Report Touts Positive Impact of Fiber Broadband on Local Economy

On February 7, the Fiber Broadband Association published a case study report, "Fiber Anchors Sustained Economic Development, Charlottesville, Virginia." The report examined the impact of fiber broadband network deployment on the greater Charlottesville area, focusing on three economic indicators: private sector job growth, housing value, and digital microbusiness density. According to the report: "Availability of high-speed, low-latency broadband accounted for roughly 35% of Charlottesville's private sector job growth during 2015-2019." The report also credits fiber deployment with increased housing values in the area. And it emphasized the benefits of fiber for "microbusinesses" that have 10 or fewer employees, a domain, and an active website. The findings of the report are based, at least in part, on a comparison of the economic activity of Charlottesville compared with similar-sized cities in Virginia.  

The economic benefits, including job creation, of next-generation broadband networks is also the subject of previous studies. For instance, other analysts have observed the positive economic impact from deployment of 4G and 5G wireless networks and 5G networks. 

 

Local communities hoping to timely realize the full potential of fiber networks for creating jobs and economic opportunities for their residents – similar to how Charlottesville, Virginia, appears to have benefitted – should have in place wireline infrastructure siting policies, including for access to public rights-of-way, that enable timely permit application processing, with permit fees that limited to covering review and processing costs. 

A Record-Breaking Year for Fiber Broadband Buildout

On December 13, the Fiber Broadband Association (FBA) filed a brief report with the FCC, "The State of the North American Fiber Deployment." As observed in the report, from September 2023 to September 2024, all-fiber broadband network availability to U.S. households climbed 13% to 76.5 million households. During that period, there reportedly was a record annual growth in fiber-to-the-home (FTTH), totaling 10.3 million households. Additionally, all-fiber availability has grown from less than 40% of households in 2020 to almost 60% today. The report acknowledges the significant buildout efforts by several providers, including AT&T, which reportedly plans to reach 50 million households with fiber by the end of 2029. 

The 13% year-to-year fiber passing figure is remarkable and benefits consumers with access to significantly improved broadband Internet service capabilities compared to older-generation networks. It is widely acknowledged that fiber broadband networks are capacious and readily capable of delivering gigabit download speeds that easily meet the FCC's current benchmarks for defining broadband Internet services (currently 100 Mbps upload/20 Mbps download). 

 

FBA filed the report in the FCC's proceeding for the forthcoming 2024 Communications Marketplace Competition report, due by the end of this year. In June of this year, the Free State Foundation filed public comments in the Commission's proceeding, and in July, FSF filed reply comments. In those comments, FSF President Randolph May and I argued that there is compelling evidence that the broadband market is effectively competitive. The report filed by FBA provides further confirming evidence for FSF's view.

 

Credit goes to the super-informed and knowledgeable Ted Hearn of Policyband for calling attention to FBA's filing.

Ookla Releases Updating Ranking of U.S. Fixed Broadband Provider Services

On July 17, Ookla released its U.S. Market Report for the second quarter of 2023, which ranks mobile and fixed broadband providers according to speeds and other service criteria. According to Ookla's Speedtest Intelligence® performance metrics, for Q2 of this year, Charter's Spectrum cable broadband service had the highest median download speed among fixed providers, at 243.02 Mbps. In a July 17 article, FierceTelecom reported that this is an increase from Q1, when Spectrum's median download speeds were 234.8 Mbps. For Q2, Cox ranked close second in median download speeds at 241.78 Mbps, Comcast's Xfinity was third with 233.25 Mbps and AT&T Internet was fourth with 210.12 Mbps. AT&T and Frontier were the two fixed providers for upload speeds, at 166.86 Mbps and 164.84, respectively. Ookla's Market Report also ranks U.S. fixed providers based on latency, consistency, and video. The report includes regional comparisons as well.

Certainly, the numbers shown in Ookla's Market Report are an improvement over figures cited in the FCC's 2022 Communications Marketplace Report as well as in my January 2023 Perspectives from FSF Scholars paper that reviewed the Commission's report. Continuing steady increases in fixed broadband speeds are predicated on strong network investment as well as network innovation. Ongoing and near-future rollouts of fiber and 10G cable broadband enabled by private market investment and innovation also will significantly boost upload and download speeds, latency, capacity, reliability, and security. To ensure further improvements in broadband network performance, the FCC should maintain its federal market-oriented policy towards broadband Internet access services that defines them as lightly-regulated "information services."

