Big Think About Broadband

This is the time of the political season for Trenton’s May elections when some candidates feel they have to present their Big Ideas, their Vision Thing for Trenton’s future. The week before last, we read Deputy County Clerk Walker Worthy’s “Plan for Jobs and Economy;” we were not impressed. The Big Idea for Trenton’s economic re-building as proposed by Mr. Worthy was development of the City’s waterfront area, including a Casino. The benefit of a Big Idea like a Casino is that it is an easily understood proposal, able to be summarized quickly and succinctly. The devil, of course, is in the details, few of which were forthcoming from Mr. Worthy.

At the end of last week, Jim Golden released a summary of his plan, which I am looking forward to discussing. But before  that, Paul Perez released a proposal that is getting some attention this morning, and which I think counts as his own Big Idea. And that makes it worth a look.

According to an article by Davis Foster in this morning’s Trentonian, “Paul Perez wants everyone in the city connected. The mayoral candidate revealed plans to create a citywide, ultra-high-speed broadband internet network to spark economic development.”

The plan, dubbed with its very own acronym TBS, for Trenton Broadband Initiative, is “to deliver speeds of 1Gbps and higher to attract IT startups, investors and businesses, in addition to providing Wi-Fi to schools, colleges and the residents at affordable prices. ‘Through a public-private partnership we can develop an affordable broadband network and create the conditions for schools, colleges, businesses and even the state offices to have a reliable and resilient IT infrastructure, ‘ Perez stated. The mayoral candidate said cities such as Chattanooga, Tenn., Provo, Utah, Kansas City, Miss. and Austin, Texas are already developing the networks.” [Emphasis mine - KM]

This proposal is certainly ambitious, and even audacious in Mr. Perez’s suggestion that a Trenton Initiative could provide broadband access to New Jersey state offices.

Ambitious and audacious may attract headlines, and perhaps sway votes, but how realistic is this plan? Looking at the municipal examples that Mr. Perez himself cited as leading the way, I have to answer, “Probably not very realistic at all.”

According to an op-ed written last August in the Baltimore Sun by Maryland State Senator Catherine Pugh, “Taxpayers in Provo, Utah, for instance, spent $40 million to build a relatively small and modest network only to sell it for $1 a few years later because they underestimated the massive costs of operating, upgrading and maintaining it.” The new owner of the Provo system, Google Fiber (more about them below) according to Senator Pugh will need to invest another $20 Million into the system – which we are told is barely ten years old – before it is considered “fully operational.”

Yikes! So Provo’s experience really does not recommend the idea very favorably to Trenton. Let’s move on.

Chattanooga, Tennessee, is the location of a municipal broadband system serving 56,000 customers according to the Wall Street Journal, and offering speeds of 1 Gigabit.

But Chattanooga’s system was helped along by several crucial facts. For one, the city-wide Internet broadband was an outgrowth of a plan by the city-owned electric utility to improve the reliability of its electrical grid. With an electrical infrastructure already reaching into every home, school and business in the Chattanooga region, this gave the City a headstart.

Trenton does not own an electrical utility. It does own the Trenton Water Works. A water utility, even one that has struggled to provide dependable basic water service to its customers, is not suited to add on this kind of added functionality.

Chattanooga funded its municipal system in part by $111 Million in Federal Stimulus dollars, and a $220 Million Taxpayer-approved bond. That is One-Third of a Billion Dollars to construct a system for a metropolitan area with about twice Trenton’s population. Using a similar yardstick to estimate the cost for Trenton, one comes up with a number of at least $160 Million.

In her Baltimore Sun op-ed, Senator Pugh tells us “To pay-down these massive costs and to break even year-to-year, municipal networks need to sign up tens, if not hundreds, of thousands of customers… [Chattanooga signed] up just 34 customers (eight residential!) to its $350 per month 1 Gbps offering. Chattanooga residents saw little use for a 1 Gbps connection, particularly at such a premium cost.”

Has Mr. Perez run the numbers for Trenton?

Did he even look very closely at the experiences of the other cities he cited?

In today’s Trentonian article, Mr. Perez does talk about utilizing a “public private partnership” to embark upon a program such as he is proposing. In that, he may be thinking about the examples of the other two cities he mentioned.

Kansas City (the one in Kansas & across the river in Missouri, NOT Mississippi as the Trentonian reports!) and Austin, Texas are cities that are being upgraded to advanced broadband services by working with a division of Google, Google Fiber. In Kansas City, the “private” part of the partnership is estimated as costing Google about $1 Billion to build out its system.

This kind of investment from a company such as Google is just the kind of commitment Trenton would love to see.

However, this private investment requires a lot n return. For its part in the project,  Kansas City is providing several in-kind items and services: “Free office space, free power for Google equipment, and use of ‘all assets and infrastructure’ in both Kansas Cities… including fiber, buildings, land, and computer tools for nada. And to sweeten the deal more, both cities are giving Google a team of government employees dedicated to the project. ”

Would Mr. Perez be willing to offer this kind of investment from Trenton? He didn’t say in his talk with the Trentonian. He should be asked if that is his intention. Trenton’s recent record of public investment in private enterprises (Hello, Lafayette Yard!) is not exactly a good one, you know!

