CTC just published a new paper on the steps community broadband network operators can take to develop an effective governance process to maximize value to the community.

Operating a community broadband network entails complex technical, financial, and strategic business considerations—and those decisions are all made within a governance framework.

Effective governance enables a locality to organize its decision-making to produce the greatest value. While value is measured in terms unique to that community, the key to good governance is that the network’s value will reflect the community’s needs. For example, a local government might construct a broadband network to lower the cost of its internal communications services, promote economic development, or serve local schools and libraries. In each of those scenarios, the locality’s governance should ensure that the network delivers on its stated goals.

In this brief white paper, we describe a high-level approach to adapting a governance process to support identified needs and produce effective value. This approach includes:

Identifying key goals and objectives

As a project unfolds and stakeholders and needs are identified, goals and objectives are often added and shaped in the context of what is realistically achievable with available resources.

Identifying key stakeholders

While a more comprehensive stakeholder analysis needs to be completed as a project’s objectives and operational model are fleshed out, the initial core goals and objectives point to natural leaders, advocates, and stakeholders who need to be active participants in the project.

Focusing on needs and value

Periodic re-checks help to keep your governance development aligned with the issues that matter to your community—and to ensure that you have the right stakeholders engaged in the right roles.

Identifying strengths and weaknesses

What changes need to be made in terms of organization and staffing to effectively manage operations?

Developing an appropriate organizational structure

Strengths and weaknesses are always relative to something—some idea of what the network should deliver, and to what extent the necessary pieces for delivery exist.

Managing strategic governance

Identify roles of stakeholders depending on whether the stakeholder represents a service provider, service partner, or client; and what resources and information the stakeholder brings to the table.

Retooling organizational structures as needed

The degree of organizational change necessary to support a fiber optic network can vary widely, and depends heavily on the phase of the project. Newer projects can involve drastic change, while those undertaken by mature organizations may only entail modest changes.

Developing key performance indicators

The industry standard is the balanced scorecard, which considers leading and lagging indicators from different perspectives, and ties those back to strategic objectives and goals. What makes most sense for your network should be something you continually discuss with your stakeholders.

Read the white paper in its entirety here.

The City of Boston is committed to closing the digital divide for its students—and to laying the foundation to meet the growing broadband needs of the 21^st century. The City plans to accomplish this by connecting all City schools to BoNet, the fiber-based network operated by the City.

This City has issued an RFP for scalable dark fiber backbone infrastructure—primarily to upgrade broadband connectivity to Boston Public Schools (BPS) facilities. The City may also seek to bolster the existing BoNet infrastructure and provide future connectivity to Boston Housing Authority (BHA) facilities and critical public safety sites. Additionally, this expansion will help the City expand and improve public safety services across the City and expand opportunities to deploy “Wicked Free Wi-Fi” to a broader geography.

The City’s goal is to leverage as much existing infrastructure from private carriers by seeking an IRU of dark fiber to connect approximately 145 sites throughout the entire city. The term of the IRU shall be for 20 years, with two 5-year renewal terms.

The complete RFP and its accompanying documents can be accessed on the City’s Procurement Page.

Responses to the RFP are due June 6, 2017

The Town of Wake Forest, North Carolina has issued a Request for Information (RFI) to convey its interest in partnering with a sophisticated and motivated partner to bring fiber-based, Gigabit-class broadband service to the area. The successful Partner will deploy ubiquitous FTTP infrastructure and provide broadband internet service to residents, businesses, and community anchor institutions (CAIs) in the Town.

Responses to the RFI are due to the Town May 17, 2017.

Read the RFI here.

The City of Seattle Information Technology Department has posted a Request for Information for Collaboration and/or Partnership between the City of Seattle and Private Sector Entities for Wireless Services and Potential Smart Cities Deployments, Including in Low-Income Districts, and Parks. 

Responses are due to the City by February 28, 2017 at 2:00 PM PST.

View the RFI.

More details, the RFI in its entirety, and a complete timeline can be found here.