Fiber Broadband Affordability Improved in 2022

A February 21 article in FierceTelecom by Masha Abarinova highlights survey findings by research firm Cowen that fiber broadband is more affordable and accessible to U.S. residential users. According to article, "Cowen found the average income of a FTTH [fiber-to-the-home] subscriber was around $83,000, compared to approximately $85,000 for those not subscribed to fiber." In other words, for the first time, "income for FTTH subscribers is lower than income for non-FTTH subscribers." Thus, it seems that fiber broadband is becoming more broadly affordable for Americans. And as the article observed, the Cowen survey found that fiber speeds continue to rise: "The survey showed FTTH subscribers received an average speed of 579 Mbps, whereas non-fiber customers are getting an average 419 Mbps. Notably, the 579 Mbps average fiber broadband download speed figure for the fourth quarter 2022 is up from 429 Mbps for fiber in the fourth quarter of 2022.

The Cowen survey constitutes another positive data point regarding broadband affordability in the U.S. In a series of blog posts from 2022, Free State Foundation scholars called attention to broadband affordability figures provided by different outlets:

• Seth L. Cooper, "New Study Touts the Affordability of Mobile Broadband In America," FSF Blog (November 30, 2022).
• Seth L. Cooper, "In the Face of Inflation, Prices Fall for Internet and Wireless Services," FSF Blog (October 14, 2022). 
• Andrew Long, "2022 USTelecom Broadband Pricing Report: Further Proof that Competition is Benefitting Consumers," FSF Blog (June 30, 2022)
• Andrew Magloughlin, "Dropping Consumer Broadband Prices Indicate Lack of Market Power," FSF Blog (May 13, 2022). 
• Seth L. Cooper, "Study Indicates Broadband Internet Service Prices Have Fallen the Last Five Years," FSF Blog (February 11, 2022). 

Acknowledging the significant difficulties posed to new investment and consumer buying power by reckless federal government-induced inflation, ongoing fiber deployments are likely to markedly improve the fiber access and affordability in 2023. A February 24 article FierceTelecom article by Diana Goovaerts provides a round-up of expected fiber deployments by broadband providers for this year, including FierceTelecom's admittedly underinclusive minimumprojection of 6.5 million to 7 million new fiber passings in the U.S. for 2023. 

Fiber Broadband is Going Strong in 2022

Third quarter 2022 reports from broadband Internet service providers show continued strong growth in fiber broadband networks. According to reports released in late October and early November for the third quarter:  

• AT&T Fiber had 338,000 net subscriber additions, and it now has 6.93 million fiber broadband subscribers. 
• Verizon gained 61,000 FiOS Internet subscribers – compared to a gain of 36,000 FiOS subscribers during the second quarter of this year – for a total of nearly 6.68 million FiOS subscribers. 
• Lumen added 31,000 fiber broadband subscribers – up significantly from and raised its total fiber subscriber count at the end of the third quarter of this year to 889,000, up from 774,000 at the end of the third quarter of 2021. 
• Frontier added 66,000 fiber broadband customers, a 15.8% growth rate compared to the third quarter of 2021, bringing its fiber broadband customer total to 1.5 million. 

In addition to these fiber broadband subscriber gains, broadband ISPs have continued to deploy fiber to reach many more potential subscribers. For instance, AT&T reported that "AT&T Fiber now has the ability to serve 18.5 million customer locations, and offers symmetrical speeds up to 5-Gigs across parts of its entire footprint of more than 100 metro areas." And Frontier reported that it "[b]uilt fiber to a record 351,000 locations to reach a total of 4.8 million fiber locations, nearly halfway to our target of 10 million fiber locations." 

 

As noted in my August 24 blog post, fiber networks offer high speeds than older technologies. The third quarter results just released by broadband ISPs reveal that even more American are benefitting from fiber networks. 

Senators Urge Fixes to NTIA's NOFO for Broadband Subsidies

On August 18, a letter signed by thirteen senators was sent to Secretary of Commerce Gina Raimondo, calling attention to aspects of the NTIA's Notice of Funding Opportunity ("NOFO") for the Broadband Equity, Access, and Deployment (BEAD) Program that are contrary to directives made by Congress in the Infrastructure Investment and Jobs Act. The letter is worthwhile reading and NTIA should take up the senators' recommendations and make changes to its NOFO in order to help ensure that the BEAD Program conforms to the Infrastructure Act. 