Austin, Texas is the other big metro area seeking to upgrade its municipal infrastructure with Google Fiber, but that is an effort running into a lot of difficulty, not least of which is that Google’s plans for Austin would require it to have access to the city’s existing utility poles. 80 percent of those are owned by the City, but 20% are owned by competitor AT&T, which is not exactly pleased by Google’s entry into their market. AT&T is challenging Google’s ability to build out its system, claiming that Google is not qualified as a Telecoms services provider by either Texas or Federal regulators.

In Trenton, a similar attempt by a Perez Administration to bring in a company such as Google into a “public private partnership” would likely run into similar objections by the companies that are now here, namely Comcast and Verizon. Not that that should be an obstacle in itself. The prospect of competition in one of its markets might encourage Comcast and/or Verizon to make improvements to its service and pricing. This is certainly something Trentonians would benefit from.

But that hasn’t happened yet. A survey of the industry on written last year reviewed developments nationwide including expansion plans by corporations such as Comcast, Time Warner and Verizon, as well as the public private partnerships towns such as the ones discussed above along with Google Fiber, and found problems with the timely rollout of our Big Connected Future

The search giant [Google] insisted it had no intention of becoming an internet service provider. It just wanted to encourage existing ISPs, including Verizon, to run higher speed lines across the country. But although Google Fiber has now arrived in Kansas City, Kansas, the big name ISPs aren’t exactly following suit.

Verizon has stalled the expansion of FiOS indefinitely, and other companies have been slow to invest in ultrafast broadband. Time Warner Cable is rolling out fiber to office building in New York City, and Comcast’s Xfinity Platinum service offers a 305 megabit cable service in some locations for $299.95, but that’s the extent of it…

‘Competitors have been overbuilding, investors are wondering where the returns are,’ says Mark Ansboury, president and co-founder of GigaBit Squared. ‘What you’re seeing is an entrenchment, companies leveraging what they already have in play.’

Mr. Perez is correct that the future competitiveness of Trenton as a community that can attract investment by businesses and families depends on an improved infrastructure. I can’t blame him for thinking big by proposing that Trenton move into the 21st Century and provide a first rate information infrastructure.

But his proposal as presented this morning is a poor one. Trenton has a long way to go to repair and upgrade too much of its brick-and-mortar infrastructure before we can hope to compete with a fiber optic one.

His proposal today is poorly thought-out. He provides no details on what a “public private partnership” of this sort may look like.

There is no estimate offered on what the “public” investment (taxpayer funds) required by Trenton might be, and what the return on that investment might be.

The other cities he cited as examples to follow in fact offer caution and warnings, clearly not what he intended.

His proposal is certainly a Big Idea, intended to distinguish himself from the rest of the mayoral field, and attract voters looking for a candidate with Vision.

Sadly, Mr. Perez’s vision of the “Trenton Broadband Initiative” is no more serious and practical than Mr. Worthy’s waterfront Casino.

7 comments to Big Think About Broadband? Or Big Baloney?

  • Mr Harry W Chapman

    Trenton already has Broadband, it is called Comcast and Verizon. I personally was in charge of installing it over 10 years ago in every Trenton school and library.

  • ed w

    The problem with our internet speed is more a function of the lack of leadership at the FCC(federal level) than with any local municipality.

    yes more speed is needed, international we(usa)are at the 25th rank and falling rapidly. the prob is more related to the severe lack of any competition, with only 2 choices, with UN-naturally similar price plans, consumers in general are being financially “raped” or in the ISP’s own words bundled.

    If Trenton could get Google to invest in our city/regional Network I would support it, but I remember Philadelphia’s go it alone broadband disaster, great idea no reality.

    BTW, why is only Comcast allowed in Trenton, shouldn’t the residents of Trenton have another choice???

  • James

    Nice analysis Kevin (as always!) ~ and I think your conclusion is spot on – it’s about distinguishing himself and resonating with voters. I’m beating the equine corpse here, but the typical voter will not spend the time to critically think out what this means – choosing instead to fill in the gaps with “hope” and envision a rosy future of either 1) hitting it big in the casino or 2) digitally surfing the interwebs at a new tech startup.

    Of course, I’m not really sure how the latter would really pan out. If I were to start a new tech company, it’s not my broadband service that I’d be worried about. Offer me all the free internet in the world – I’d still be worried about getting mugged and shot on my way into the office! Why the hell can’t these candidates just be practical and bring forward a plan that can actually fix the basics needs around here – like safety??

  • Faster smartphones, yo!

  • BTW, Kevin, thank you for doing what no one else in Trenton will with these analyses.

    Unfortunately … well, you know.

  • I teach a course for my company that includes the history of cable. It explains why things are the way they are and the impact the FCC has had on the industry (much of it bad).

    Perhaps I’ll teach it in Trenton sometime.

    Looks like we could use some in depth discussion.

  • ed w

    Don, I would very much like to attend your course.