The City of Salisbury, North Carolina has issued a Request for Proposals (RFP) to convey its interest in entering into a contractual arrangement (Provider Arrangement) with a third-party provider (Provider) that will enhance the operation, sales, marketing, and delivery of Gigabit-class broadband service to the community.

The Provider Arrangement could be a sale and purchase of the existing City FTTP assets, an operating lease of such assets, a management contract pursuant to which the Provider operates such assets, a “public-private partnership” with respect to such assets, or any other contract arrangement that satisfies the City’s objectives. The details of the assets and the City objectives are included in the RFP.

Letters of Intent (LOI) to respond to the RFP are due to the City by 4:00 PM EST Friday, February 3rd. Responses to the RFP are due to the City by 4:00 PM EST Friday, March 10th.

View the complete RFP

Additional details and a response timeline can be found on Fibrant’s Community Interest Page.

Originally published by the Benton Foundation on behalf of Joanne Hovis on January 4, 2017.  The original post can be found by following this link.

The SHLB Coalition developed Connecting Anchor Institutions: A Broadband Action Plan to provide ideas and actionable policy recommendations for government leaders at the federal, state, and local levels to address the broadband needs of anchor institutions. The ten policy papers highlight connectivity gaps and explain why broadband access is vital to communities nationwide. In the coming weeks, the Benton Foundation will be highlighting each of the Action Plan policy papers. The following is an excerpt of the third paper. Be sure to register for Partnerships and Rural Broadband Needs, a webinar coming on January 10.

Introduction

Partnerships, aggregation, and coordination in securing broadband services are valuable tools for community anchor institutions (CAIs). Aggregating buying power on a regional or statewide basis is a tested best practice that can enable anchor institutions to achieve lower per unit pricing, higher bandwidth, and improved service quality. Policymakers should encourage anchors to consider joint procurement and coordination with entities representing other anchor sectors in their state or region. Aggregated procurement also encourages broadband providers to collaborate and bid with other providers—which could flatten pricing and reduce geographical disparities.

The Aggregated Purchasing Model

Under the aggregated purchasing strategy, multiple anchors (such as school districts and/or libraries) on a regional or super-regional basis—or ideally, on a statewide basis with support of one or more state agencies—combine their request for proposal (RFP) processes to solicit and contract for Internet bandwidth and wide area network (WAN) connections, dark fiber, wavelengths, Ethernet, or any other service. (The RFP process established by the Federal Communications Commission (FCC) in its E-rate program is conducive to this model, but the strategy can also benefit CAIs that do not participate in E-rate.)

In this approach, the anchors cooperate to develop the joint RFP and select the vendor(s). Ideally, the buying group would be as large as possible and would include both rural and metropolitan-area anchors—thus enabling, on the one hand, rural communities to benefit from the substantial buying power of higher-volume urban districts and, on the other, enabling urban communities to benefit from the buying power afforded rural stakeholders by federal funding programs. Establishing a joint urban-rural consortium for the purchase of broadband services can also permit the CAIs to adopt a “postalized rate” pricing regime that allows rural CAIs to pay the same per-unit rate as the urban CAIs.

The FCC encourages consortium buying in both the E-rate program(1) (for schools and libraries) and in the Rural Healthcare program.(2) In the Rural Health Care Pilot program, originally adopted in 2007, the FCC found that “the flexible, consortium-based approach of the Pilot Program fostered a wide variety of health care broadband networks that enabled better care and lowered costs, . . . enabling smaller HCPs [health care providers] to draw on the medical and technical expertise and administrative resources of larger HCPs.” As a result, the FCC has directed the Universal Service Administrative Company (USAC) to prioritize consortium applications for expedited review in both the E-rate and Rural Healthcare programs.(3)

Statewide or Regional Procurement

Aggregated buying is a best practice that has also been utilized powerfully at the state and regional level. A large-scale state or regional procurement strategy can leverage the collective buying power of several anchor institutions, which together represent a massive customer for commercial service providers. Significant leadership and organization are necessary to implement aggregated buying, including convincing stakeholders at the local level to participate. But the challenge can be overcome by pointing out the significant cost benefits. These benefits include:

• Lower per unit pricing across the full range of key services, including Internet bandwidth and WAN
• transport costs;
• Potential increased investment and improved services by private sector providers;
• Reduced (per CAI) administrative and processing costs; and
• Additional management expertise that could benefit participants with limited technology resources.