One of the problems with the NOFO has to do with its provisions that impose or at least encourage controls on broadband prices. According to the senators' August 18 letter to Secretary Raimondo: 

The law clearly states: "Nothing in this title may be construed to authorize the Assistant Secretary or the National Telecommunications and Information Administration to regulate the rates charged for broadband service." In your recent testimony before Congress on April 27, 2022, you recognized this express prohibition on rate regulation. You also noted that State plans to address affordability may not involve rate regulation. 

 

The NOFO, however, appears to open the door to rate regulation by imposing several requirements not included in the law. The NOFO even suggests a price point of $30 dollars for states to adopt for low-cost options. This appears to be an attempt to pressure Eligible Entities to set rates deemed appropriate by NTIA. Additionally, the NOFO prohibits all data usage-based pricing options, which many existing providers use in conjunction with different tiers of service. This requirement could discourage provider participation by conditioning grants on substantial changes to their current practices. Additionally, the NOFO states that, "each Eligible Entity must include in its Initial and Final Proposals a middle-class affordability plan to ensure that all consumers have access to affordable high-speed internet." A "middle-class affordability plan" is a new term that does not appear in the law. Asking States to pursue various strategies for achieving this new objective, including by requiring "providers receiving [BEAD] funds to offer low- cost, high-speed plans to all middle-class households using the BEAD-funded network," is another indirect form of rate regulation. Elsewhere, the NOFO requires States to review the affordability of a 1 Gbps symmetric service and 100/20 Mbps service as part of their prioritization for program scoring. That requirement is also not part of the law. 

 

Congress did not invite States to adopt rate regulations that the statute plainly prohibits, nor can NTIA go beyond the statutory affordability initiatives in the law. Unfortunately, the NOFO does not fully conform to this clear limitation and, if NTIA or States move in this direction, it could deter participation in the BEAD program. We therefore urge NTIA to rescind or correct these portions of the NOFO and make clear to States that rate regulation of broadband service is prohibited under this program. 

Indeed, NTIA ought to make the changes prescribed in the senators' letter and alleviate these reasonable concerns that the BEAD Program will result in federal price controls on broadband services. 

 

Additionally, the senators' letter calls out the NOFO's provisions that discard technological neutrality by favoring fiber technology. FSF Senior Fellow Andrew Long called attention to this problem with the NOFO and the need for NTIA to correct it in his May 24 Perspectives from FSF Scholars, "Future Guidance Can Fix NTIA's Flawed "Fiber-First" Approach." Also, the letter takes issue with the provisions in the NOFO that give preferences to government-owned broadband networks in the BEAD Program grant award process. Those concerning NOFO provisions were addressed in my May 26 Perspectives, "NTIA's Broadband Subsidies Must Respect State Law Limits on Government-Owned Networks."

 

The senators' letter rightly calls for changes to fix the NOFO's provisions favoring technological non-neutrality and government-owned networks and to bring the BEAD Program more in line with the Infrastructure Act. 

Report Touts Benefits of Fiber Broadband Speeds and Pricing for Americans

On August 23, the Fiber Broadband Association released a report titled "A Detailed Review: The Status of U.S. Broadband and the Impact of Fiber Broadband." The report was prepared by Michael C. Render of market research and consulting firm RVA, LLC. It contains several interesting data points regarding broadband Internet access and fiber-to-the-home (FTTH) services in America.  

Relying on data from Pew Research, the report found that about 92% of Americans have Internet access at home, with 77% having wired service and 15% with wireless service. In terms of market share, the report found that about 49% of Americans with Internet access at home subscribed to cable broadbands, 21.3% subscribed to FTTH services, 13.1% still subscribed to DSL services, 11.7% subscribed to mobile wireless services, 3.1% subscribed to fixed wireless services, and 0.9% subscribed to satellite broadband services. Notably, many cable subscribers are actually served by FTTH services. 

 

On a side note, one can expect the market share for DSL to decline and for fiber as well as fixed wireless connections to rise over the next few years. And it will be interesting to see how the future rollout of multi-gigabit 10G cable broadband platform will impact broadband market share in the times ahead. 

 

Additional data points contained in the report include:

• "The average download speed experienced by users as tested in the annual FBA/ RVA random survey of Internet users…has increased from about 4 Mbps download to 121 Mbps from 2009 to 2022." 
• "Average U.S. upload speeds have increased from about 0.4 Mbps to 26 Mbps in the same period. The upload to download ratio was 11% in 2009 and has increased to 26% in 2022."
• Average download/upload speeds for FTTH services clock at 199 Mbps/75 Mbps.
• "The cost per provided Mbps (cost divided by the number of Mbps received downstream) has decreased very dramatically from about $9.00 to about $0.55 since 2010." 

