Ubiquity, which builds and operates open-access networks recently obtained a green loan to help finance fiber network construction. Ubiquity is probably best known for being one of the fiber builders in Mesa, Arizona.
It’s an interesting concept that other ISPs might want to consider. Green loans (and bonds) are a special form of funding that is aimed at financing environmentally friendly projects. Many lenders are creating separate pools of funding for making green loans. Ubiquity was able to justify that building a fiber network is ‘green’ under the principles created by the Loan Market Association (LMA) and under Generate Capital’s Green Financing Framework.
By definition, a fiber network is greener than a telephone copper or a coaxial cable network, which uses significant electricity to operate. Fiber networks transmit light signals generated by a laser at the core, but the network carries no electricity. But until I heard of this financing deal, I never thought of fiber as greener since there is still power needed by the electronics at the core and the edge of the network. I also have to wonder if manufacturing glass is more or less environmentally friendly than making copper wires – it seems like it should be.
Various industry players have touted fiber as being a greener technology. For example, the Fiber Broadband Association claimed fiber is greener than other networks since the technology requires fewer truck rolls. That’s certainly true for now, but we’ll have to wait a while to see if that remains true for fiber networks as they age.
The European Commission conducted a study in 2017 that compared fiber and copper networks and found that fiber is more efficient and environmentally friendly. The study noted that at a broadband speed of 50 Mbps that a fiber network emitted 40% less CO2 per year compared to similar copper network. The cited reason for fiber efficiency was that fiber transmits data over longer distances without the need for field electronics like amplifiers.
The process for getting a green designation starts with the borrower demonstrating that the project has clear environmental benefits that can be measured and reported over time by the borrower. It’s likely that somebody building a green fiber network will also have to adopt other business practices that will reduce and minimize the carbon footprint.
Anybody taking a green loan has to measure and report quantitative performance (such as the amount of greenhouse gas emissions reduced/avoided) during the life of the loan. A borrower also needs to report qualitative indicators describing the ongoing benefits to the community from the green investment.
There were no details of this specific loan terms announced. Green loans do not automatically get a lower interest rate but could if a lender wants to promote green technology. The loan to Ubiquity involved multiple lenders, with Woodforest National Bank taking the lead.
It seems like the primary benefit of a green loan for a fiber network is the ability to tout the social responsibility of the ISP building and operating the network. Ubiquity can advertise in its markets that the network was funded by a lender that certified the project as green. That seems like something that would play well with the public.