Lower Unit Pricing

An anchor institution, when acting alone, often is a relatively small purchaser, particularly in smaller communities in rural areas. Indeed, even if an anchor — such as a school district — is one of the bigger buyers in the region, it still has relatively modest buying power. Dramatically compounding this problem is the fact that, in many areas, there may be only a single broadband provider with the facilities to serve the anchors. As a result of the modest buying power and the effective lack of competition, rural and single anchors have little to no leverage to secure pricing comparable to that of larger buying groups or metropolitan area districts that may be fortunate enough to have slightly more competition.

In contrast, the aggregate of the communications purchases made by all anchors in a region or state is substantial—and in total likely represents one of the largest communications purchasing sectors in that area. Greater purchasing power can deliver better pricing because bidders offer lower per unit costs in order to secure the volume business opportunity.

The aggregated purchasing strategy is also likely to have positive impacts on commodity Internet bandwidth costs. The cost of bandwidth varies dramatically depending on location (i.e., it will be significantly less costly in Chicago or El Paso than in Peoria or Farmington) and the size of the total purchase (i.e., large bulk purchases of bandwidth will result in lower per-megabit costs than will smaller purchases). The ability of the broader anchor community to buy commodity bandwidth in bulk and then distribute it across a region or state to locations where it is needed can dramatically decrease the per-megabit price of that bandwidth.

Increased Private Sector Investment

The opportunity to realize more revenue and improve long-term business opportunities can convince commercial providers to make additional network investments to serve consortium purchasers. The scale enabled by large group buying is likely to create a business opportunity so appealing to the service provider community that it may organize itself to build additional fiber and offer improved services. Service providers may also offer certain benchmarks for service and upgrade service levels in order to win such a large opportunity.

The new E-rate rules, which explicitly allow E-rate funding for special construction and dark fiber, also present new opportunities for aggregate purchasing. The prospect of receiving substantial ongoing E-rate subsidy for services, and the opportunity to obtain upfront payment for network expansion (particularly for fiber construction), amplify the business opportunity for service providers.

The development of new infrastructure would serve not only the anchor customers, but also many other users in the surrounding area. Indeed, fiber built to currently unconnected anchors can serve as a “middle-mile bridge” into areas where the anchors are located—and then provide a means of extending service over time to business and residential customers. At the same time, the construction will have direct economic development benefits, as well as catalyzing long-term indirect benefits that flow from the new communications services.

Reduced Administrative and Processing Costs

Another significant benefit of regional, super-regional, or statewide procurement is lower (per anchor) net administrative costs, including RFP preparation, RFP review, contract negotiations, contract administration, invoice review and payments, and, very significantly, interaction with the E-rate administration. One of the E-rate program’s biggest challenges is the considerable administrative cost involved at the local level. While the FCC has made efforts to reduce the administrative burden, some of the components of the E-rate application process have become more complex as a result of the significant E-rate rule changes in the two E-rate orders adopted in 2014, particularly for “big-ticket” applications. Collaborative purchasing leads to the opportunity to share the costs of an E-rate consultant or consultants, thereby lowering administrative costs for all participants in the consortium.

Bringing Additional Resources to Help

Consortia applicants can also benefit from shared management and technological expertise. Either the purchasing cooperative itself, or service providers, can provide management services to help even out the technological skill and capacity of the membership. This benefits all members of the purchasing group in that it makes sure that all members are able to benefit evenly from the purchase, installation, and management of connectivity for their organization. This benefit is particularly important for rural CAIs that may not have the resources to hire engineering and legal support necessary to ensure the application meets all the criteria for approval.

