P3 Case Studies
This post concludes our series on public-private partnerships. The first post in the series provides an overview of traditional broadband models and P3 models — please start there.
In this post, we explore some P3 examples from across the country.
Public facilitation of private investment case study: Chattooga County, Georgia & Kinetic
A common example of private investment facilitated by a public entity is the use of American Rescue Plan Act (ARPA) funds to extend private networks.
In Georgia, Chattooga County formed a simple public-private partnership with Windstream’s Kinetic to connect 3,400 premises along 320 new miles of fiber optic infrastructure capable of delivering speeds of 1 Gbps symmetrical. Under their arrangement, Chattooga incentivized Kinetic to build out their network by contributing $3.1 million of ARPA funds. In return, Kinetic invested $7.2 million, and will contribute more if the project goes over budget. Construction is scheduled to be completed in 2024.
The partnership and ARPA dollars will make building out high-speed infrastructure in rural, sparsely populated areas of the county that would otherwise be prohibitively expensive to connect more economically feasible for Kinetic.
Public funding and ownership with private “fee-for-service” operation case study: Maple Broadband & Waitsfield and Champlain Valley Telecom
In 2015, the Vermont Legislature authorized the formation of Communication Union Districts (CUDs), which allow towns to join together under a single municipal structure to provide broadband service to all on-grid premises within their territories. One such CUD, known as Maple Broadband, launched in September 2020, covering 20 individual towns.
In 2021, Maple Broadband entered into a 10-year agreement with a network operator, Waitsfield and Champlain Valley Telecom (WCVT), aiming to deploy fiber optic infrastructure to every premise in the region by 2025. Under the agreement, Maple Broadband finances and owns the network, handling budgeting, engineering, construction, marketing, and rate setting. WCVT acts as the network manager and operator on behalf of Maple Broadband, maintaining and repairing the infrastructure, connecting customers, providing customer service, and invoicing monthly service fees. Maple Broadband pays WCVT a monthly per-customer operator fee for the services they provide.
Importantly, this fee-for-service network management agreement means that the bonds used to pay for the network can be tax exempt, which is attractive to investors and helps Maple Broadband raise cheaper capital.
Public funding and ownership with private lease case study: West Des Moines, Iowa & Google Fiber
West Des Moines, Iowa, is constructing an underground conduit network throughout the city that they will then own, operate, and maintain. The funding for this public infrastructure project comes from existing taxes through the city’s capital improvement budget.
Once construction is complete in 2024, Google Fiber will pay the city licensing fees to run their fiber optic cables through the conduit network, which the city expects will generate a profit once initial construction costs are paid off. Google Fiber will be responsible for installing the drops to residential and commercial premises and selling high-speed internet services directly to customers. The city will receive predictable revenue from the licensing fees, while the provider will have more access to upside by billing customers for internet service.
West Des Moines will later open up the conduit network for other fiber and cable providers to lease as well, boosting competition and customer choice in the area, even though the providers will all be using the same open-access conduit network.
Shared investment and risk case study: Dublin, New Hampshire & Consolidated Communications, Inc.
In 2020, the town of Dublin, New Hampshire, voted to form a P3 with Consolidated Communications, Inc. (CCI), to deploy a universal fiber-to-the-home (FTTH) network. The first homes were connected to the network in March 2021.
Under their unique, hybrid arrangement, both the town and the ISP share the ownership of the network and construction costs. Dublin owns the town-funded network components while CCI owns the drops as well as the network components and facilities that they funded. Dublin paid for deployment to unserved areas via general obligation bonds while CCI paid to overbuild cabled areas.
Though the town issued a bond to pay for their portion, the cost of repaying that bond is only passed on to users of the network, as CCI charges customers a “network operations fee,” which is then fully passed along to the town to cover their bond payments.
Their agreement stipulates that CCI cannot impose throttling or data caps, they must charge customers a monthly rate that is comparable to other broadband subscription costs in New Hampshire, and they must provide free service to public buildings in Dublin. In return, CCI does not have to pay taxes assessed on or related to the town-funded network, and CCI has exclusive operating and maintenance authority of the network for 20 years. Lastly, the contract also contained useful enforcement mechanisms. CCI was allotted 24 months to complete deployment and would have paid a penalty of $1,000 per day after the expiration of the construction deadline. Overall, this partnership is very low risk for the town of Dublin even though they funded a significant portion of the network.
Thank you for reading our series on P3s!
Does your community need help evaluating potential P3 models, exploring ISP partners, or reviewing agreement terms? The Center on Rural Innovation’s broadband team is pleased to offer up to 25 hours of no-cost, individualized support to public sector officials, nonprofits, cooperatives, or small ISPs working in collaboration with their communities. If you think your community could benefit from this free technical assistance program, or if you just want to learn more about how we could support you, please fill out this short form to get in touch.
