Use of and/or registration on any portion of this site constitutes acceptance of our User Agreement (updated 4/4/2023), Privacy Policy and Cookie Statement, and Your Privacy Choices and Rights (updated 1/26/2023). Chattanooga, Tennesseeis one of the leading examples when it comes to full service municipal network deployment. The Journal Sentinel Online reports on many grants that have been awarded. Often called "municipal WiFi," these networks use more than just 802.11 networking. Communities must invest a considerable amount up front to build out the core network infrastructure. They are also a smart investment option for high income taxpayers as they can avoid a higher tax bill with a tax exempt stream of income. While there are some safeguards in place for municipal bond investors to get some of their principal back in the event of a default, it isnt foolproof. Several of Agawams neighboring cities have signed, or are considering signing, a petition calling for Comcast to abandon its data charge plans. No matter the geography, project scale, or community, it is essential for leaders to have sophisticated network management tools and expertise at their disposal..Before beginning any project, cities must also understand the competitive dynamics in their local markets. This is huge because of the higher income tax brackets for Federal income taxes versus state income taxes. Market dynamics can also make it challenging for communities to successfully launch their own municipal fiber networks. BroadbandNow is supported by commissions from some of the providers listed on our site. Still, electric cooperatives that provide electricity to many of the rural communities have stepped up and taken the initiative in providing high-speed broadband to their co-op members. Municipal broadband, for the reasons listed above, can indeed be an effective tool for small rural areas that are legitimately unserved. Ask yourself, is the company or local government stable, or could they go out of business? Chattanooga, Tennesseehas been an inspiring example of how municipal networks can spark economic development and regional growth. Visit my About Me page to learn more about me and why I am your trusted personal finance expert. As the. Any references to third party products, rates, or websites are subject to change without notice. The proposed fiber network would serve both residents and businesses. When investing your money for long periods, you need at least some portion of it to outpace inflation if you are going to have any chance at increasing your net worth over time. The dark fiber route is an effective solution for cities that want to maintain oversight over telecom services without having to install more than the core fiber infrastructure. We have to have an alternative to Comcast, Sapelli said. Municipal utilities that have set up broadband projects have drastically underestimated expenses while significantly overestimating the amount of revenue they are able to bring in, said Chris Richardson, President of the Tennessee Cable and Broadband Association. Communities can designate local leaders and personnel to ensure the success of their fiber networks. We count these networks as single networks, so long as they do not maintain drastically different branding, customer-facing services, or utilize significant owned and operated network resources outside the line leasing/sharing agreement. While U.S. treasury bonds charge income tax on the Federal level, they do not charge tax on the state or local level. On the downside, municipal networks can be very complex to manage. As communities across the country plan their future in the context of a competitive global economy, ensuring a robust broadband infrastructure is paramount especially because a new generation of broadband is upon us: ultra-broadband. Your email address will not be published. Municipal broadband is a broadband Internet service that is entirely or partially owned and operated by a public entity, usually a local government or public utility provider . Whip City Fiber, the municipal broadband Internet provider owned by the neighboring city of Westfield, has partnered with several towns in the Berkshires to operate their publicly owned fiber. Timnath town officials want to partner with a neighboring municipal broadband provider to bring high-speed internet to town, but who, when and how to pay for it are questions without answers. Because consumers are price sensitive when it comes to paying for telecom services, cities must carefully price their offerings. Terms and conditions and restrictions apply. Knowing what the key economic success metrics are is crucial: Because municipal fiber networks require such a heavy investment, city leaders must know what adoption rates they need in order to generate attractive returns. On the other hand, building and managing a fiber network independently can be very challenging. Communities that lack access to high-speed internet continue to fall further and further behind in todays rapidly changing world. A market research firm was hired by Cleveland Utilities to gauge the interest in the potential partnership between the town and the utility company. They can see the location, use, and status of every cable, all of the way down to individual fiber strands and wavelengths, if needed. What are the primary approaches to deploying municipal fiber networks. The town of Cleveland, TN is currently considering a proposal to partner with Cleveland Utilities to install a broadband grid for all its residents. Click here to learn more about how our cloud-based platform can help you manage public, high-speed broadband for your community. Wheeler opponents, including industry research consultancy The Precursor Group, say the FCC would be overstepping its authority if it were to take the sort of action Wheeler has threatened. However, only 46.4 percent of the respondents said that they definitely would switch to this service if it became available. are used by BROADBANDNOW only to describe products and services offered by each respective trademark holder. 