Please don’t tell me that municipal fiber networks are destined to meet the same fate as MuniFi networks. Today there is news that Broadwave Networks, a company co-founded by former Novell CEO, Robert Frankenberg, is buying the much-vaunted iProvo fiber network from the city of Provo, Utah, for $40.6 million. Broadwave is in the business of building fiber networks in new communities, and has planned networks in new developments in Utah. The $40.6 million will help pay off the $39.5 million bond the city issued to build the system.
The sale of the network, and to some extent its financial failure, makes me think that the fiscal reality of running a telecom operation and an open network don’t sync up. The iProvo network launched with much fanfare in 2004, but has had a rocky financial road. Despite the promise of a fiber future and what was an open network, iProvo didn’t get enough subscribers and was costing the city of Provo about $2 million a year. The iProvo site indicates that they had 10,000 subscribers in October 2007, and last month, Provo Mayor Lewis Billings said it was too soon to unload the network. Apparently he changed his mind. I imagine all the incumbents who opposed iProvo are thrilled to bits today.
2 thoughts on “X-Novell CEO Buys Provo’s MuniFiber Network”
Thats because running these networks is non trivial, a fact that seems conveniently handwaved away by the proponents of open access and diy builds. These are unglamorous, ugly, back breaking things that burn up capital and people like they were going out of style.
Consider the enterprise value of a large cable company, around 80billion, that generates free cash flow of 2billion/year. if you bought it today, it would take you 40 years to pay off. Doesn’t seem that attractive now, does it?
Some good points come up from the Provo example:
1) Have an experienced operator run any broadband network, regardless if its an open or closed business model. Think of a regional airport, we generally bring in operators to run them, we invite the private sector to compete and offer services. The same concept should be applied to Muni owned fiber networks. The Muni should be the “catalyst” to ensure that this investment (fiber) is made in their community, and then they bring in the experts for the services.
2) Its not just about telecom services. The whole concept of an open Muni fiber model is that it can be DIFFERENT. Sure, you have to have triple play services to compete, but the network should support locally generated services, community information and services, hopefully educational and healthcare services too, as well as offer raw bandwidth and competitive pricing for those that want it. Also, you better budget some dollars to successfully market the open city network as you can’t rely on the SPs to do it. First market, then build!!
3) The busines approach with the SP has to be a “win/win” approach with the City or PPP that actually owns the infrastructure. The network will only succeed if the SPs are successful and that they can easily differentiate their services and innovate to add new ones. The network cannot be a black hole for the SP, they also have to easily be able to manage their subscribers too. Do not limit bandwidth consumption or you’ll likely limit any innovation, think revenue share with the SP as opposed to toll fees for bandwidth usage. Systems exist to easily automate the delivery of IP services and simplify operational complexities, these should not be overlooked.
4) Be realistic. This is a long (very long) term investment in your community, just like the roads, why think differently over a fiber investment? Don’t have unrealistic expectations over any returns.
5) Communities are now expected to have fiber services available to both keep their businesses and attract new ones. France is witnessing this first hand as communities there are having to compete against one another through offering fiber services.
6) There are many great European examples, see these links which show what the resident or local consumer can enjoy via their community portal (translation services needed!!):
http://www.malarnetcity.se/texter/read.php?id=99317 (English Version)