Municipality Broadband - Five Years On
By Paul Budde

Some of you might recall the campaign I launched in 2001: "Broadbanding local communities". In all I spoke to over 50 municipalities in an attempt to make them take control over the broadbanding of their local communities. Around the world more than 1,000 local communities now do have at least some form of local broadband. After eight years of experience (more realistically however, more like 3 to 5 years of actual implementations), we are now beginning to see some trends in this market.

In general the more entrepreneurial councils and municipalities are the ones that are looking at their own broadband infrastructure. Communities that have a clear understanding of the economic and social benefits of these initiatives are leading the broadband charge.

Of course, in some countries - Sweden, for instance - local councils have built up expertise over a much longer period, but even in this country the real social and economic effects of broadband have only become more relevant over the past 3 to 5 years. Initially it was simply launched to stop telcos digging up the streets.

Many of the more recently broadbanded communities now have a leading edge on the utilisation of this infrastructure and have since built up considerable expertise in this field - so much so that in several countries the incumbents are starting to utilise some of these local networks. This is occurring in Sweden, the Netherlands, Canada and the USA and BuddeComm predicts that this will be an ongoing trend.

In many countries incumbents, both telcos and cable-cos, are still reluctant to roll out fibre broadband networks, as they can't see the business case for it, and/or they wish to protect their incumbent business. On the other hand, local communities are receiving the support of government organisations, which are using these networks for a range of social services in healthcare, education, multicultural, indigenous and other community services. In some cases these wholesale services - based on the principles of open access - cover up to 50% of the costs. This then provides a much better business case to deliver affordable high-speed broadband to the end-users.

In the end the average user is not prepared to pay much more than $50 per month for basic access and another $50 for other services such as entertainment.

Local communities have also learned valuable, and sometimes costly, lessons - such as how difficult it is to provide good coverage and good quality over WiFi networks. Most of these networks have been abandoned, scaled down or replaced by fibre-based plans.

The global credit crunch has severely damaged the financials of some of the local councils and this has somewhat dampened the enthusiasm of municipalities caught up in this crunch; however, with better credit facilities becoming available it is to be hoped that this will have been just a hiccup.

In some cases we see that the incumbents are picking up speed and that the need for separate municipality networks no longer exists. However - as is the case in the USA, for example - the cost of using the networks from the incumbents is still too expensive for most users and local networks continue to provide a better offer. Over time, however, we will see that competition will also drive the end-user prices from the incumbents down and this will than start leading to infrastructure consolidation. Only once that starts happening can municipalities withdraw from this market.

After some eight years of experience more realistic business plans are being developed and unrealistic expectations are less common, especially regarding the coverage of these networks.

Paul Budde

For more information see BuddeComm's -
2008 Global Broadband Market - Demand for Faster Networks
2008 Global Utilities - Environmental Focus for Smart Grids
2007 Global FttH - Fibre Networks Becoming a Reality

Top of Page