Funding Strategies
There are no significant funding or technology challenges related to community investments in broadband infrastructure. Communities routinely invest in, build, and manage water and sewer projects that are many times more expensive than community broadband systems. Subsequent chapters in this report provide extensive estimates of the many billions of dollars currently being spent on telecom services by local government, schools, health care facilities, businesses, and residents. A small fraction (less than 7%, typically) of those funds–being paid out of existing government, business, and home budgets–is all that is needed to provide world class broadband infrastructure to every home and business that requests it.
The critical funding challenge is not to find new sources of funding, but rather to choose to spend existing funds differently.
The bulk of Pennington Gap’s investment in broadband infrastructure will be in passive infrastructure that will have a conservative life span of thirty years or more. This is ample time for the town to recoup not only its investment but also to receive regular income from the project.
Any company that chooses to use Pennington Gap duct, fiber, and tower infrastructure for commerce would pay the Town a share of revenue that reflects a fair value for access to that infrastructure. All existing telecom providers, including incumbents, would be invited to use the system to sell services both to existing customers and also to reach new customers with new services that were not possible to deliver using older, copper-based technology. Incumbents indicate that they cannot offer broadband in some rural areas because of the high cost of infrastructure. This is true, because the current telecom business model of each company building, maintaining, and managing its own infrastructure (called overbuilding) is expensive--much more expensive than building a single common digital road system that is shared by many companies.
Somewhat paradoxically, the cost of such a community digital road system is lower when there is a day one commitment to build to any residence or business that requests service. This maximizes the potential marketplace of buyers and attracts more sellers to offer services because of the larger potential market.
