The problem isn't the ownership model after the fact, it's who underwrites the risk of the initial investment. Most of the time, when public organizations make bold investments, they're mis-pricing the risk (which is easy to do when you have someone else around to pick up the tab if things goes wrong). In Denmark, the utilities did a fiber-laying frenzy around a decade ago and the business case did not follow through and the consequence was enormous cost to electricity consumers who never had a say in the matter (OK, technically they did through politically appointed oversight at the utilities).
I think the coop model for getting fiber to the home is awesome. Nobody benefits more from laying last-mile fiber than the homeowner. But forcing neighbors to invest in the project if they're happy with the state of the art isn't really fair IMO.
I've actually been thinking quite a bit of how a provisioning and operations consultancy that would help eg. home owners associations and the like build and run a fiber network and essentially be their own local ISP. Does such a thing exist?
I would love for someone to start a company that could bring fiber to cities via the kickstarter model. Getting the money upfront from customers could go a long way toward mitigating the risk. Ideally the company would be structured as a hybrid for-profit/customer co-operative (so maybe 20% of the shares would be 10X preferred stock owned by the for-profit arm, and the other 80% of shares would be owned by the customers).
The problem with this model would be actually convincing a large majority of residents. The New Zealand Government is funding fibre to most cities and towns in New Zealand. Currently they're at 15% of their target population covered, and only 3% of those 15% are connected with UFB (ultra fast broadband) service.[1]
I should note, these fibre services are a free installation for residential use and many businesses. Monthly charges are the same price as ADSL2+ internet is here.
Well, although not exactly the same business model, this community in a rural area north of Toronto seem to have convinced a distant ISP to do a FTTH project. Homeowners pay up-front and get their deposit back as they continue their subscription.
So, I haven't done any market research, but the model I have in mind is that the network is dark fiber terminating in a carrier neutral facility to decouple the infrastructure from the service - I think this is important for financing reasons. Running fiber to the home is a pretty expensive operation and most people would need some kind of financing. In a non-decoupled scenario, that financing would come from locking in a long term provider subsidy contract, but the timescales needed (maybe 5-15 years) are way too long to commit to a single service provider. They might be awesome in the beginning, but they then deteriorate or go bankrupt or whatever and you're stuck paying for Comcast-like service for a decade.
A dark fiber, however, is a perfectly neutral medium and it's trivial to measure it's quality so you can set up meaningful SLAs (basically, like water or electricity - it's either there or not, and if it's not, it's the providers problem. OK, not quite, but it's a heck lot more clean cut than deciding whether your internet connection is too slow, why and whose responsible).
So you essentially take out a mortgage on your fraction of the dark fiber coop (my consultancy could conceivably facilitate this financing - maybe there's some local businesses or wealthy citizens that you like to underwrite the loans, but they'd still need the infrastructure to facilitate the loans and secure the collateral). You own the bit of infrastructure that only serves your house outright (if you're in a dense area, that't not much, if you have a two mile driveway, it's more) and 1/nth of the shared infrastructure, including the carrier neutral termination room. When someone buys in later, they pay for any direct cost of connecting them, and their 1/nth is distributed evenly between the existing members. If this is a community effort, you can save a lot of money digging ditches yourself (the consultancy will provide instructions on how to properly secure the cables in the ditch) and by placing the termination room in a town hall, community center, church or local business annex - ideally close to existing backbone cable runs. Obviously, bullet proof leases and contracts for access to this room would need to be in place, that's part of what I imagine the consultancy would help with.
Once you have the infrastructure in place, you need to get a provider to set up shop in the termination room. It would make a lot of sense for the consultancy to also be an ISP for this purpose. Maybe the cost of setting up could be incorporated in the initial capital of the coop, maybe the ISP will front it on back of signing maybe 1-2 year contracts for service (which is separate from and on top of the cost of the fiber), maybe it can just provide the service on the expectation of being able to do business - that would likely depend on how remote the community it. Installing optical transceivers at each end of the fiber is the responsibility of the customer and their desired ISP.
I think you raise a good point. In the UK local governments in South Yorkshire to run fibre (well, fibre to the cabinet) to ~98% of the properties in the area, costing £100m+ of taxpayer money.
It never got more than a couple of thousand subscribers out of the 1.3million people that it passed. It turned out that the large national ISPs would rather use their own infrastructure or wait for BT (the national telecom) to roll out their wholesale solution than have to have a special case for support, installs etc for such a small proportion of their userbase.
It got shut down and is now pretty much rotting in the ground.
That example doesn't apply here. The utility covered the cost by selling bonds. Municipalities use bonds to fund the building of toll roads and other long term projects without tax dollars.
I'm sure the bonds are utility company bonds so the risk point still stands. Even if the project fails financially, even if the project were to essentially bankrupt the utility and it had to be bailed out by the taxpayers, the bonds will almost certainly get paid off. I'm not saying either of these things will happen, but the point about taxpayers taking the downside risk is a good one.
Of course, internet service is a utility and so should be underwritten by the state, just like other critical infrastructure with benefits shared by all, so the point about mispricing risk--while valid--is a critique of government-run projects generally, but no more applicable here than in the building of bridges and roads.
I've seen some apartment buildings that buy a T1 line (or whatever) so they can give their tenants "free" Internet included with their rent. That's basically the same thing.
Or they could form their own internet cooperative and do wireless links between apartment buildings and a NOC somewhere in town with the actual downlink.
The equipment to do it (Ubiquiti makes some gear that appears quite nice) is getting cheaper by the year.
I think the coop model for getting fiber to the home is awesome. Nobody benefits more from laying last-mile fiber than the homeowner. But forcing neighbors to invest in the project if they're happy with the state of the art isn't really fair IMO.
I've actually been thinking quite a bit of how a provisioning and operations consultancy that would help eg. home owners associations and the like build and run a fiber network and essentially be their own local ISP. Does such a thing exist?