Broadband infrastructure, municipalities, Make money, municipal broadband

Three ways broadband infrastructure can make your town money

September 28, 2015

With the increase of the digital age, many cities are considering adding municipal broadband to keep residents happy and keep up.

While broadband is an investment, it also offers cities advantages that make up for the cost. Many cities who have added high-speed networks have found benefits, including GDP growth, more local jobs, and a better economy.

Create a job ready city and happier residents

One of the main reasons municipals consider building broadband infrastructure is for the economic growth. A new network often brings new jobs into the city, for two reasons. Municipal broadband allows existing employers to expand locally, and it also brings new companies into the area. Cities with success include Chattanooga, Tennessee; Auburn, Indiana; and Dublin, Ohio.

When cities have a completed and available network, they’re considered “job ready” by companies. When these companies and businesses are looking to expand and add new branches, they are more likely to choose a municipality that already has existing infrastructures. Of course, when new companies build, it means more jobs and a simulated economy.

Cities who are considering adding a new network to their residents and businesses are promoting healthy economic growth, educational opportunity, and make it easy for lower income residents to have access to the internet. It also creates a center of digital technology and opportunity.

Lease it

The other possibility for municipalities is to lease the infrastructure to telecommunication providers. Essentially, cities would be beating already existing providers to the punch, constructing their own network to then lease it out as a profit.

It’s essentially creating a direct revenue for the city. When telecommunication providers are looking to expand their networks, using an existing network is easier. With the revenue made from leasing, cities are able to bring money directly to their municipality.

This include telecommunication providers such as:

  • ATT/Verizon/Sprint
  • Time Warner Cable/Comcast
  • Internet providers
  • Security companies
  • Home monitoring
  • Small, local companies

The advantages are, of course, the same as above. Residents will have access to better internet, and companies will consider the city job ready.

Make it a utility

Most cities, when creating a new network, use the new infrastructure as a utility, and thus, as a revenue stream. Cities who double broadband speed often see GDP growth, sometimes by 0.3 percent, which is equivalent to $126 billion.  

When creating a new network in a municipal, many cities may choose to offer free wi-fi, or create infrastructure with lower speeds. However, that is actually counterproductive. A better plan is for governments to increase speeds in the area. By focusing on faster speeds, cities give themselves an edge over other markets.

As we mentioned earlier, there are other cities who have embraced this method. Chattanooga, Tenn., has had great success with their municipal broadband, attracting more than 900 businesses. More than 75,000 Chattanooga residents and businesses obtain broadband from the municipal utility and the network has generated between $865 million and $1.3 billion in economic and social benefits while also creating as many as 5,200 new jobs. Chattanooga offers speeds up to 1-gigabit.

Even smaller cities are offering gigabit services at affordable prices. SandyNet in Sandy, Oregon, has been offering broadband for more than a decade. And, they have plans to continue zoning and expanding their network, with a 40-year master plan. Sandy has about 10,000 residents, and sees 50 new homes being connected each week. In 2015 Sandy upgraded their town to Fiber. Residents pay just $40 a month for 100 Mbps.

Dublin, Ohio, has also seen success with their DubLINK Broadband Network. The city has 125 miles of fiber optics within its own boundaries and through fiber purchased by the city within metro and regional networks. While the city has spent approximately $5.5 million over the years in building, purchasing, and upgrading DubLINK, it’s estimated that they have seen at least a $35 million return on investment already.