The report is available on the FBA's website. 

Section 253 Petition Rendered Moot by Responsive State Law

Once again, the possibility that the FCC might exercise its authority to preempt "excessive, unreasonable, and discriminatory" right-of-way requirements under Section 253 of the Communications Act has prompted positive change at the local level.

On May 10, 2021, Bluebird Network (Bluebird) submitted to the Commission a Petition for Declaratory Ruling seeking relief under Section 253(d). Bluebird argued that the $1.91 per linear foot right-of-way fee charged by the City of Columbia, Missouri, "violates Section 253 by materially inhibiting Bluebird's ability to bring competitive broadband services to customers in the City, which will constrain broadband deployment and perpetuate the digital divide."

Pursuant to Section 253(a), "[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service."

After Bluebird filed its petition, the Missouri legislature passed H.B. 271, which bars the City of Columbia from collecting the fees at issue. In response, Bluebird filed a Motion to Withdraw on November 9, 2021.

This outcome evokes the dispute I described in a recent post to the Free State Foundation's blog, "City's Preferential Treatment of Fiber-Based Broadband Raises Competition Concerns."

In that case, Mediacom Communications Corporation (Mediacom) objected to actions by the City of West Des Moines, Iowa, that it argued would provide Google Fiber, as a practical matter, with exclusive use of a $50 million city-financed fiber-specific conduit network.

Shortly After Mediacom filed its Petition for Expedited Declaratory Ruling, the City of West Des Moines and Google Fiber amended their agreement to reduce the period of the latter's exclusive use of the conduit network from 18 to 6 months.

And on October 15, 2021, Mediacom and West Des Moines notified the FCC that they had negotiated an agreement in principle to settle their dispute.  In response, the Wireline Competition Bureau on October 25, 2021, adopted an Order pausing the pleading cycle to provide the parties with additional time to work out the specific details of their settlement.

Thus, it appears that the mere specter of Commission preemption pursuant to Section 253 performs a potent role in assuring that providers have reasonable access to local rights-of-way.

City's Preferential Treatment of Fiber-Based Broadband Raises Competition Concerns

In July 2020, the City Council of West Des Moines, Iowa, voted (1) to spend $50 million to construct within public rights-of-way (ROW) a so-called "open access conduit network" that it readily concedes is designed for the exclusive use of fiber-to-the-premises (FTTP) broadband providers, and (2) to enter an "anchor tenant" agreement with Google Fiber that raises serious factual questions as to the ability of even other fiber-based Internet service providers (ISPs) to utilize that infrastructure on reasonably equitable terms.

Given that West Des Moines (the City) also serves as the gatekeeper to those ROW, these actions inevitably create worrisome conflicts of interest. They also violate the principle of technological neutrality and are at direct odds with our nation's longstanding and proven (intramodal as well as intermodal) competition-based approach to the deployment and expansion of broadband access. Moreover, given the abysmal financial track record of municipal involvement in the broadband marketplace generally, a topic I addressed in an August 2021 Perspectives from FSF Scholars, they unnecessarily place taxpayers in economic jeopardy.

MCC Iowa LLC, a subsidiary of Mediacom Communications Corporation (Mediacom), is the local cable system operator in West Des Moines. It provides broadband service throughout the City via a hybrid fiber coaxial (HFC) network at speeds up to a gigabit (1000 megabits per second (Mbps)) downstream and 50 Mbps upstream. Notably, these rates far exceed not only the definition of "broadband" embraced by the Federal Communications Commission (FCC or Commission) – 25/3 Mbps – but also the threshold for a "served" area agreed to by a bipartisan group of Senators in the $1.2 trillion infrastructure bill currently before the House – 100/20 Mbps.

Mediacom is able to provide this level of service to City residents only because it has (1) committed the large amounts of private capital required to build out its network, and, critically, (2) complied with the City's formal permitting processes in order to gain access to ROW.

In May of this year, Mediacom filed with the FCC a Petition for Expedited Declaratory Ruling (Petition) pursuant to Section 253 of the Telecommunications Act of 1996 arguing that the City's actions, which reduce substantially the construction and permitting obligations of fiber-based providers – and, as a result, their costs and time to market – as a practical matter constitute an "effective prohibition" under Section 253 for providers other than Google Fiber. This is particularly so for broadband providers that embrace distribution technologies other than end-to-end fiber (for example, cable HFC networks rely upon coaxial cable for the last-mile connection to the home) and therefore are foreclosed, at least in part, from utilizing this taxpayer-funded infrastructure.