66 Pa. Cons. Reliability Across the country, 94% of all people are served by municipal networks. Cleveland Utilities already has the third-highest electric rates in the state, he added. So if you bought a bond with a par value of $1,000 and sold it for $1,200 then you owe tax on the $200 gain you realized. Many other communities prefer to build the infrastructure and then lease capacity to private ISPs. In OSPInsights platform, there are many different ways to look at data in order to evaluate network performance. Next take the muni bond yield and divide it by the above. For 25 years, we have helped network operators manage every type of network, including municipal fiber networks. For example, operators can run Impact Reports to see how splice point changes might impact end users or analyze Network Statistics Reports to track certain database objects. #X^SdR;C1i=VIo$d?-SB)hgJ But there are risks when investing in muni bonds. Here are the pros and cons of fixed wireless internet: Pros. If so, where? hbbd```b``N5 )DZ+A$KX$@,#gn The federal government recently passed H.R.3684. DISCLAIMER: MoneySmartGuides has financial relationships with some of the merchants mentioned on this blog. Were glad! According to the National Conference of State Legislatures, 41 states have proposed bills related to municipal broadband projects. The task force consists of five town officials, IT Director Jeff Hulbert, City Councilor Rosemary Sandlin, Planning and Community Development Director Marc Strange and Cable TV Manager Les Tingley, as well as two residents at large, Brian Burbank and Paul Jenney. By far the biggest benefit of muni bonds is the interest they earn is free from Federal taxes. Noting that there have been more than 400 municipal projects to date, Chris Mitchell director of the ILSRs Community Broadband Networks Initiative said there were some projects that didnt work out but others that have had major benefits. Understand that this doesnt mean muni bonds are completely risk free. If you purchase a product or register for an account through one of the links on our site, we may receive compensation. Yes No. The creation of BEAD has pushed public broadband into the national spotlight like never before. There are 10 pros and cons to municipal bonds. Cleveland Utilities claims that their all-fiber network will deliver higher speed and better rates for all participants. 1. Extends better access equity to rural areas and other populated locations that dont represent profit potential to private companies. The next steps are to present to our utility board, said Cleveland Utilities Executive Vice President, Walt Vineyard. What are the advantages and disadvantages of municipal fiber networks? But trying to rely on municipal broadband as another competitor or as a . In taking action against anti-municipal network legislation, Mitchell believes the FCC will go after the most egregious state-level laws. Because municipal networks are managed by local governments, stakeholders may also have concerns about their privacy and information. Completely wireless. Therefore you have to find the right balance between the asset classes you invest in to match your risk tolerance and still achieve rate of return you need to earn. It may seem safe to invest in them because you are getting a steady stream of income from the interest on your investment. Reset your password. are standard, as are speed ranges of 25 Mbps to 1 Gbps. The catch here is that this isnt always the case. Of the 2,143 responses collected, 97 percent of the surveys indicated that respondents were interested in the plan. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning. Setting up such a system will be harder in Agawam than in cities like Holyoke and Westfield, Sapelli said, because unlike those cities, Agawam does not have a municipal electric utility. Your email address will not be published. Communities need powerful tools, real-time information, and in-depth reporting capabilities. The task force will be charged with studying a broadband network that will be more reliable and faster than Comcasts service, while being realistic on the cost.. hWnF1o$-l7. However, if you bought Maryland muni bonds and live in Virginia, then there is state income tax you owe. These programs are an important first step in determining the best ways to provide high-quality internet access for everyone. The 1996 Telecom Act limited states powers because Congress was afraid states would be pressured by cable and phone companies to make anti-competitive moves, Mitchell asserted. Low Volatility #4. By using municipal bonds to get your asset allocation correct, there is a greater chance you will stay invested for the long term, thus increasing the odds of success. Others