With the Covid-19 pandemic demonstrating the critical need for communications connectivity, local governments are striving to improve local broadband service and fill broadband service gaps. At the same time, localities may be able to generate much-needed revenue from broadband and telecom assets they already own, including towers, fiber optics, rooftops, conduit, and poles.
Indeed, many cash-strapped communities possess a range of assets, including fiber strands and tower and conduit space, that have spare capacity and could be maximized. Given the challenging economic environment, some localities have been approached by investors looking to snap up attractive investment opportunities—or even capitalize on economic hardship to get favorable terms.
Based on our experience with such deals, we urge caution and careful consideration before localities sell or otherwise monetize their broadband-enabling assets. These assets represent valuable tools for meeting short- and long-term broadband goals that will be challenging to replace in the event the locality strikes a bad deal with an investor and loses control of its own assets.
A cautionary example: Some cities have sold to investors the rights to place communications equipment on city-owned rooftops – and have inadvertently compromised their own rights to use those rooftops for public safety and public access broadband.
This is not to say that the revenue-generation opportunity should be discounted. To the contrary, that opportunity may be very attractive in the current climate – and it can be explored with an eye toward simultaneously advancing the locality’s broadband goals. Stated otherwise, localities can build a monetization strategy that ensures that these twin purposes – revenues and broadband expansion – complement each other rather than undercut each other.
To evaluate this potential, localities should answer two questions: First, what is the revenue generation and asset monetization potential for my communications network assets? And, second, how can I realize that potential—and involve the private sector—while protecting the public interest and serving my community’s broadband goals?
To analyze these possibilities, CTC Technology & Energy, which specializes in network strategic planning for the public sector, has partnered with Rebel, an international infrastructure advisory firm. We suggest a process of assessing the technical, financial and legal considerations of potential revenue generating initiatives; comparing alternatives; and structuring transactions that serve the public interest.
As a first step, a quick and cost-effective review, which we refer to as the Broadband Asset Scan, provides an initial understanding of the feasibility of revenue generation and asset monetization. The Broadband Asset Scan includes four steps:
- A high-level technical condition assessment of the assets;
- A high-level financial business case evaluation of the possibility for revenue generation;
- A comparison of different viable approaches to structuring private sector involvement in the commercialization or management of the assets; and
- A roadmap for the implementation of the preferred approach.
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