Author via Smart Draw Online
The second is to remove barriers or provide incentives to the private sector to invest in
local broadband infrastructure—this is best represented to by the Kansas City use case. In this
model, the government gets out of the way and does little in terms of seeking assurances from
the private sector to achieve specific project outcomes (see Figure 4.3). While Google Fiber’s
entry into Kansas City was purported by both parties as a means to promote digital inclusion,
nothing in the contract explicitly mandated such an outcome and the fate of such objectives were
ultimately left up to the nature of the private marketplace. Google does not have to provide
access to all homes and businesses in Kansas City, and only builds the infrastructure if the
demand is deemed adequate. This is certainly reasonable from a practical business perspective,
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but it ultimately falls short of the goal of providing access to connectivity for everyone. This
model is still a viable option, and Kansas City is certainly better off than it was before, but it
shouldn’t be construed as means to truly provide ubiquitous access across a given community.
Figure 4.3: SWOT Analysis-Private Investment + Public Support
Source: Author via Smart Draw Online
The third approach is to form a true public-private partnership—which represents a
spectrum of different possibilities related to risk allocation, public control, and project financing
(see figure 4.4). Broadband makes sense from a public-private partnership perspective because
there is a revenue source baked into it from charging network subscribers or fiber lessees. In
addition, an effectively structured partnership is the most promising model for most
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municipalities in terms of the public sector’s ability to retain relative control over the project’s
outcomes without necessarily having to bear the full burden of project risks relative to
implementation, market demand, financing, and maintenance. Public-private partnerships also
enable flexibility in terms of the structure of the agreement so that municipalities can strike the
right deal based on their own specific circumstances. This is particularly appealing in the
broadband space because each city’s baseline situation is variable, and thus each city’s goals and
objectives will be different.
Figure 4.4: SWOT Analysis-Public-Private Partnerships
Source: Author via Smart Draw Online
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The flexibility and viability of the public-private partnership model is made clear by the
different ways that Leverett, Westminster, L.A., and New York City were able to leverage it
based on their own specific circumstances and goals. In Leverett, its partnership model enabled
the small town to retain public control over its fiber infrastructure while contracting with
multiple partners to perform tasks that it wouldn’t be able to adequately perform on its own (e.g.
network operations and service provision). The town is also able to control network pricing and
mandate that speeds achieve 1Gbps for everyone.
In Westminster, the town also owns the underlying infrastructure. It is able to share some
of the burden of public financing with Ting its chosen service provider and network operator.
Ting must also operate the network on an open access basis to other competing ISPs. Because
Ting is eventually required to split its wholesale and retail businesses to provide admission to
other ISPs in an equitable manner, Westminster’s model is heralded as an ideal means through
which to foster healthier broadband competition, particularly in less populated areas. Other
towns and cities could choose to lease access to publicly owned fiber to achieve similar
outcomes, even if they choose not to enter in a contractual agreement with one private partner.404
The partnerships in Leverett and Westminster work because they focus on allocating risk to the
party most able to manage that risk effectively. In both cases, the partnership models are
structured so that access to all residents and businesses are eventually achieved.
Typically, smaller municipalities in less-connected cities will need to rely on more
complex and risky partnership models to reach the baseline requirements for more robust
404 Lee Roop, “Google Fiber Coming to Huntsville, AL,” Government Technology, February 10, 2017, http://www.govtech.com/dc/articles/Google-Fiber-Coming-to-Huntsville-Ala.html; Jeff Baumgartner, “AT&T Expands Fiber to 17 More Metros,” Multichannel News, March 4, 2017, http://www.multichannel.com/news/technology/att-expands-fiber-17-more-metros/411714. Huntsville, AL is leasing fiber from its publicly built and financed fiber network to the likes of Google and AT&T.
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development of digital infrastructure. Indeed, analysis of these case studies reveals that public-
private partnership models for connectivity projects become easier if there is already fairly
robust broadband infrastructure in place (represented by “level two” and “level three” on the
maturity scale).