must invest in their own infrastructure in order to have access to high-speed internet at all. Under this model, communities often work exclusively with a private ISPs to build out fiber infrastructure and operate networks. Operators must also have access to real-time information about cables, such as where they are installed and who they service. Will others follow? When it comes to fiber network management, few others have the depth of experience and knowledge that we do. However, installing fiber infrastructure still requires considerable capital. Lack of profit incentive can lead to reduced efficiency in infrastructure expenditures, leading to greater costs. However, there are some that do and these special cases need to be considered before you buy the bond because it might affect your investment strategy. Because the legal and financial landscape for municipal broadband projects is unstable right now, it isnt easy to judge how these public internet providers will fare in the future. Joshua holds a degree in sociology from the University of Tulsa and worked as a behavioral anal Read more, Camryn Smith 6 min read, Robin Layton 4 min read, Alex Sheehan 5 min read. Taxpayer dollars are at stake, which can be scary in communities with limited experience running profitable fiber networks. On the other end, if your bond has a 5% interest rate and the new bond rates are 2%, you are going to have a lot of bond investors looking to buy your bond if you decide to sell it. Never miss a story with the GovTech Today newsletter. Municipal internet projects tend to be charged significantly higher rates for pole attachments (the cost charged by utility companies to attach lines to and use their infrastructure). Community Rules apply to all content you upload or otherwise submit to this site. Your guide to technology in state & local government. Some Congress members favor paving the way for more municipal broadband projects, both financially and legally. A slightly more lukewarm 50.6 percent marked probably would switch on their surveys. Please do the appropriate research before participating in any third party offers. Understanding the pros and cons of municipal networks When it comes to fiber network deployment, there is no one-size-fits-all approach. Since munis avoid this tax, they can be a better investment. With OSPInsight, managing municipal fiber networks is much easier. hb``` cb LG(&5te1@}kCo$B33O/ r$;{= 6hr81+\MFM2?tD(',f5#v[^ jp%#MI;l)&5L@)u 5 YAh k[b : #Ko81sxuaC MmX&BN>f1 Consequently, startup ISPs are less likely to get permission to break additional ground in order to install their own cables. There are pros and cons to municipal fiber networks. Low Default Risk 5 Cons Of Municipal Bonds #1. But if inflation rises at a much faster rate than the interest rates on muni bonds, you might end up losing money. Local governments deploy municipal networks for various reasons. Municipal networks are not often banned outright. Rather than rely on external developers and private internet service providers (ISPs), local governments are building their own municipal fiber networks.. As more municipalities explore alternatives to delivering high-speed internet to residents, the debate around publicly owned networks will only intensify. For example, if inflation rises at about the same rate as interest rates on muni bonds, there wont be much of a difference in real returns when compared with other investments. Understand this is rare, in fact much lower than 1% versus close to a 7% default rate risk for corporate bonds. City leaders must consider many factors before deploying municipal fiber networks.Some of the most important questions to ask include: Communities must answer these questions to put themselves in the best position to succeed. In smaller communities, it can be hard to find personnel with expertise in taking big fiber development projects from start to finish. Almost annually in North Carolina, proponents for better broadband take a shot at overturning the municipal broadband ban. Another major benefit of municipal networks is that local governments can closely monitor the services provided by participating ISPs. This means that you can typically expect your investment to fluctuate less than if you invested in stocks or other types of more risky investments. Many cities target specific areas where they want to attract talent and innovation. It can be hard to cover these costs before a large subscriber base exists. City of Wadsworth Electric & Communications Dept. Here are the ones you need to know. And since they are backed by local and state governments, the actual default risk, or the risk of you never getting your money back, is low. Powered by consumers. Since municipal bonds are low-risk investments, they also have relatively low volatility. Itd be more expensive for us to string those wires.. This risk is called default risk or credit risk. Your information will never be shared with any third party. Compared to a dial-up connection, a broadband connection is almost 100x faster. Municipal networks also help promote community-wide economic development. IQGeo is a registered trademark. 