My Turn/Dvore: Where is the broadband?


Monday, January 23, 2017

What happens when you put lawyers and politicians in charge of a project that requires business and technical expertise? MBI, Massachusetts Broadband Institute, was created in 2008 by emergency legislation that allocated $40 million to address the critical need for Broadband Internet access in 45 unserved towns. Rather than building the network where needed, MBI chose to accept matching federal funds that due to the cable companies’ lobby prohibited use of funds to actually connect subscribers.

The project became known as the MB123 middle mile: 1,100 miles of fiber in 123 towns. Simple math reveals that 78 of those towns already had broadband and did not need the MB123. The 45 actual unserved towns don’t need separate middle- and last-mile networks. Having duplicated sets of fiber on the same poles just adds unnecessary cost, which get passed down to the consumer. A properly designed regional network would not require a separate middle mile network.

So how did MBI justify spending $90 million on the MB123? They claimed that it would attract private sector companies to invest in last mile networks built off of the MB123 middle mile network. They didn’t have a single such company lined up, and none ever appeared. They also claimed that it would supply service to hundreds of CAI’s (Community Anchor Institutions), such as town halls and libraries. MBI’s RFP seeking a network operator to run the MB123 claimed that libraries in all of the towns would be willing to pay $1,000/month for service. That’s more than the total budget for most of those libraries.

Again, in 78 of the towns, the CAI’s already had free or discounted broadband service from existing providers. Axia, the company that ultimately “won” the contract, was suckered into believing they would have plenty of paying customers. The good lawyers at MTC, the parent agency of MBI, got Axia to accept all of the risk for a 10-year contract. Axia has been losing nearly $3 million per year and won’t renew their contract under the same terms. So who will end up paying the cost to support the largely unnecessary MB123?

In 2011, out of frustration with the lack of progress, a number of unserved towns joined together to form the WiredWest co-op. WiredWest developed a plan for a regional fiber network that would be jointly owned and operated, an approach endorsed by experts including MBI’s own technical staff. WiredWest got the Legislature to authorize another $50 million in 2014. But MBI took control, took $5 million off the top for themselves, allocated another $5 million for cable companies, leaving $40 million for the last-mile network in the remaining 44 unserved communities.

Initially, MBI endorsed WiredWest’s plan and calculated that the $40 million would only cover about a third of the cost, so towns would have to come up with the balance. Twenty-four towns did so, and also WiredWest volunteers got over 7000 people, about 40 percent of the households in those towns, to sign up with a deposit as a demonstration of demand.

But something went wrong. As MBI and WiredWest worked together on plans for a regional network, it became apparent that a regional network would not need much service from the MB123 middle mile, just one or two connections to the outside world. MBI panicked.

In December 2015, just as WiredWest towns were about to sign an organizational agreement, MBI turned against WiredWest. They made an arbitrary policy that each of these small towns must build and own its own network and connect individually to the MB123 middle mile. This places additional costs and administrative burden on the towns, but generates more income for their MB123. Even if all of the towns did that, it still would not make up the nearly $3 million per year annual deficit in supporting the MB123.

MBI has a big problem and they wish to make it the unserved towns’ problem. Many objected and there was public outcry.

Gov. Charlie Baker stepped in to review the situation. He saw the money pouring out with no progress, and a MB123 that is a money pit. He put new people in charge and wanted quick action. Unfortunately, there was no long-range planning, just urgency to move, and no understanding of the need for the regional approach that most towns wanted.

Requiring each town to plan, build and operate a separate network for these small towns is onerous and expensive. When it became apparent that many towns are struggling to do this on their own, rather than going back to the more efficient and sensible regional approach, which should be given priority according to the recently enacted Municipal Modernization Act, the state is now pursuing private partners. Never mind that previous attempts to find private sector solutions failed because sparsely populated areas are not profitable. This time, the state is going to give the money meant for the towns to private companies who would own and operate largely unregulated monopolies. After the most profitable towns are cherry-picked, there is no plan for the remaining towns.

It’s time for the state and MBI to put the needs of the unserved towns first instead of trying to get the towns to pay for MBI’s past mistakes. We need a regional network for all of the towns that want to be part of one. Put MBI’s technical staff in charge of construction and work with WiredWest on a regionally operated network. It may be that the best solution for the MB123 middle mile is to break it up and give it to the towns to be used as part of a regional network. That would save cost on constructing the last mile network and reduce operating costs in the long run.

Its approaching 9 years and $100 million spent. Where’s our broadband?

David Dvore is chairman of the Rowe Broadband Committee.