How Small Communities Can Use Gigabit Fiber Expansion to Stand Out

SANDY, Ore. — Driving out along U.S. 26 about 30 miles east out from downtown Portland, there’s a small red-and-white painted brick structure called Joe’s Donut Shop in this city of about 12,000 residents. It’s a hard-to-miss spot where locals and travelers heading to Mount Hood or locations in central Oregon stop off for coffee and, well, doughnuts. (Delicious doughnuts, as Route Fifty found on a recent visit.)

Gas stations along the highway nearby provide other opportunities to stop off in the city of Sandy, among the last outposts of metropolitan Portland before heading into the heart of the Cascade Range.

While the pass-through traffic that stops off in Sandy is certainly welcome, the municipality has ambitions that aim to connect the city to the rest of the world using routes that don’t rely on U.S. 26.

“We don’t want to be known for just doughnuts and gas,” City Council President Jeremy Pietzold told a gathering of regional broadband leaders and stakeholders during a Digital Northwest conference in Seattle last week, hosted by Next Century Cities , the National Telecommunications and Information Agency and NTIA’s BroadbandUSA initiative.

Thanks to high-speed Internet connectivity through the city-owned SandyNet , there are more and more people interested in planting roots in the community, Pietzold said, where all homes are connected to Sandy’s fiber network.

“Now we’re known for gas, doughnuts and municipal Internet,” the council president said last Monday.

Broadband was once a nice amenity to have in a house. Now it’s a necessity. And in Sandy, the fiber network is an important economic development asset for the city.

Many home sellers prominently feature their broadband connection in photos that go with the house listing. Real estate agents often encounter prospective buyers with Internet connectivity as a leading concern, Pietzold said: “The number one question: Is there fiber?”

That’s not a problem in Sandy.

The municipal broadband network that has made Sandy a fascinating local government case study has its roots in the early 2000s when IT personnel couldn’t get a DSL line connected to City Hall—located next door to Joe’s Donut Shop.

When Sandy wanted to connect a municipal operations center to fiber, an Internet service provider said that it would need $100,000 up front and $6,000 a month to pay for connectivity, SandyNet’s IT Director Joe Knapp said in a follow-up Digital Northwest conference break-out session.

Knapp said that Sandy’s leaders at the time asked: If the city government was having problems getting connected to the Internet, what about Sandy’s residents?

So Sandy started building its own network, laying down fiber through the center of town to connect different municipal buildings. Soon, leaders in Sandy decided to use that investment as as a way to deliver high-speed Internet citywide, building the network out incrementally.

SandyNet is now about 14 years old since it started out providing DSL and wireless service. The municipal-owned fiber network, built without taxpayer funding and paid through a $7 million, 20-year bond, is now connected to 100 percent of Sandy’s homes.

In order to break even, SandyNet’s fiber-to-the-home offerings needed a 35 percent “take rate,” or the percentage of total possible customers who sign up for the available service. By last summer, the take rate among Sandy’s residents was 60 percent. There are now 10 to 15 new signups per week, Pietzold told the Seattle gathering.

SandyNet has two basic service options for residential customers: 100 Mbps for $39.95 per month and 1 gigabit per month for $59.95. There are no data caps and no contacts.

“We’re not Comcast,” Knapp said. “My residents don’t want Comcast. We are a network that is about and for our community.”

Fiber connections are available within Sandy’s city limits. Wireless high-speed service is available for rural areas near the city. High-speed Internet service for business customers is based on the availability of fiber or dedicated wireless connections.

“The reason why we’re successful is that we’re small and we’re nimble,” Knapp said. “We do everything.”

Since SandyNet operates as a non-profit, revenue gets put back into improving the network, Knapp said.

“Everything with SandyNet was incremental,” he said. “We were able to take revenues and put it back into expansion.”

While Sandy provides a great local case study, as with all broadband models, an approach that’s worked in one community doesn’t necessarily mean it will automatically flourish in another. There are different approaches, including building a municipal network, working with a private-sector provider or creating a cross-sector collaborative solution.

Regardless of the precise model, it’s important that communities think about what they want, what they need and how they can be supportive of efforts to bring high-speed Internet connectivity to their localities.

In the end, broadband is the critical infrastructure cities need to compete for economic development, regardless of who supplies it.

“Seattle will not be able to compete with Los Angeles on weather. Chattanooga will not be able to compete with Seattle on coffee,” David Edelman, special assistant to President Obama for economic and technology policy, said during the conference. “But they’re all going to be competing on broadband.”

That’s especially true in smaller communities that have had to shift economic gears to adapt to a globalized economy and compete against larger cities that are usually magnets for the tech sector and innovation.

The former logging community of Toledo, Washington, a small city with 725 residents located about 70 miles north of Portland, seems like an unlikely place for high-speed Internet to flourish.

A private, local Internet provider there, ToledoTel , has built out a gigabit fiber network that now covers 486 square miles—connecting every tax parcel in what’s a largely rural region near Mount St. Helens.

Dale Merten, the chief operating officer of ToledoTel, said that smaller communities looking to build a municipal network or work with a partner to build a local gigabit network should go in with a sound plan because even if you build it, it doesn’t necessarily mean people will come.

“Even if you have the best broadband in the world, [that] doesn’t mean people are going to sign up for it,” Merton said during the Digital Northwest conference.

It takes a sustained effort to build community goodwill to boost adoption by network residents.

And Toledo’s residents have really embraced the high-speed Internet connectivity that came with ToledoTel’s $18 million build out —funded through U.S. Department of Agriculture rural broadband development loans—which wrapped up late last year.

“We’re very fortunate that we have a 95 percent take rate,” Merton said.

A promotional video for ToledoTel’s broadband promotes the lower cost of living in the Toledo area and the assets of having a fiber network, allowing people the option of working remotely and capitalize on being situated between two of the Pacific Northwest’s leading metropolitan areas: Portland and Seattle.

The fiber network in Ammon, Idaho, like Sandy’s, started when the the city government was trying to connect its municipal buildings with fiber but had sticker shock when it sought private sector solutions.

When Ammon solicited bids for the project back in 2007, one private provider quoted the city a pricetag of $80,000 with additional costs of  around $1,000 per month, according to Bruce Patterson, the city’s technology director, who spoke during the break-out session.

The city decided to build the project itself more cost-effectively, Patterson said.

But, Patterson said,“there’s no right model for everybody,“ he said. Still, you have to start somewhere. The “journey of 1,000 miles begins with the first step.”

Ammon then began looking at ways to take advantage of the unused fiber to help local businesses get higher-speed connectivity and is currently gauging interest in providing future residential access to the municipal fiber network.

Time will tell if Ammon gets in the business of providing gigabit speed connectivity to its residents. But even if a local government chooses to outsource through a private-sector provider, it still needs an internal champion to make the plan work for the community.

“Whether you outsource it or not, you need to have someone in-house who understands all this. If you have someone on your team who can take ownership,” Patterson said. “It’s yours. Make it yours.”