More recently, the City and Mediacom informed the Commission on October 15, 2021, that they have agreed, at least at a high level, to resolve this dispute. As a result, the FCC's Wireline Competition Bureau issued an Order earlier this week pausing the pleading cycle in order to provide the parties with additional time to hammer out the specific details of a settlement.

The fact remains, however, that the City's underlying decision to align its economic interests with a specific distribution technology (if not a specific company utilizing that distribution technology) violates the competition-fostering principle of technological neutrality, incentivizes the City to perform its permitting function in a discriminatory fashion, and arguably implicates Section 253 itself.

Given that Mediacom and the City are in the process of negotiating specific settlement terms, it is conceivable that at least some of the disputed provisions of the City's agreement with Google Fiber will change. In one important respect, that is something we already have observed: a month after Mediacom filed its Petition, the City and Google Fiber agreed to reduce the length of time that the latter would have exclusive use of completed portions of the conduit network from 18 to 6 months.

Accordingly, at this time I will not discuss in detail other aspects of the agreement, particularly those relating to the implications of the conduit network's technical design for other providers, whether fiber-based or not. (I will note, however, that Mediacom's Petition did make numerous compelling allegations regarding the practical ability of other fiber-based ISPs to utilize the conduit network in a manner equivalent to that afforded Google Fiber.)

Instead, I want to highlight a more fundamental question raised by the City's decision to not just express a preference for fiber-based service, but to take substantial steps to reduce the costs and administrative burdens solely for fiber-based providers: Should a municipality's actions to promote a specific distribution technology be evaluated under Section 253?

As Free State Foundation President Randolph May and I explained in "Biden Broadband Plan: 'Future Proofing' Is Likely 'Fool's Proofing'," a June 2021 Perspectives, progress towards reaching the goal of universal broadband access hinges upon adherence to the pro-competitive principle of technological neutrality.

The United States is a large nation, one that encompasses areas with vastly different geographic features and population densities. Truly ubiquitous broadband coverage, as well as price competition and heightened innovation, will be realized only through policies that embrace the unique strengths and weaknesses of the range of distribution technologies – not just FTTP but also cable HFC networks, mobile and fixed 5G, fixed wireless, and satellite – that ISPs leverage to provide consumers with the capacity that they in fact demand.

As such, a policy approach that exclusively prioritizes fiber – for example, the Biden Broadband Plan as articulated in a March 2021 White House Fact Sheet – is wasteful and ultimately counterproductive. But when pursued by a municipality, is it also at odds with the pro-competitive thrust of the Telecommunications Act of 1996, specifically Section 253?

Section 253(a) states that "[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service" (emphasis added). And subsection (d) empowers the Commission to "preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or inconsistency."

Per the FCC's 2018 Declaratory Ruling and Third Report and Order, (1) "a state or local legal requirement constitutes an effective prohibition if it 'materially limits or inhibits the ability of any competitor or potential competitor to compete in a fair and balanced legal and regulatory environment'" (emphasis added), and (2) "an insurmountable barrier is not required to find an effective prohibition under Section 253(a)."

It seems evident that the City, in choosing to spend $50 million on a conduit network that can be used only by those ISPs that embrace a FTTP model, is making it relatively more difficult for providers utilizing other viable distribution technologies to compete.

In its Opposition to Mediacom's Petition, Google Fiber dedicates an entire section to the concern that the grant of Mediacom's requested relief could have "broad, negative implications on local investment in broadband infrastructure." In response, I offer the following two points. One, as Free State Foundation scholars have pointed out on many occasions, attempts by municipalities to enter the broadband marketplace overwhelmingly have failed to achieve independent financial viability. (See the "Further Readings" at the end of this recent Perspectives from FSF Scholars for examples.) Consequently, those claimed "broad, negative implications" in fact, may generate positive economic outcomes for taxpaying residents.

Two, where the policies and/or spending by a municipality discriminate so heavily in favor of a specific provider (as alleged here, Google Fiber) or a subset of providers (as freely acknowledged here by the City, those ISPs that embrace a FTTP model), does a line exist that, once crossed, benefits one or more competitors rather than, as Congress intended in 1996, competition?

If so, a scenario may arise where preemption pursuant to Section 253(d) by the FCC of a project that so strongly rejects the principle of technological neutrality is warranted.

As noted above, this proceeding remains open. The Wireless Competition Bureau only temporarily suspended the deadline for replies. I will provide further updates on this dispute as developments warrant.

