Building Fiber to Anchor Institutions

The Schools, Health & Libraries Broadband Coalition (SHLB) announced a strategy to bring broadband to every anchor institution in the continental US. They estimate this would cost between $13 and $19 billion. They believe this would act as a first step to bring broadband to unserved and underserved rural communities.

While this sounds like a reasonable idea, we’ve tried this before and it largely hasn’t worked. Recall that the BTOP program in 2009 and 2010 funded a lot of middle mile fiber projects that brought broadband deeper into parts of the country that didn’t have enough fiber. That program required the BTOP middle mile fiber providers to serve all anchor institutions along the path of their networks and was a smaller version of this same proposal.

We’re approaching a decade later and a lot of the communities connected by BTOP middle mile grants still don’t have a last mile broadband network. There are some success stories, so I don’t want to say that middle mile fiber has no value – but for the most part nobody is making that last mile investment in rural areas just because the BTOP middle mile fiber was built.

BTOP isn’t the only program that has built fiber to anchor institutions. There are a number of states and counties that have built fiber networks for the express purposes of serving anchor institutions. There are also numerous fiber networks that have been built by school systems to support the schools.

In many cases I’ve seen these various anchor institution networks actually hurt potential last mile fiber investment. Anybody that is going to build rural fiber needs as many ‘large’ customers as it can get to help offset building expensive rural fiber. I’ve had clients who were thinking about building fiber to a small rural town only to find out that the school, city hall and other government locations already had inexpensive broadband on an existing fiber network. Taking those revenues out of the equation can be enough to sink a potential business plan.

At least BTOP fiber required that the network owners make it easy for last mile providers to get reasonably priced backbone access on their networks. Many of the state and school board networks are prohibited from allowing any commercial use of their network. I’ve never understood these prohibitions against sharing spare pairs of government fiber with others, but they are fairly common. Most come from State edicts that are likely prompted by the lobbyists for the big carriers.

I’m sure I’ll take some flak for my position, but I’ve seen the negative results of this idea too many times in the real world. Communities get frustrated when they see a gigabit connection at a school or City Hall when nobody else in the area has decent broadband. I’ve even seen government staff and officials who have fast broadband in their offices turn a deaf ear to the rest of the community that has poor or no broadband.

To make matters worse, many of the BTOP networks have run into economic difficulties. The companies that invested in BTOP bought into the hype that the middle mile fiber networks would attract last mile fiber investments, and they counted on those extra revenues for long-term viability. But a significant portion of the BTOP middle mile networks ended up being fiber to nowhere. Companies funded by BTOP needed to bring matching capital, and a number of the BTOP providers have had to sell their networks at a huge discount and walk away from their unpaid debt since the revenues to cover debt payments never materialized.

This also raises the question of who is going to maintain the enormous miles of fiber that would be built by this proposal. Somebody has to pay the electric bill to keep the fiber lit. Somebody needs to do routine maintenance as well as fix fiber cuts and storm damage. And somebody has to pay to periodically replace the electronics on the network, which have an average economic life of around ten years.

I feel certain I will get an inbox full of comments about this blog. I’m bound to get stories telling me about some of the great success stories from the BTOP networks – and they do exist. There are cases where the middle mile fiber made it easier for some ISP to build last mile fiber to a rural community. And certainly a lot of extremely rural schools, libraries and other anchor institutions have benefitted from the BTOP requirement to serve them. But I believe there are more stories of failure that offset the success stories.

I seriously doubt that this FCC and administration would release this much money for any kind of rural broadband. But this is the kind of idea that can catch the interest of Congress and that could somehow get funded. There is no politician in DC who will take a stance against schools and libraries.

I can think of much better ways to spend that much money in ways that would bring broadband solutions many whole rural communities, not just to the anchor institutions. That’s not enough money to fix all of our rural broadband issues, but it would be a great start, particularly if distributed in a grant program for last mile projects that requires matching private investment.

5 thoughts on “Building Fiber to Anchor Institutions

  1. So many important points in this piece, for rural communities. Key among them is your observation that, “In many cases I’ve seen these various anchor institution networks actually hurt potential last mile fiber investment. Anybody that is going to build rural fiber needs as many ‘large’ customers as it can get to help offset building expensive rural fiber. I’ve had clients who were thinking about building fiber to a small rural town only to find out that the school, city hall and other government locations already had inexpensive broadband on an existing fiber network. Taking those revenues out of the equation can be enough to sink a potential business plan.” To make a rural fiber network work, every opportunity – including and especially anchor institutions – must be part of the business plan.

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  2. I’m so with you. We looked at many of these investments – including Supernet in Alberta and the Massachusetts network. Very predictable – good middle mile does not spur last mile investment in any meaningful way. When you understand the real economics of last mile, it is quite predictable but very few policymakers have that understanding.

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  3. Absolutely spot on article!! Congratulations. What so many telecom “quickie experts” (especially those that infest Washington) don’t appreciate is that a middle mile network designed to serve a small number of “anchor tenants” CANNOT economically serve the intervening residential and small business clients. That is inherent in the way through-haul networks are designed as opposed to networks designed to serve all retail clients passed by the network. (I would be happy to expand on this….but not here since it would take rather a lot of space: suffice it to say that no genuine telecom expert who builds real networks in the real world would disagree.) To retrofit a “through-haul” network to serve a large number of intermediate retail customers costs almost as much (and can cost even more) than building an entirely new purpose-designed retail network!!!

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  4. And further: here in Vermont, some BTOP recipients who did build to anchor institutions (especially schools) offered them service at exorbitant rates – despite the enormous BTOP subsidy.

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