Apples and Oranges: Properly Evaluating Municipal Funded Fiber Network Projects

Apple_and_Orange-1Perhaps the major concern that has been raised over the proposed Princeton Broadband initiative is the question of how successful other municipal funded fiber network projects have been around the country. Opponents, for example, point to the problems associated with the public fiber network buildouts  in Provo, Utah and Burlington, VT and conclude that, if those initiatives were problematic, then the same issues will arise if Princeton tries to build out a fiber network.

There are, however, fundamental differences between Princeton and these other cities, so much so that a comparison is, to borrow an old adage, like comparing apples to oranges.

Princeton Broadband Initiative Is Not an Overbuild

Provo and Burlington are poster child examples of building a municipal funded fiber network in a location that already has established high speed internet providers. The industry term for this situation is called an overbuild, or the introduction of a new service in an already crowded market. As George Ou notes, both Provo and Burlington were classic overbuilds:

The problem with all these failed municipal fiber endeavors is that they were all founded on bad assumptions.  They all that tried to enter a saturated telecom/cable market under they assumption that the current providers weren’t serving the market.

In contrast, Princeton doesn’t have Verizon FIOS or highspeed cable from Comcast. In fact, Princeton is classified as an “unserved” town by the Massachusetts Broadband Initiative. A municipal funded Princeton fiber network, therefore, can’t be an overbuild by definition because there are no existing high speed broadband network builds in town to build on top of.

Princeton Broadband Initiative is Not Subscriber Dependent

Provo and Burlington planned to pay for the network buildout based on subscriber revenue. So, in each case, planners made optimistic assumptions on the adoption rate of the new service.  But, because they built into a crowded market, these adoption rates proved unrealistic, causing funding problems for the services.

In contrast, the funding of the proposed Princeton Broadband initiative is not dependent on the actual adoption rate of the new service. If approved by voters, the buildout would be funded 100% through a bond. In other words, the cost of the buildout would be known and fixed before construction begins, and the funding would be 100% ready before construction begins. Therefore, there’s no possibility of a financial “fiasco” on a buildout like the subscriber-dependent plans of Provo and Burlington.

Reflecting on Burlington, George Ou concludes:

The lesson in this fiasco is that there is a right way and wrong way to build a successful municipal network and Burlington Telecom is an example of what not to do.  If a community has no high speed Internet services and no commercial operators already providing service or planning to provide service, there is a role for the community and government to step in to fill in the demand.

Therefore, as we consider a municipally funded fiber network buildout for Princeton, let’s be sure to compare apples to apples and oranges to oranges. Provo and Burlington, we are not.

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