Communities considering public private broadband partnerships should beware of “questionable proposals” from broadband providers, cautions a new report from CTC Technology & Energy published by the Benton Institute for Broadband & Society. The report also offers an analysis of potentially viable models for public private broadband partnerships and offers real world examples of these partnerships.
An unprecedented level of broadband funding has become available since the onset of the COVID-19 pandemic called attention to the importance of the technology and its lack of availability in some areas. And according to the CTC report, titled “The Era of the Broadband Public-Private Partnership: New Trends and Opportunities in the Wake of COVID-19,” there are “areas of real peril associated with the current moment, including the fact that localities are being inundated with questionable proposals from ‘partners’ regarding how communities can spend their ARPA funds on broadband.”
The American Rescue Plan Act (ARPA) allotted $350 billion to the states to be used for a variety of purposes, including broadband. The recently adopted infrastructure bill will make additional funding available for broadband.
“Frankly, many of the ‘partnership’ options being pitched to localities either are not true partnerships, in that they involve primarily community cost and private profit with no enforceable public-interest commitments on the part of the private entity or are quite simply technologically or financially infeasible – effectively, too good to be true,” the report cautions.
The report advises communities considering public-private partnerships to investigate proposed technologies, determine the likelihood of projected revenues, insist on enforceable commitments from private partners and check the partner’s technical, financial and managerial track record.
Public-Private Broadband Partnership Models
The report authors see two potentially viable public-private broadband partnership models.
In the most common of these models, the locality contributes support funding, including the ability to tap federal or state funds and other assistance, which ultimately goes to the private partner to construct the network, which the private partner owns. In exchange, the private partner agrees to certain obligations such as building to all households in an area.
The report includes six examples of public private broadband partnerships of this type.
The largest of these involved Cincinnati Bell and three Indiana counties. The three counties combined committed $30 million to the project, while Cincinnati Bell committed $181 million. The carrier pledged to bring service to make gigabit fiber available to all residences and businesses in the counties – approximately 207,000 locations.
At the other end of the spectrum, the CTC report references a small deployment in Slade, Kentucky, where the county committed to providing $20,000 toward the cost of bringing service to 300 unserved locations. The county selected Eastern Telephone & Technologies, which committed to the deployment and pledged to return $5,000 back to the county once the network had 13 subscribers.
In the other public private broadband partnership model, the community funds, constructs and owns the fiber infrastructure and the private partner leases the fiber, activates it for services and delivers services to the public, the CTC report explains.
In some cases, network ownership transfers to a private entity over time, the authors note. They cite an example of a Chesterfield, N.H. network where a network funded by the town will transfer to the private partner after all debt is repaid.
The report includes several other real-world examples of public private broadband partnerships conforming to this model.
A twist on this model is when the community owns only part of the network, the authors note.
According to the CTC report, this approach “allows the locality to focus its funding on areas of greatest need when market forces and other grant funding sources are sufficient to reach most of a town or city.”
The authors add that “the community’s investment in lower-return neighborhoods serves as an inducement to private investors to enter that community, benefit from the community’s investment and invest their own funds in other neighborhoods where public funds are not necessary.”