For instance, L.A.’s partnership with Philips and Ericsson leverages the city’s existing
public assets (e.g. fiber, streetlights) to expand mobile wireless connectivity. This allows L.A. to
form a partnership where it can charge for access to infrastructure assets at virtually no risk to
taxpayers. Revenues for both parties are derived from leasing access to wireless carriers creating
a win-win for both public and private sector actors. The partnership has helped position L.A. as a
leader in terms of leveraging public assets to bolster its mobile wireless network—which will
become critical with the need to enable greater wireless connectivity across cities to support
more connected technologies and 5G mobile networks.
Similarly, New York’s public-private partnership with CityBridge comes at no cost to
taxpayers while providing revenues for both the private and public sectors through advertising.
CityBridge has committed to finance construction of fiber, but its efforts are aided by the fact
that a fairly solid fiber network already exists throughout the city through which CityBridge can
lease access nearby.405 The projects success so far has meant that versions of New York’s model
for providing free high-speed Wi-Fi are already being planned in other cities—with pilots being
launched in Chicago and London.406
405 New York City, Department Of Information Technology & Telecommunications, Franchise Agreement. 406 News Staff, "Chicago Enters Partnership for Smart Kiosk Deployment," FutureStructure, January 25, 2017, http://www.govtech.com/fs/Chicago-Enters-Partnership-for-Smart-Kiosk-Deployment.html; Jason Shueh, "New York’s Free Wi-Fi Kiosks to Debut in London by 2017," State Scoop, October 26, 2016, http://statescoop.com/new-yorks-free-wi-fi-kiosks-debut-in-london-by-2017.
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Both New York City and L.A. benefit from both the size of their markets and their
relative progressiveness in terms of data analytics, smart technology, and innovation—private
sector partners are looking for deals in these kinds of cities. However, the experiences of both
Chattanooga and Kansas City reveal that this status can be achieved for mid-sized cities as well
if cities proactively work to improve their underlying broadband infrastructure. It is easier to
develop partnerships and implement smart city plans that build from a strong broadband
backbone whereas it is much more complicated and difficult to build the backbone itself. In that
sense, this first step up the broadband maturity scale (“level one” to “level two”) is the hardest,
but most necessary step for enabling all future smart city applications. Even in Westminster, its
fiber network has led to the creation of organizations like MAGIC dedicated to leveraging the
fiber network to come up with innovative smart city solutions. Now that Westminster owns a
robust fiber backbone it is not inconceivable that it could eventually implement solutions similar
to those found in larger cities like New York and L.A.
Of course, determining the right broadband implementation model must take into account
numerous circumstantial factors related to the nature of state broadband laws, the nature of
regional broadband infrastructure, and the availability of public financing—particularly for
communities struggling to achieve baseline connectivity. For instance, state and federal funding
played a major role in making the projects in Leverett and Westminster come to fruition. If it
were not for publicly funded middle-mile fiber networks nearby, it is difficult to see how the
high-speed networks that exist today would have been built at all. It speaks to the important role
state and federal government can play in enabling broadband infrastructure upgrades
(particularly in rural areas), even if they aren’t involved in making last-mile connections to
specific municipalities.
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Urban Planning Recommendations
The lessons derived from of each municipality in the case analysis along with additional
examples and credible literature highlighted throughout this paper lend convincing support to the
idea that broadband infrastructure is the backbone of the smart city. It is from this backbone that
all future smart city innovations will eventually flow. Therefore, every city planner and official
should develop a strategic plan for building high-speed, high-capacity broadband infrastructure
assets.
The nature of each broadband strategy should depend upon each city’s specific
circumstances and goals. Planners and officials should spend a significant amount of time
upfront determining their goals and objectives based on what their communities need. From
there, the plan should be crafted by paying attention to situational factors such as the nature of
current broadband infrastructure, the availability of financing, and the governance mechanisms
that exist that will help (or hurt) the implementation process.
In general, broadband infrastructure strategies should focus on present and future
broadband technology considerations, with an eye toward how different technologies can enable
the implementation of additional smart city solutions (e.g. real-time monitoring, connected
infrastructure, improved mobility). In addition, each strategy should lay out distinct policy
recommendations for how to best enable the construction of broadband infrastructure in the most
cost-effective manner. A focus should be placed on leveraging the investment to advance the
city’s broader goals related to economic development, equity, improved efficiency, and
sustainability. Financing and partnership considerations should be weighed based on each
community’s appetite for risk coupled with its desire to have control over project outcomes.
