Fast Company: Should Seattle Finance Gigabit Internet Service?

| FROM THE PRINT EDITION |
 
 

When outsiders say Seattle is wired, they must be talking about the coffee because every computer-savvy Seattleite knows most internet service here doesn’t live up to the city’s high-tech reputation. Now, Seattle is hoping to help lead a gigabit internet revolution by providing blinding-fast service 10 times more rapid than the top speed typically advertised by cable providers. But first comes a roiling political debate. Should Seattle own the network? Should it partner with a private company to develop the system? Should it just stand back and let cable firms and telcos do the job? 

For its part, CenturyLink, the legacy telephone company that now offers DSL service citywide over its long-established phone network, says it’s ready to step up. Until now, its technology-limited service has offered a slow alternative to the two cable companies franchised to operate here, Comcast and Wave. But this fall, Seattle made it easier for CenturyLink to enter the fray when the City Council eliminated cumbersome restrictions on communications cabinets in public rights of way.
CenturyLink has a go-ahead to wire homes and businesses with fiber-optic connections. Already, phone company fleets are on the streets of Ballard, first of the neighborhoods to be targeted, and sandwich boards advertise superfast internet is coming soon. Next, the company promises service to Beacon Hill and the Central District, two neighborhoods that have complained the loudest about slow internet service via cable, as well as West Seattle.

“In a city that boasts some of the world’s leading technology providers, it’s critical that residents and businesses have leading technology available to them,” says Sue Anderson, CenturyLink’s general manager/vice president for Seattle. “We chose Seattle for this next-generation technology because the city’s tech-savvy customers demand it.”

Meanwhile, Wave is investing heavily to offer more high-speed connections, although it focuses primarily on apartment buildings. For the foreseeable future, superfast networks will show up only in a patchwork of neighborhoods, which, pundits say, is simply not good enough for a city that likes to consider itself the home of cloud computing, video games and any number of other high-tech sectors.

So begins a multimillion-dollar effort to wire Seattle and, with it, soul-searching about the role the city ought to play. On the rebound after a failed partnership with Gigabit Squared, a private firm that promised a network and failed to deliver, Seattle is weighing its options. One possibility that has captured the imagination of many is on display in Chattanooga, Tennessee, the nation’s leading example of public ownership. 

Apublic internet utility for Seattle? Chattanooga’s Electric Power Board (EPB), the public utility that serves the city of 173,000 people, began thinking about a fiber-optic network in the ’90s as a way to build a smart-power grid that could quickly reroute the flow of electricity for outages and peak demand. City officials saw the economic development potential of a fast internet network but found local cable and telephone companies unenthusiastic about a multimillion-dollar investment.

“They just sort of passed on that great opportunity, and that helped build political will to have EPB focus on fiber development,” explains Ken Hays, president of The Enterprise Center, a public/private partnership formed to promote Chattanooga’s technological advantages.

Thus, Chattanooga in 2010 became the first to launch system-wide gigabit service  — 1,000 megabits a second for uploads and downloads. Service is inexpensive, just $69 a month at present, competitive with typical charges for lower-bandwidth cable-company service. The local chamber of commerce estimates somewhere between 1,000 and 1,500 direct jobs have been created, Hays adds, as tech firms developing next-generation internet apps have taken advantage of those broadband capabilities. And “the gig” has given Chattanooga bragging rights: “There is a spirit in this community we didn’t have four years ago,” Hays says.

Making it happen wasn’t easy. Comcast put up political and legal opposition as the system was developed. Now, EPB finds itself in a price war for its bundled TV, phone and internet service.

The system wasn’t cheap, either. Total network cost was $330 million, some of it financed by bonds. But $112 million came from the feds in the form of recession-era stimulus grants — unlikely to be repeated as the nation is wired for fiber during the next 20 years.

About 400 American cities offer some sort of public internet network,  but these systems are configured in many different ways. Tacoma Power, that city’s municipal electric utility, operates one of the largest. Under its open system, the Click! Network maintains the fiber backbone and private-sector ISPs use it to deliver internet and phone service. Most connections are made with coaxial cable, but where demand for faster service exists, ISPs can tap into the network with fiber. Some 250 such connections have been made; speeds of up to a gigabit are possible.

