A novel new approach to underwriting the costs of next generation broadband - fiber to the home while addressing the challenges of reducing energy consumption and CO2 emissions and providing new revenue model for service providers. See below for more details
Sunday, January 29, 2012
What the Green Bay Packers can teach us about broadband
If Green Bay, Wis., a town of 105,000 people, can raise $70 million to rehabilitate its football field by selling $250 stock shares, I bet $250 there’s a community in America that can raise $2 or $3 million for a broadband network. Any takers?
In Vermont, 23 town governments created ECFiber, an LLC nonprofit corporation. No tax dollars went into ECFiber. Instead, ECFiber offered tax-exempt 15-year $2,500 promissory notes that effectively earn 6 percent interest. The approximately 50,000 people in these towns raised over $900,000 in 2011 to begin an initial buildout covering 26 miles. To finish the network and bring connections to people’s doorsteps, ECFiber is doing additional fundraising rounds. In a recent effort, the town of Barnard , Vt. with 386 households generated $350,000 to continue building out the network in their town. With funds for covering two-thirds of Barnard accounted for, they expect to raise enough to complete the job.
In rural Lancashire in the north west of England eight parishes united to form Broadband for the Rural North, Ltd (B4RN), a not-for-profit community co-op. Similar to Green Bay, the co-op sells stock in B4RN, though these shares earn immediate tax breaks, and potentially will pay back investors and the communities.
B4RN shares are 1£ each with a 100-share minimum purchase required. Those buying 500 or more get a tax credit of 30 percent of the stock’s purchase price. Investors buying 1,500 shares get a year’s worth of broadband thrown in the deal, or 15 months if they buy before the February 29 Early Bird Special deadline. Further cementing the community bond with the project, investors buying 3,000 shares can donate 1,500 of those plus the broadband service to a neighbor. B4RN currently is over halfway to reaching its financial goal that enables the buildout to start.
The value in these community-investor models is not just their ability to raise money. When the community literally owns a major technology asset such as communication infrastructure, some of the dynamics of marketing, network operations and management change.