U.S. House Committee Passes "Dig Once" Reform to Boost Fiber Buildout

As reported by John Eggerton at Multichannel News, on June 10, the House Transportation and Infrastructure Committee favorably reported the National Dig Once Act out of committee as part of the INVEST America Act. The Dig Once Act, writes Eggerton, "would require that the plastic conduit that houses fiber optic cable be included in the construction of any road being built with federal funds in areas without broadband," with broadband providers receiving notice of opportunity to use those conduits. The idea behind the bill is to expedite fiber deployment and reduce the time end expense of multiple excavations.

Leaving aside the other parts of the INVEST America Act, the policy contained in the Dig Once Act is sensible way to promote broadband access to unserved Americans. Hopefully, the 117th Congress will see fit to pass "dig once" reform as a way to promote real infrastructure in the United States. For more on the "dig once" legislation's sponsorship and history, see John Eggerton's report.

New Wireline Order Will Advance Fiber and 5G Deployment

On June 7, 2018, the FCC adopted a Second Report and Order that will accelerate the transition from legacy networks and services to next-generation networks and services and will eliminate FCC regulations that unnecessarily raise costs and slow broadband deployment. In March 2018, I authored a Perspectives from FSF Scholars titled “Reaching Rural America: Free Market Solutions for Promoting Broadband Deployment.” In the paper, I discussed ways Congress, the FCC, and state and local governments can remove barriers to entry into the broadband market to spur competition and advance deployment in rural and underserved areas. In particular, this wireline Order will reduce regulatory costs for broadband providers and advance the deployment of fiber and 5G networks.

A June 2017 paper by CMA Strategy and Corning found that the adoption of all of the proposed rules in the wireline Notice of Proposed Rulemaking (NPRM) would increase fiber broadband penetration by 26.7 million premises (residential and businesses), which corresponds to over $45 billion in capital investment. The paper also found that adoption of the full NPRM would increase 5G broadband penetration by 14.9 million premises, which corresponds to $24 billion in capital investment. For both fiber and 5G providers, over 95% of the $69 billion would be invested in rural and suburban areas. That means that the FCC’s wireline Order could lead to an additional $42.8 billion in capital investment from fiber providers in rural and suburban areas and an additional $22.8 billion in capital investment from 5G wireless providers in rural and suburban areas.

By expediting application processes and eliminating unnecessary requirements designed for legacy networks, the Second Report and Order in addition to a Report and Order adopted in November 2017 will modernize regulations and could lead to an additional $69 billion in fiber and 5G broadband investment.

New Paper Shows Economic Consequences of Municipal Fiber Projects

Christopher Yoo, a member of FSF’s Board of Academic Advisers, and Timothy Pfenninger, both professors at University of Pennsylvania Law School, coauthored a recent paper entitled “Municipal Fiber in the United States: An Empirical Assessment of Financial Performance.” The paper analyzes the financial viability of twenty municipal fiber networks, finding that eleven of them are cash-flow negative. 

It also finds that five of the nine cash-flow positive projects are generating such small returns that it would take over 100 years to recover the projects’ costs. Additionally, two of the nine cash-flow positive projects have a recovery period of 61-65 years, which is beyond the expected useful life of a fiber network. Professor Yoo and Professor Pfenninger’s paper is an important piece of economic literature for understanding the negative consequences that often occur from implementing unnecessary municipal broadband projects.

Consumer Choice is Always Better Than Government Mandates

On August 4th, Jon Brodkin wrote an article about SandyNet, a municipal broadband network in Sandy, Oregon, and its transition from a fixed wireless network to a fiber network. The fixed wireless service offers 5 Mbps down and 1 Mbps up for $25/month, while the fiber network offers 100 Mbps down and 100 Mbps up for $40/month. Once the fiber network is fully constructed, consumers can no longer use the fixed wireless network.

Mr. Brodkin makes the following claim about the transition: “It also didn’t make sense to have a $25-per-month service compete against the new fiber service that started at $40 a month, even if the slowest fiber service was 20 times faster downstream and 100 times faster upstream.”

Essentially, Mr. Brodkin is suggesting that consumers are better off if the municipality requires everyone to use the fiber network. For an elderly couple, 5 Mbps might be sufficient for an occasional email. For a poor household, $25/month might be the maximum it is willing to pay for access. Why presume that it makes sense to require everyone to have a faster, more expensive service if they prefer, for whatever reason, a slower less expensive one?

Consumer choice is always better than government mandates – not just for the welfare of the individual consumer, but also for the welfare of the Sandy community.