Saturday, January 09, 2016

Imagine that, a new state law that actually encourages municipal broadband financing

Here's something you don't see everyday, a state passes a law that actually encourages community broadband financing and investing. Community Broadband Networks has the news from the state of Vermont. After years of reading about ALEC and how they lobby on behalf of major telecoms and write bills for them in secret while lavishing statehouse members with gifts, it is refreshing to see such a change.

A new law in the state of Vermont allows cities to create union districts that in turn allow them to pool their resources and credit for financing their community networks. Apparently things have gotten so bad with legacy internet service providers like ATT and Comcast, that the legislature decided to give the cities more room to work in. The one caveat is that no taxes may be raised by the cities to pay back the union district bonds - all financing must be paid back by subscriber fees.

That's a reasonable way to go about it. Especially if you let the community broadband services sell direct to their customers rather than having to rely upon a third party who may not share more than a passing interest in your success. The city of Spanish Fork's community network proves that community broadband with a direct sales approach not only works, but it allows the network to pay for itself faster. According to the Vermont ECFiber website, anyone within their service area may apply directly for service, so they're on the right track.

ECFiber is a consortium of 21 cities in Vermont that have pooled their resources to create a fast, reliable and affordable network for their citizens. This is what it takes to beat and compete with deep pocket private ISPs with money to burn on members of the legislature. I've checked ECFiber price list and yes, they look expensive, but they're still beating the incumbent competition. Compared to the incumbents like ATT, they're more reliable and they're rolling out services where the incumbents refuse to go. That's telling.

The new Vermont law provides cities greater visibility to attract investors that are willing to finance their networks. With greater investor visibility, they will get better financing, build more capacity and that in turn will drive down costs. With lower costs come lower prices (the opposite of what incumbents do) and that will grow the subscriber base. The fact that a state, any state, is willing pass a law to encourage community broadband financing is noteworthy and a breath of fresh air.
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