A String of Municipal Network Ideas: Traverse City Mulls Options

Date: 17 Apr 2017 | posted in: MuniNetworks | 0 Facebooktwitterredditmail

The Cherry Capital of the World, Traverse City, Michigan, continues to weigh its options to improve high-speed Internet service. The city of 12,000 homes and businesses has the results of a feasibility study and is carefully eliminating options as they look for the one that best suits their needs.

Most Likely Possibilities

Local newspapers, the Traverse Ticker and the Record Eagle, have followed the planning process. In late 2015, the city utility Traverse City Light and Power (TCL&P) began developing ideas on how to bring better connectivity to residents and businesses. The possibilities ran the gamut from an open access network to a public private partnership (PPP), and different groups within the community advocated for each option.

In February 2017, the community received the results of a feasibility study, which detailed two main options: operating the network as a city utility or leasing the network to a single private provider. Both options assume about two years for construction and an initial customer base of around 2,900 homes and businesses. The proposed prices are $25 per month for phone service, about $50 per month for 100 Megabits per second (Mbps) Internet access, and about $80 per month for a gigabit (1,000 Mbps) Internet access.

What About Open Access?

Local tech enthusiast group TCNewTech, however, pressed the city to also consider an open access approach, where multiple private providers share use of the infrastructure. TCNewTech member Russell Schindler explained to the Traverse Ticker that he supports public ownership of the network, but his focus is on increasing competition:

“I’d prefer to see Light & Power maintain the infrastructure and not be an ISP themselves. We’re going to advocate for as many providers as possible.”

TCL&P directed their group of consultants to further consider this possibility and report back on their findings. At a meeting on April 11th, the consultants recommended against an open access network. They described a scenario where the first provider to begin operating on the network would likely take the majority of the customers, preventing later providers from finding business. logo-tclp.jpg

TCL&P will now go back to its main options or do nothing: operate the network as a city utility or work with a single private provider. Traverse City may also collaborate with the local electric cooperative to improve local connectivity.

A City Run Network

epbfiber.jpgIf Traverse City chooses to own and operate a citywide Fiber-to-the-Home (FTTH) network, the project will cost just over $16 million, funded through a 20-year bond. Community leaders are considering a revenue bond, but have yet to make the final decision. The network will pay for itself, i.e. “break even”, by the 11th year of operation. Tim Arends, TCL&P Executive Director, told the Record-Eagle that they are also searching for state grant funding to alleviate some deployment costs.

Under this plan, Traverse City would offer phone and Internet service, but not video. The community received advice to skip video offerings from Chattanooga, Tennessee.

At a population of 170,000, Chattanooga is more than 10 times the size of Traverse City, but home to one of the most well-known municipal networks in the country. It was also the first network to offer citywide gigabit connectivity in 2010. We describe how the network touches everything from traffic lights to people’s houses in our report Broadband at the Speed of Light.

Smaller communities, however, also run their own networks. On the other side of Michigan, the village of Sebewaing built a citywide FTTH network in 2014 to serve the small population of 1,800. Communities more comparable in population to Traverse City include Auburn, Indiana, and Tullahoma, Tennessee. Both have been featured on the Community Broadband Bits Podcast, episode 77 and episode 54.

At least one city commissioner is in favor of the city providing the Internet service directly. Tim Werner, city commissioner and a TCL&P board member, told the Record-Eagle:

“If we as the city take that on as the service provider, from what I’ve seen so far, that’s the best opportunity to provide the lowest-cost services to customers.”

Finding A Private Partner

The city commission wants to further explore the second option – having a private provider run the network.

If the city expands the network and finds a private provider to operate it, the city’s cost for the project will drop to about $10 million. The city would also “break even” in the second year of the network’s operation. The hiccup in this approach is finding a private provider to lease the network and take on the operational risk of running it.

logo-lightspeed.pngA nearby private provider, called LightSpeed, has had some discussions with TCL&P over the possibility of installing a separate fiber network, completely owned and operated by LightSpeed. The company and TCL&P have talked about developing conduit and pole attachment agreements, but Traverse City is focused on owning the infrastructure.

The PPP approach has been tried in a few other cities. For instance, Lancaster, Pennsylvania, is working with local provider MAW Communications. MAW communications will own the fiber, but the city will help everyone gets connected. Listen to Community Broadband Bits Podcast Episode 248 for more on their approach.

The city of Indianola, Indiana, also works with a local private provider, Mahaska Communications, to build the connection from the city-owned fiber backbone to homes. The partnership started after Indianola had built a fiber ring that connected businesses and community anchor institutions, such as schools and libraries. Unlike Lancaster, the city owns the fiber and the private provider only operates on the network.

PPPs come in many different sizes and may not be right for every community. If a community chooses to explore such an approach, it’s important they protect their interests. Typically, finding a trusted partner willing to enter into an agreement in which both parties share the risks and revenues is a good place to start. Check out the report Successful Strategies Behind Broadband Public-Private Partnerships by Christopher Mitchell and Patrick Lucey for more on finding the best fit for the community.

logo-cherryland-coop.pngFor Traverse City, the option described in the feasibility study is for the city to own and maintain the fiber network itself while the private provider simply provides the Internet, phone, and possible video services.

What About The Local Electric Cooperative?

Another possible partner is the local electric cooperative that operates in the rural area surrounding Traverse City. Cherryland Electric, part of the Wolverine Power Cooperative, is also installing fiber throughout its service area. TCL&P and Cherryland Electric have already collaborated on other projects in the past.

Cherryland Electric wants to connect its electrical substations via fiber over the next few years and then determine how to expand that connectivity to residents. The cooperative explained on their blog:

“Our plan is to start slowly with a multi-pronged fiber strategy. The first step is to begin exploring a partnership with Traverse City Light and Power in the Traverse City area. Can we reduce our risk, learn valuable lessons and then expand into the more rural areas? We will begin this process very soon.”

What’s A City To Do?

logo-traverse-city.GIFWith so many options, Traverse City has to continue to narrow down the field. We spoke with Scott Menhart, TCL&P Technical Director, to confirm details and learn about the community’s response.

Menhart noted that TCL&P has owned and operated the current fiber for more than ten years. During that time, they have leased excess fiber to a number of schools and hospitals, and recently they worked with the Downtown Authority to create a free Wi-Fi zone for residents and visitors. Extending the fiber connectivity to the residents only makes sense.

Fun Fact: Traverse City won the #2017StrongestTown competition for being not only a great place to live, but also having a community active in local issues.

Photo of Sunrise on the Lake – Traverse City by Bryan Casteel [CC BY 3.0], via Wikimedia Commons

This article was originally published on ILSR’s MuniNetworks.org. Read the original here.

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H Trostle

H. Trostle is a Project Manager for ILSR's Community Broadband Networks Initiative. A graduate of Macalester College with a degree in Political Science, they work on issues of Internet access in rural communities. They are a member of the Cherokee Nation, but grew up among the lakes and woods of northern Minnesota.