on Oct 15, 2020
Broadband from the Bottom Up: How Community Organizations Can Shape the Broadband Future
Written by Danny Fuchs, David Gilford, and Ariel Benjamin
Universal high speed internet access is foundational to addressing American inequality, particularly in education, employment, and healthcare. Nearly every effort to address inequality relies in some way on the internet. Yet more than 18 million American households live without a broadband subscription, 13.9 million of them in metro areas. In urban counties, people of color represent 75% of all unconnected residents.
The private market will not close this digital divide on its own. Nearly 28 million American households have a single choice of broadband provider; millions more live in duopolies. Government primarily serves as a regulator—recently, an anti-city, anti-competition regulator—with a few programs that subsidize internet service providers’ (ISPs) service of low-income residents.
New models of public-private partnership are essential to achieve universal broadband. The public and civic sectors have three principal tools to shape these partnerships:
- Investing capital directly in building networks, deploying fiber and other infrastructure;
- Making real estate assets available to support broadband deployment —especially street poles, which are essential for 5G deployments; and
- Aggregating demand for internet service to leverage collective buying power.
Given the scale of the required capital investment, complex regulatory framework, and essential nature of street poles to 5G, government will be a part of any comprehensive solution. However, communities themselves need not wait to act. Detroit’s Equitable Internet Initiative and New York City’s NYC Mesh and Silicon Harlem show how neighborhood-governed broadband infrastructure can be deployed to provide faster, cheaper service with better privacy than incumbent ISPs’. These community organizing efforts are essential to a more equitable broadband future. Scaling them presents opportunities to unlock local economic opportunity, prioritize community values in the delivery of services, and begin closing the digital divide. Bringing these efforts to scale will require attention to these lessons of the initial efforts:
Aggregating demand changes private partners’ development economics.
ISPs invest where they can be assured a reasonable rate of return. In deciding whether to expand to a new neighborhood, an ISP estimates revenue that will accrue through adoption (the rate at which a household subscribes to any internet service) and take rate (the rate at which a subscriber household chooses a particular ISP over the competition’s). This expected revenue is compared to estimated costs: financing the required infrastructure investment, operations and maintenance costs, and the cost of marketing and sales to new customers. When communities pool households or businesses, they are guaranteeing a take rate while reducing customer acquisition costs. This permits ISPs to provide bulk discounts and assurances on performance and other community priorities, like privacy.
Aggregating demand can take different shapes, such as bulk purchasing internet service at negotiated rates or guaranteeing a threshold of monthly revenue and/or underwriting the service provided to low-income subscribers. Aggregated demand can help ISPs finance critical network investments in areas where broadband infrastructure is poor. In areas where affordability is a challenge, aggregated demand can connect households across larger geographies.
Collective purchasing enables organizations to obtain better services and pricing.
From school districts to church groups, community development corporations to unions, organizations can approach ISPs to evaluate options, negotiate rates, and reduce overall costs. As with home heating oil buying clubs and community group-led solar installations, group purchasing programs have achieved cost reductions, while empowering members to make educated decisions on topics from price volatility to sustainability. Among these early successes, we number:
- The New York City Department of Education’s (DOE) recent purchase of 300,000 internet-enabled iPads to enable remote learning. In April, DOE reported paying T-Mobile $10 per month per device for unlimited data, 70% less than the typical retail price for this service.
- Chicago Connected’s issuance of a Request for Proposals to connect low-income households with the best-possible internet service package, including minimum speed thresholds. This public-private partnership that aims to close Chicago’s digital divide, intends to guarantee payment to the ISPs, reducing risk while unlocking a new customer segment for the provider.
- South Bend, Indiana’s non-profit business accelerator, enFocus’ development of nCloud, a shared IT purchasing program for non-profits to access the local dark fiber network, ChoiceLight. Aggregating the high-speed internet needs of over 20 organizations allowed each to receive connectivity for less than 10% of a commercial provider’s rates.
- At a smaller (and less effective, less equitable) scale, condo boards in some urban areas have negotiated with incumbent carriers to wire buildings for fiber-to-the-home by committing that a specific percentage of residents sign up for service.
Scaling this approach will require cross-sector collaboration and specific expertise.
While such successes should be celebrated, they have not yet achieved scale. Organizations that have large membership or stakeholder bases, from universities to unions, are best positioned to create larger-scale programs. Yet delivering aggregated demand to ISP partners requires skillsets and expertise outside most of these organizations’ core competencies: few are well-positioned to surmount administrative and regulatory hurdles, nor to deliver on customer service responsibilities. Helping to build this capacity—whether in-house to the nonprofit or contracted out—will require the involvement and partnership of philanthropy, technology firms, marketing experts, and entrepreneurs in bespoke combinations—unless and until national models emerge. Nonprofits with large memberships that successfully grapple with this challenge will not only provide new benefits to their members, but also secure a source of unrestricted operating income. One approach that seems to have significant promise is for these organizations to bundle their aggregated demand into a municipally led public-private partnership, enhancing what local governments can offer private partners.
Nonprofit-led demand aggregation presents an opportunity to help local governments build capacity.
On its own, aggregated demand will not close the digital divide. It will not expand broadband networks to serve every neighborhood, ensure public ownership of fiber infrastructure, fund robust digital literacy programs, or unlock the street poles critical for the delivery of 5G. While it may help enable, it cannot force capital investment in a new network. Local government has the power to coordinate these levers, although it may not have the resources. Helping local nonprofits develop demand aggregation programs is a starting point, but equally important is understanding what else is needed, specifically infrastructure investment and leveraging real estate assets.
Developing that understanding is critical: local and regional governments must position themselves for an evolving landscape and forthcoming federal investments. Broadband is poised to be a central piece of the next big federal infrastructure bill, already passed in the House of Representatives, and any future comprehensive federal COVID-19 recovery package is likely to include quick-spend broadband infrastructure support. In addition to federal money, broadband infrastructure will likely draw private capital to fund deployment. Telecom industry analysts are predicting rising demand for fixed broadband as people seek better performing internet at home, and private investors began the year with a record $1.5 trillion in unspent cash and are eager to invest. Communities with ready-to-go broadband plans, as well as the administrative capacity and the political support to advance them, will be ahead of their peers to take advantage of these substantial future sources of funding.