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Traditionally, an urban planner might see plans for broadband connectivity as something
that is generally outside of his/her purview. However, this issue is much more important than
being able to download a YouTube video in milliseconds. Instead, broadband connectivity
strikes at the heart of issues related to social equity and economic opportunity that have been an
urban planning focal point for years. For instance, if a child cannot go home to do his/her
homework because they do not have adequate connectivity, are we not creating the same
economic and social divides that slum clearances did in the past? When devising plans for
connectivity, planners and city officials must avoid making the same mistakes they made in the
era of urban renewal where the prevailing new ideas of the day were implemented in a way that
benefitted the privileged few as opposed to benefitting everyone in an equitable manner.
It is within this framework that broadband plans and strategies for digital technology
should be approached. New, connected technologies are the driving force in our world today.
While there are legitimate gripes to be made about privacy and public control over the nature of
the public realm, these potential impediments to the adoption of digital technologies should not
be used as a means to resist change. Change is inevitable, and city planners need to be on the
frontlines to make sure that plans to implement those changes are grounded in improving
people’s live.
In addition, the idea of broadband as a legitimate economic development strategy should
not be overlooked. The nature of the global economy is changing rapidly, and cities that do not
have the necessary infrastructure to support the business community will struggle to compete
economically. With the exception of the tiny town of Leverett, which primarily wanted access to
high-speed residential connections, significant additional economic development benefits have
accrued from each analyzed municipality’s proactive efforts to expand connectivity across the
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community. This primarily takes the form of an emerging or bolstered tech or startup sector that
is eager to take advantages of the area’s fast Internet speeds and bandwidth.
This is not just about attracting high-tech startups, however. Every company in today’s
economy requires sufficient levels of connectivity, and broadband requirements to support these
enterprises will only continue to expand with the growth of cloud computing, intelligent
automation, and big data analytics. What’s more, residents will need to have access to high-
speed broadband both at home and throughout their local community in order to compete in
today’s job market. People will need additional opportunities to learn the skills required by
structural changes that will likely leave those without digital literacy disconnected and without
prospects in today’s world. This is not to mention how smart solutions can (and will) be
employed to tackle common municipal goals related to energy conservation, better governance,
and improved urban mobility. A robust broadband backbone leads to smart city partnerships that
enable each city to inch closer to the ideal goal of leveraging data and efficiencies to streamline
government operations and improve the lives of residents.
Therefore, planners and other city officials need to be laser-focused on how to improve
connectivity across the community. These investments, will not only yield dividends in terms of
cost-savings, economic development, data-driven planning, and government efficiency—it will
also help ensure that every person can compete in today’s digital world. With that in mind,
depending on where a community falls on the broadband infrastructure maturity scale for smart
cities, urban planners and municipal officials should develop strategies to do the following:
1. Connect every home and business to a high-speed broadband to establish baseline
connectivity levels (ideally gigabit speeds). This includes building an airtight business
case for proactive public leadership in some way, shape or form—whether it is incenting
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private deployment, or taking a more direct stake in the broadband business.
Implementation models should weigh the risks of public financing and asset ownership
against municipal control over project outcomes.
2. Itemize strategies for potential collaboration with the private sector. This includes
developing a full understanding of potential partnership models that could work for your
community.
3. Determine what broadband technology solution makes the most sense for your
community based on current connectivity levels. A fiber-optic backbone is recommended
as a future-proof investment to provide baseline connectivity, but the required scale and
nature of implementation will vary by community.
4. Determine how to best leverage funding from the state and federal government, and
lobby politicians for additional funding support for broadband infrastructure deployment.
5. Review and potentially revise policies related to how your community provides access to
public rights-of-way, including an assessment of how permitting fees are structured for
different kinds of technological deployments (e.g. small cells versus macro cells).
6. Integrate broadband infrastructure plans into the community’s broader economic
development strategies to foster industry growth and build education programs that
provide residents with the skills they need for this century.
7. Establish specific wired and wireless broadband priorities and goals for after baseline
connectivity is achieved related to smart city projects, economic development, and digital
inclusion.
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8. Evaluate whether or not the technical skills, systems, and governance mechanisms are in
place at the local level to effectively leverage data to provide insight that guides future
city management and planning decisions.
9. Experiment with pilot projects to determine how smart, connected IoT devices can
improve data collection, improve city services, save money, and enable citizens to more
actively participate in local government.
