June 12, From the Deseret News
by Drew Clark
There are some things governments do well, and there are other things the private sector does best.
Disaggregating the "governmental" function from the "competitive" function of services — such as high-speed broadband internet services — can help us think more clearly about the pros and cons of sometimes controversial policies like "open access" telecommunications networks.
Public versus private provision of broadband was very much the central topic at the "Mountain Connect" telecommunications conference last week at this resort in the heart of the Colorado Rockies.
A vast array of telecom-focused companies, from Juniper Networks and Fujitsu to Corning and Brocade, displayed their wares in the hallways, while dozens of Colorado municipalities enthusiastically discussed their plans for securing better broadband within their communities.
Against a historical backdrop of lack of service by major telecom companies, plus challenges imposed by the geographic terrain, many sessions focused on rural service. Although a 2005 Colorado law barred cities from entering the broadband market themselves, the law allowed municipalities to opt out of the law with a public vote. Thus far, 57 cities have done this, and the number keeps growing.
But "opting out" doesn't mean the government always adds broadband as a service. It can instead partner with a private company to build everywhere in the city. This ensures universal access yet permits maximum competition among private internet service providers.
The archetypical role of local government is to provide for the safety, health and public needs of its citizens.
Some dream about a world with private roads, where every individual contracts with companies or homeowners associations to build and operate roads. But in the functional world, a government cannot escape its ineluctable obligation as guardian of its roads and its rights-of-way. Sewers, light poles, power lines and telecommunications wires and conduits also run in these rights-of-way. They make up the infrastructure of modern life.
But here's the flip side: Even when one recognizes that government must ensure sound, functioning public utilities, cities work best when they recognize and tap into the entrepreneurial and fast-moving nature of the private sector.
The capstone event here at "Mountain Connect" was a debate on open access. It featured Nick Hann, senior managing director of the Australian Macquarie Capital — an infrastructure financing and construction firm — and also Roger Timmerman, the new executive director of the Utah Telecommunications Open Infrastructure Agency (UTOPIA). The two of them defended open access networks against two skeptics who questioned the business model.
Hann, who has lived in England, Canada and Australia, recounted his support for the privatization revolution in the United Kingdom under former Prime Minister Margaret Thatcher. "Having spent most of my career in infrastructure, I recognize that infrastructure — whether a fiber optic wire or a road — is a monopoly asset."
He said there were two ways of coping with such natural monopolies. First, the government can attempt to regulate it. Hann viewed this as a never-ending battle doomed to failure. Alternatively, the government can enforce a "structural separation" between the ownership of the infrastructure and the use of that infrastructure. Under this model, many competitors offer their own services on the fiber asset — much as public roads permit travel for a multitude of taxis, buses, Uber and private vehicles.
Nationwide, one of the dominant forces in broadband in recent years has been the competitive entrance of Google Fiber into a communications market dominated by traditional cable and telecom companies. Utah has been a leading beneficiary of this, as Provo became the third Google Fiber city (with Google taking over the city’s municipal system), and with new infrastructure in Salt Lake City currently under construction.
But at Mountain Connect, Brian Bell, the Google Fiber expansion lead for the western region, emphasized the company's unique agreement in February with Huntsville, Alabama.
Instead of building a gigabit network from scratch, Google Fiber is leasing space on a network built by Huntsville Utilities. The city's utility has begun construction of the backbone fiber loop around the city and up and down every street; Google Fiber will build connections to homes subscribing to the service.
Here's the most interesting point: Huntsville will have a universal open access network. Any company, from Google to the newest startup, will be able to offer communications services to all the city’s residents over this open access network. This is exactly what has been done for more than a decade by UTOPIA, which currently has 10 competing service providers.
Because of the challenges that UTOPIA has faced, “for many cities, we have been the reason not to do open access,” joked Timmerman. He didn’t sugar-coat the difficulties his network has encountered.
But he insisted that because it allows competition and differentiation by private companies, open access will increasingly be the model for the internet’s future.