MBI was initially funded and created by emergency legistlation in 2008 with a mandate to bring broadband internet service to all 45 unserved communities. Instead, they spent $80M building the MB123 middle mile to 123 communities which they claimed would attract private companies to finish the last mile. It never did and now is a hindrance to a regional last mile network. With the second round of funding in 2014, they first said they would build a regional network that WiredWest would own and operate, then a year later they reversed and wanted each town to build and own it’s own network, now they want private partnerships. With all uncertainty about policy, towns and companies cannot make progress.
The recent Municipal Modernization act requires that priority be given to regionalization. Experts who have looked at this, e.g. the Harvard University Berkman Institute’s Case Study of WiredWest, the CTC report, even MBI’s own technical staff, have all recommended a regional approach as the most efficient and cost-effective way to make broadband available to the most communities.
Yet, despite all this, MBI resists this and encourages towns to either accept having their allotment of state funds spent on a network owned by an unregulated monopoly private company, or else to build and operate an independent network. Some of their policies impede regionalization. For example, they require each town to individually connect and utilize the MB123. This negates many of the advantages of a regional network. MBI has refused multiple offers by WiredWest to work on a regional plan that would allow many towns that cannot manage the cost and complexity of an independent network to move forward. MBI does not seem to understand that many towns cannot commit funds to a construction project without a regional management plan to make it sustainable. So far, they offer no other solution for these sparsely populated towns.
Some basic facts:
- About 15 or so unserved towns that want to build fiber networks are too small to sustainably operate a network on their own. The fixed costs divided among too few potential customers makes the cost prohibitive. Another 10 to 15 of the more densley populated unserved towns want a regional network and see it as highly advantageous, though not necessarily required in their case.
- If you combine those towns into a regionally managed network, then it becomes affordable and sustainable for all. Cost averaging brings the necessary subscriber price down dramatically for the sparser towns, economy of scale brings it down for all, and all the towns benefit from not having to individually hire vendors and manage the networks. There are additional benefits such as increased resilience, reduced risk, and a larger pool of qualified people to manage the network.
- If private partners cherry pick the denser towns, which they are already doing with MBI’s urging, and are encouraged to do more of by their recent RFP, then there may no longer be enough population density in the remaining towns to make a regional fiber network feasible.
The recent Private Partnership RFP that MBI released allows proposals for networks in “one or more municipalities.” They say they will give priority to proposals that cover more towns, but do not require it. Anyone who understands the economics of broadband networks knows that private companies will see this as an opportunity to get state money to cherry pick the most profitable towns, leaving behind the less profitable, more sparsely populated towns.
MBI apparently has an institutional bias against WiredWest that is impairing the ability of some unserved towns to make progress toward a broadband solution. The Governor and EOHED (the Executive Office of Housing and Economic Development that oversees MBI) should intervene and direct MBI to work cooperatively with WiredWest on a regional solution available to all towns that want it, perhaps putting a WiredWest representative on the MBI Board of Directors. Better yet, the EOHED should invite WiredWest to discuss directly with them about the advantages and opportunities for a regional approach.