10. Create a mechanism to track new and emerging technologies that could help improve
citywide connectivity in a more effective and less costly manner than traditional methods.
CHAPTER 5: ARGUMENTS—FUTURE IMPERATIVES
Argument 1: High-speed, high-capacity fiber broadband infrastructure is a fundamental
building block to achieving the promise of the digitally connected, smart city.
The smart city of the future will require an extensive network of wired and wireless
broadband infrastructure assets to enable the smart city to reach its true potential. This city of the
future will not be enabled through one connectivity solution. Instead, the technology model that
is emerging will be a hybrid model that consists of a high-speed wired backbone and a plethora
of innovative wireless technologies ranging from public Wi-Fi hot spots to 5G.
However, it is difficult to see a future in which wired fiber-optic technologies aren’t a
major part of that equation. The city of Barcelona offers a compelling example. It began building
its fiber network about 30 years ago, and is now considered one of the most connected, digitally
enhanced cities in the world.407 Over 300 miles of fiber optic cables provide FTTH coverage to
407 Adams, "These Smart Cities Are Building Infrastructures for the 23rd Century;" Laura Adler, "How Smart City Barcelona Brought the Internet of Things to Life," Data-Smart City Solutions, February 18, 2016, http://datasmart.ash.harvard.edu/news/article/how-smart-city-barcelona-brought-the-internet-of-things-to-life-789.
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90% of the city and helped to kickstart Barcelona’s smart city initiatives.408 The existence of the
fiber-optic network has cut the upfront costs of Barcelona’s Smart City programs from 300
million euros to about 30 million euros, according to estimates cited by Josép Ramon Ferrer, the
city’s former smart city director.409
Barcelona’s fiber infrastructure directly supports around 700 Wi-Fi hotspots and
connected LED street lights that save energy and double as wireless hotspots themselves.410
Fiber also supports a growing network of IoT systems including 19,500 smart meters, smart
parking, smart trash bins, and sensors that collect air quality data.411 In Barcelona’s case, fiber
has enabled both wired and wireless connectivity across the city in a manner that enables
additional smart city innovations to take route. The effectiveness of Barcelona’s approach is
summarized well by Laura Adler of Harvard Kennedy School’s Data-Smart City Solutions:
“Through investment in IoT for urban systems, Barcelona has achieved a wide array of benefits. From reduced congestion and lower emissions, to cost savings on water and power, to economic development, the city’s commitment to producing smarter urban infrastructure is changing the quality of governance and the quality of life for residents, workers, and visitors.”412
In short, Barcelona, just like in L.A. and New York City, was able to leverage its robust fiber
backbone to enable smart city development. These benefits are beginning to be realized in
Kansas City and Chattanooga as well because investments in the city’s underlying fiber
broadband infrastructure have positioned both cities as hubs for innovation in digital technology.
408 Adler, "How Smart City Barcelona Brought the Internet of Things to Life." 409 Vivienne Walt, "Barcelona: The Most Wired City in the World," Fortune, July 29, 2015, http://fortune.com/2015/07/29/barcelona-wired-city/. 410 Adams, "These Smart Cities Are Building Infrastructures for the 23rd Century." 411 Adler, "How Smart City Barcelona Brought the Internet of Things to Life." 412 Ibid.
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Argument 2: There is no one right way to finance, build, and maintain broadband
infrastructure assets, the model a particular community chooses to follow should be based on
circumstance, not dogma.
The debate around broadband has become needlessly political, in part, because it strikes a
chord with those who believe that the government shouldn’t be in the business of providing
services that have been traditionally provided by the private sector. On the other end of the
spectrum, broadband services are viewed as a utility—not a luxury—and as a result, many
believe that public sector should effectively own the entire underlying broadband infrastructure
to ensure equal access. The latter point of view is correct in the sense that every person should
have access to broadband in the digital age. However, a purely public solution simply isn’t
feasible—at least not for the foreseeable future.
Instead, communities should focus on figuring out what works best for them. The public
sector should still play a leadership role to promote ubiquitous access, but not every community
needs to own the infrastructure itself to make that happen. In some cases, removing roadblocks
and providing incentives to the private sector is the most viable option. However, current state
laws that don’t allow municipalities to make the choice to invest in their own broadband
infrastructure should be abolished. Communities should have the right to choose their own
destiny as it relates to this increasingly important issue.