Click! offers its own cable TV service to a little more than 20,000 customers and faces tough competition from Comcast and satellite providers with bigger buying power. But as customers shift to TV over the internet, Click! General Manager Tenzin Gyaltsen says the broadband network becomes the important thing. Tacoma’s model allows ISPs with expertise and financial wherewithal to serve high-demand customers; for the network, he says, “The key is to have an efficient plant that is properly engineered.”

The thing about municipal systems like Chattanooga’s and Tacoma’s is that none of them operate on a Seattle scale. Major cities are the next big battleground in a burgeoning movement for public ownership, says Chris Mitchell, director of the Community Broadband Networks Initiative for the Minnesota-based Institute for Local Self-Reliance. He says it is time for them to seize the moment. 

Mitchell roused crowds at Seattle City Hall in October with his message: If the city doesn’t act it will find itself at the mercy of Comcast, CenturyLink and other major corporations concerned more with making money from captive networks than providing public service. Google Fiber’s deployment of gigabit networks in select American markets has helped touch off a scramble by telcos and cable firms to do the same. But Mitchell says the public option offers a better way to assure universal service, open competition and a swift rollout.

“If cities wait too long to build networks or develop a strategy, companies like CenturyLink will have built in all the areas that are profitable or likely to be profitable,” he notes. “And left behind will be all the communities that are harder to serve.” 

Mitchell argues municipally owned Seattle City Light is poised to do the same job as Chattanooga’s EPB. But now the hitch. Even if a public network uses the city’s existing $50 million investment in so-called “dark fiber,” laid down since the ’90s for city needs and possible future use, Seattle will make Chattanooga look cheap. Think well upward of a half-billion dollars. Think of Safeco Field. “This is sports-stadium-type money,” says Ben Krokower, chairman of the city’s Citizens Telecommunications and Technology Advisory Board.

Experts say a fiber-to-the-premises network is so expensive — more than $1,000 a connection — that only one such network is likely to be developed in any given service territory. Yet on a national scale, private companies are likely to build networks slowly because of cost, meaning Seattle has some time before the window closes. Michael Mattmiller, the city’s new chief technology officer, says a broadband strategy is a top Seattle priority. Relaxing city rules to stimulate private competition was an easy first step. Now comes the hard one: deciding whether the city ought to be involved.

“This is why the municipal option is so relevant,” Mattmiller explains. “If we are not able to get providers to the table to build up a competitive gigabit-quality service, that is where the city needs to understand our ability to step in and provide that service directly.”

By early 2015, the city plans to update a 2009 study of broadband options, costs and legal issues. There also remains the possibility of a public-private partnership with a firm willing to take on the job, despite the Gigabit Squared debacle.
Other major cities are asking the same questions. Los Angeles is a year or two ahead as it prepares a plan to attract private investment in a citywide fiber network. Its challenge is similar to Seattle’s but on a larger scale. “We just don’t have an extra $4 billion or $5 billion to build a municipal network,” says the project’s champion, Los Angeles Councilman Bob Blumenfield. “Whether it would work or not, I’ll leave that to the academics and theorists. As a practical matter, it would not be on the table anytime soon. That has forced us to think creatively about how we can make this happen without just building it out ourselves.”

In Seattle, the costs likewise cause many to gulp. “There’s not an infinite amount of money to spend on infrastructure throughout the city,” says Robert Kangas, spokesman for Upping Technology for Underserved Neighbors, a group promote improved internet service. “Private companies do have the deeper pockets here.” And there are some who argue that it doesn’t matter so much who builds the network as building it in the first place.

In a city that sees regular big-money proposals for everything from bus service to preschool, there does seem to be plenty of sympathy. Bill Schrier, the city’s former technology officer, notes other proposals benefit small segments of the population, but when you consider economic development impacts, telemedicine, education and property values, Schrier declares: “A municipal broadband network would benefit every last one of 650,000 people.” 

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