Notes:

1. Federal Communications Commission, In the Matter of Modernizing the E-rate Program for Schools and Libraries, Report and Order and Further Notice of Proposed Rulemaking, WC Docket 13-184 (July 23, 2014) (“First E-rate Modernization Order”), ¶168. [The FCC stated, “Consortium purchasing can drive down the prices paid by schools and libraries for E-rate supported services. In this section, we reduce or eliminate some of the existing barriers to applicants’ participation in consortia.”]
2. Federal Communications Commission, In the Matter of Rural Health Care Support Mechanism, Report and Order, WCDocket 02-60 (December 21, 2012) ¶50.
3. First E-rate Modernization Order, ¶168.

The changes in Washington DC in January, as a new presidential administration takes office, may bring changes to the E-rate program.[1] In brief, E-rate reimbursement for special construction charges may not survive through the incoming administration, and E-rate funding in general may be reduced. To hedge against these potential changes, public entities that can benefit from the E-rate program should act now to secure those benefits in the coming funding cycle.

This memo outlines the opportunities for E-rate reimbursement of fiber construction charges—and explains why both service recipients (school districts and library systems) and potential public sector service providers (like city and county governments) should act quickly to capitalize on the program in the next funding year.

Benefits of E-rate Special Construction Reimbursement

For schools and libraries, an E-rate procurement that includes investment in fiber optics can:

• Ensure the long-term affordability of network connectivity required to meet growing broadband needs.
• Hedge against potential increases in price in broadband services.
• Help school and library facilities reach federal broadband connectivity goals as defined by the most recent E-rate modernization order.
• Protect against potential reductions in, or elimination of, federal E-rate funding over time.

For local governments that serve their schools and libraries as an E-rate service provider, the special construction reimbursement can be a means to build out a public sector fiber network with significant federal funding. This assumes, of course, that the local government participates in the competitive bidding process (i.e., responds to the school or library’s E-rate RFP) and is selected as the winning, most cost-effective bidder to serve the schools or libraries. While the fiber strands built for the schools or libraries would be dedicated to that purpose, the locality could install additional strands of fiber at the small incremental cost of those materials.

In a similar way, the E-rate special construction reimbursement could create new competition in the local broadband market if the schools or libraries select a private provider to build fiber. In this scenario, as in the scenario in which the local government wins the competitive bidding process, the private provider, answering an eligible E-rate applicant’s bid for leased dark fiber or leased lit fiber, could add fiber strands in addition to the fiber it builds to connect schools. Then the private sector entity could use those additional strands to offer broadband services in the neighborhoods around the schools, and wherever else the fiber reaches.

Brief Overview of Approaches to E-rate Special Construction Reimbursement

The E-rate program provides financial assistance to schools and libraries to obtain affordable broadband. Eligible schools, libraries, and consortia of schools and libraries apply for E-rate support every funding year (July 1 through June 30).

Applicants (schools and libraries) are generally required to seek competitive bids for the services they seek to purchase using E-rate funds; the price of eligible products and services must be the primary factor in selecting the winning bid. City and county governments are eligible to bid and provide services to schools and libraries that utilize E-rate, much as private sector service providers are.[2]

In 2014, the FCC updated the E-rate rules for reimbursement of construction costs, known as special construction charges. The rule changes were designed to expand opportunities for E-rate applicants to select higher bandwidth lit services that may require the construction of new infrastructure by a service provider, or allow applicants to pursue other service options such as dark fiber IRUs and self-provisioning when traditional lit services are unavailable or not as cost-effective.

This E-rate capital funding offers an opportunity for school districts and library systems to enable the construction of fiber optics by the winning bidder of their broadband procurement, so long as the bid that includes the cost of construction is the most cost-effective bid (measured over some period of time that can be as long as 20 years or more).