While this analysis reveals that no single implementation model is innately superior—
public-private partnership models will increasingly serve as viable model for communities
without the ability to attract private investment or to operate a network on their own. In these
cases, a public-private partnership affords these municipalities their only real opportunity to
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move forward. These partnerships should be encouraged and an embraced as a means for many
municipalities to move forward.
Argument 3: State and Federal funding is a critical enabler of broadband infrastructure
projects, particularly in rural communities.
Throughout the course of this research, many of the rural communities that developed
creative ways to provide high-speed access to their residents were connected back in some way
to the middle-mile networks funding by grants provided through the Broadband Technology
Opportunities Program (BTOP) in the 2009 American Recovery and Reinvestment Act (ARRA).
In addition, each state that received federal funding typically deployed these resources while
providing additional funding of their own. Because of these investments, many communities
across the country were able to build last-mile fiber networks—creating access to connectivity,
and in many cases sparking economic development, job creation, and digital technology pilots.
Future federal infrastructure packages should focus on further enabling this critical infrastructure
asset across the country.
CHAPTER 7: CONCLUSION
The smart city concept is full of idealistic solutions to some of the world’s most pressing
problems. Local communities today have a tremendous opportunity to take advantage of digital
technology solutions to improve government efficiency, save money, solve environmental
challenges, and improve the lives of residents. However, without a sound broadband backbone,
these lofty goals will fail to be realized at scale. The research findings presented in this paper
illustrate how important it is for cities to take a leadership role in determining their broadband
future. It is imperative that all planners and city officials develop a strategic plan for ensuring
ubiquitous connectivity across their communities. Failure to do so will cause some cities to fall
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behind while others prosper, increasing the disparity between municipalities that have and have
not taken this challenge seriously.
The reality is that future economic growth is increasingly reliant on connected solutions
and new innovations that require significant broadband capacity. It is no longer a matter of
choosing whether or not to invest or facilitate upgrades to local broadband infrastructure.
Instead, the new imperative is about planning for robust connectivity in order to compete in the
digital age. The stakes are high—but the rewards will be even higher for city leaders and
planners that are able to bring superior connectivity to their communities.
Doing so requires determining the model for broadband implementation that best fits a
community’s objectives and goals. Smaller communities will likely need to rely on municipal
and public-private partnership implementation models in order to achieve baseline levels of
connectivity. Mid-size and larger cities will have more options in the sense that the private sector
could provide requisite connectivity—but these communities shouldn’t rest on their laurels
hoping that the large incumbent telecoms will do so. Public-private partnerships—particularly
those where the public sector retains control of the underlying infrastructure is something that
every community should consider. It enables control over the implementation while allowing the
public sector to share some of the project’s risks with a private sector partner(s). Faced with this
challenge, more cities should embrace these innovative financing and partnership models. As
time passes, more models will emerge, and they should continue to be assessed according to their
viability, cost effectiveness, and ability to achieve desirable municipal outcomes.
After achieving baseline connectivity, communities ranging in size from Westminster to
New York City will have significant opportunities to move up the broadband infrastructure
maturity scale to integrate digital technology solutions throughout the built environment. A
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collaborative relationship with the private sector will help implement many of these solutions
whether it is through integrating small cells into public assets (e.g. Los Angeles), or through
other revenue-generating innovations like those exemplified by New York City’s Wi-Fi kiosks.
As more and more cities move up the broadband infrastructure maturity scale, cities will
have to grapple with how to manage all the data created by connected digital technologies. The
necessity of high-speed broadband connectivity in every municipality represents a fundamental
shift in our society, which will fundamentally change prominent economic and planning models.
Subsequent research should focus on the governance, planning, and city management
implications of this reality. Specifically, future research should evaluate how the discipline of
planning will need to become more agile and adaptive in an age of increased access to real-time
data. Ultimately, this author believes that the rapid emergence of digital technology offers hope
that the cities of the future will become more livable, equitable, efficient, and environmentally
sustainable. However, realizing that promise begins with taking proactive steps to ensure that
better future is within our grasp. Building the broadband infrastructure assets to enable that
future is the first step that all communities must take to get there.
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