788 0 obj <>/Filter/FlateDecode/ID[<6451788AD0D847438E5B847DFB6D1695><925C54FEB1DB6945A060964B3709D13D>]/Index[774 40]/Info 773 0 R/Length 88/Prev 598858/Root 775 0 R/Size 814/Type/XRef/W[1 3 1]>>stream We present information collected independently from official provider websites. Start from the top or navigate to specific sections using the table of contents below. Cities can issue bonds to private investors, which are paid back over long periods of time with revenues produced by their networks.Many communities also take out internal loans to fund future development. 5:55 am. Among the more successful public broadband projects may be in Chattanooga. Municipalities are legal creations of the state, not the federal government, argued Scott Cleland, president of The Precursor Group, in a blog post from earlier this week. For support, Cleland cited the 2004 Supreme Court decision Nixon vs. Missouri Municipal League, which said the FCCs authority to regulate telecom did not give the commission the authority to preempt state prohibitions on localities offering telecom services. Springfield may become the first big city in New England to invest in municipal internet. We have to have an option, and there are some options. He added that uncertainty over future price hikes has caused a tremendous anxiety in town.. One of the biggest disadvantages of municipal fiber networks is that they can be difficult to manage. This is because the call provision can affect bond prices if you decide to sell your bond early. In this post I share 10 pros and cons of municipal bonds to help you make an informed decision about whether or not this investment strategy is right for you! Municipal fiber developments are currently outlawed in more than half of the U.S.26 stateshave laws that prevent local municipalities from funding, installing, or managing their own networks. However, if you are using an investment strategy that is meant to help protect your assets, then this drawback might not be a big issue for you. 774 0 obj <> endobj The right deployment model for a community depends on a variety of factors. When told that the wireless network would be delivering speeds of at least 50 Mbps . When done well, residents and businesses benefit from increased internet access without having to pay exorbitant rates. Cities manage the networks while ISPs compete for subscribers on a common infrastructure. Moving or just moved? Copyright 2023, IQGeo UK Limited. Get smart with GovTech. We still dont recognize that sign in. More Local Journalism to Love Start today for 50% off Expires 4/30/23, Michael Ballway | Special to The Republican, announced in November that it would start charging customers extra, Springfields City Council passed such a resolution, begin offering municipal broadband in at least one neighborhood of town. In the open access approach, cities build their own fiber infrastructure and then lease cable capacity to private ISPs. The positive externalities of getting some service rather than none certainly outweighs the drawbacks to government-provided broadband. When the wireless network was first discussed publicly, Cox made a proposal to provide 10 Mbps broadband to students in some selected parts of the city. Or, states may require communities to work with private ISPs, which may see municipal networks as threats to their success. There are also ongoing expenses associated with fiber network management. Pricing varies by location and availability. The public oversight inherent with municipal networks can be a deterrent in many parts of the country. Note: OSPInsight is committed to fiber and we are optimistic that constituents, regulators, and businesses will find effective solutions. Because of this, you as an investor need to do your homework before investing in muni bonds, or any bond for that matter. Make sure you do your homework before investing to ensure you are making the best decisions based on your financial situation and goals. Designing, building, and managing a successful municipal fiber network is no small task. Mayor William Sapelli has appointed seven individuals to study the pros and cons of establishing a new fiber-optic network in town. Check your inbox and stay tuned for deals, news and more. The higher the overall capital investment, the larger the subscriber base needs to be. All content on this Web site is proprietary. In contrast, others have recently introduced bills to ban the entire practice at a federal level. AGAWAM Although Comcast has pressed pause on plans to charge customers for heavy Internet use, a task force announced today that it will look at whether a town-owned alternative should be offered. Nineteen states currently have laws limiting and in some cases effectively prohibiting municipalities from offering commercial services on broadband networks constructed by the municipality, according to the Institute for Local Self-Reliance. Hispanic Groups Push for FCC Nominee, Want Sohn Pulled, StratCap Acquires Nearly $20M in Digital Infrastructure Assets in December. IQGeo is a registered trademark. If population density is too low or market competition is too high, ISPs may not be able to generate high enough financial returns to justify joining a municipal network. The communitys network, City Net, has continued to grow over ten years since its initial deployment. Legislation in 34 states prohibits local PUCs from oversight of internet services, which includes broadband, although some small telephone companies, primarily in rural areas, continue to be regulated for both voice and broadband services. Do leaders want to attract more residents or businesses?

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