E-Rate Bidding Process for Special Construction

In this scenario, the school or library system would issue an RFP under the E-rate rules for both “lit” services and for a long-term lease for “dark” fiber. The incumbent provider can bid on this RFP, as can competitors (including public sector competitors) that propose to build and own new fiber, subsidized by the E-rate program, and then to provide to the schools or libraries either lit communications services or a dark fiber lease for a period of time specified in the RFP. (The schools or libraries can then “light” the fiber with equipment funded under E-rate.)

Under the rules of the E-rate program, the winning bidder would be the one that offers the most cost-effective option, measured over a period of time selected by the school district or library system. If a bid to build fiber and then provide services or dark fiber would be more cost-effective than procurement of the same services from other providers, measured over the next, say, 20 years, then the E-rate program would fund construction of the fiber at the community’s standard E-rate discount rate.

In the scenario in which the applicant contracts for dark fiber (as opposed to lit services), it could procure a guaranteed long-term lease of 20 or more years. This approach would serve as a hedge against reduction or elimination of the E-rate program in the future, ensuring that the schools or libraries control sufficient fiber infrastructure to meet their needs at low cost into the far foreseeable future. We think particularly highly of this approach because it entails extremely low risk and relatively low effort for applicants—but gives them long-term security.

Construction of new fiber by the winning bidder enables a school district or library system to meet its own needs for advanced broadband services – and to simultaneously enable its provider to build new infrastructure that can serve as a base for deployment of new services to the public in the neighborhoods around the schools or libraries. (E-rate rules do not allow any fiber strands built with E-rate funding to be utilized for other purposes, but the winning bidder could pay the incremental materials cost to install excess fiber strands alongside the fiber dedicated to the schools or libraries.)

Act Now to Capitalize on Potential E-rate Funding Before Expected Changes to the Program

Based on the outcome of the presidential election and likely changes in leadership at the FCC, we believe that the next chairperson of the FCC will not be as committed to this fiber-based competitive model as is the current chair. Indeed, there is some risk that in the coming year or two, the FCC under new leadership could adjust its direction on special construction funding.

Even if the E-rate program does not see substantial changes in what can be funded, it is likely that that total amount of funding will be reduced. We anticipate an effort in the new administration to lower the cap on the E-rate program (which was raised quite substantially in recent years). If the cap is lowered, there may be insufficient funding for procurements that require special construction. The procurement cycle for the 2017-18 funding year, which will only partially overlap with the new administration, could thus be the last opportunity to seek reimbursement for fiber construction.

For this reason, we strongly recommend that schools and libraries seek to maximize the next E-rate funding year, the process for which has already begun for some districts (i.e., those that are planning their RFPs in advance of the FCC’s upcoming bidding window) and extends into the late spring for funding to begin July 1st.

We note, too, that there is benefit to testing this strategy even if the bids on dark fiber turn out not to be of interest to a school district or library system, or if the applicant chooses to accept a bid for lit services. (Under the E-rate rules, an applicant can test this strategy through an RFP process without being obligated to execute it.) Including the dark fiber option in an E-rate RFP increases the competitive pressure on existing vendors—often leading them to offer lower pricing for lit services. In this scenario, simply the potential for new competition emerging through the dark fiber procurement strategy could reduce a school district or library system’s costs for communications services.

[1] The term “E-rate” is the informal name for the Federal Communications Commission’s Schools and Libraries universal service program.

[2] If the eligible E-rate applicant is part of city or county government, the city or county government should make certain that there is a process of bid evaluation for the E-rate applicant that involves no conflicts with the city or county entity that submits the E-rate bid.  For example, the county IT director should not be part of the E-rate applicant’s bid evaluation process if the county IT department is the operator of the network which is proposed to serve the E-rate applicant’s broadband needs.

The City of Pikeville, Kentucky has released a Request for Proposals (RFP) seeking a motivated partner to enable phased broadband deployment in the region through a Public-Private Partnership for a Fiber Optic Network.  View the RFP.

Proposals are due to the City by 10:00 a.m. on January 4th, 2017.  Additional details can be found by visiting the City’s procurement page.