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Happy New Year! I know, a little later than others’. But I wanted to give you some time to dig out from that first-of-the-year pile of work.

 

So here we are, beginning of the New Year, and 11 years past ARRA’s birth. You have to admit, even if not another dollar in grant money is awarded, the stimulus is a raging success in making broadband a topic front and center in the U.S. News coverage and Monday-morning analyzing after the first batch of awards was incredible.

 

Though a mere 18 awards don’t offer a lot of data points for serious trend analysis, two aspects of broadband will be running neck-n-neck to lead developments this year. Middle mile projects will become central to broadband deployment strategies, and partnerships will be the coin of the realm.

 

Last mile has likely been more prevalent in discussions by non-techie types because this is the part of broadband that touches them. However, middle mile projects enable local governments to bring broadband to a significant number of people at manageable long-term costs. There are some pre-stimulus success stories that more people should review, such as Cambria County, Penn.’s project.  

 

The role of partnerships was clearly established not only by the number of initial grant awards going to public-private and multi-institution partnerships, but also in last Thursday’s NTIA/RUS announcement that they created a Web app to facilitate partnership development. Partnerships in no way are confined to grant applicants. Serious about broadband? Better have your dance card filled with partners before you get to the ball regardless of how you plan to finance your network.

 

As we near (hopefully) the end of round 1 funding, and many communities come away empty handed but still in great need of broadband, what is to be their ticket to ride that train? Money and obstructionist incumbents tend to be two significant challenges to overcome.

 

 

The key to launching your community broadband network may be investors. Local community investors. Individuals and organizations that have a direct stake in putting up money in exchange for a piece of the action, even if they don’t need to use the network.

 

National Community Development Services, Inc. has an interesting approach to raising money for economic development projects. Their president, Tom DiFiore, and I co-hosted a Webinar on broadband strategy because I believe a process that can raise $1.6 billion over 30 years for these types of projects deserves a fair review by those of us in broadband.

 

In my book on broadband strategy coming out later this money, I explain this process in detail, but it’s simple really. You build your financial sustainability strategy not on institutional customers, but on recruiting a group of local investors who together with local government fund the network buildout and operations.

 

“Key funders have a greater sense of ownership in the initiative they are funding,” explains DiFiore. “An investor expects a return on his or her investment, but for economic development fundraising, the investor’s primary return is benefits the community receives. Broadband creates economic growth, prosperity, and vibrancy for a city, county, or region. The largest stakeholders in that community’s wellbeing, therefore, are logical potential investors in that mission, even if they are not customers on the network.”

 

A typical scenario might be to create a co-op or other nonprofit entity, such as many communities did when applying for broadband stimulus grants, and develop a budget for how much it would cost to build and operate a broadband network. Assemble leaders of 11 or 12 of the community’s larger commercial and other organizations to propose that each of them and local government invest a fairly proportioned amount into the co-op. If you have a local retired Bill Gates (News - Alert) with money looking for a home, invite him or her also.

 

The co-op then retains contractors and hires personnel to build and operate the network. The investors received high-end broadband services as part of an ROI package while profits from revenues go back into network services that benefit the community, or into other economic development activities.

 

This is a great approach on several levels. First, communities in areas that have middle mile projects still need to have last mile networks built. I predict, and will put money on, quite a few small and rural communities still won’t be able to get service providers or telcos to play in this last mile game for various reasons.

 

Second, the community owns the entire asset, with private money still playing a major role financing the network and private sector expertise running the network. Then you can sit back and have fun watching the big incumbents tie themselves into a knot explaining why these networks are a bad idea. And if you have a local telco whose heart is with the community’s best interest, they can be an investment partner as well.

 

OK, I agree, this is pretty radical thinking for some people. But let’s face facts. As I said in my Top 10 Prescriptions for Getting Broadband Done, “all of you aren’t winning the brass ring!” so everyone applying better create a parallel universe with a good Plan B. Yours can be one of those communities that give a bunch of reasons why they can’t get broadband, or it can be one of those determined, highly creative communities that gets broadband done. Which is it gonna be?