Municipal Broadband: Digging Beneath the Surface


The City County Observer would like to make this extensive study on municipal broadband complete with financial results available to our readers. It is a whopping 211 pages but reads quicker than most documents of that length. Here are a couple of excerpts from the conclusions to pique your interests.


“The problem with the municipal broadband “storyline” is that most of the accounts and analyses are generally superficial and cannot be evaluated because of the absence of data. The reality is far too complex to be distilled in a few points captured in a headline or article. Further, journalists frequently do not have the space or the background to examine the data in a constructive manner. So, the public is left with analyzing “spin” based on quotes from opposing parties that, more often than not, summarily dismiss the other viewpoint on the basis of who sponsored the study.”

“The financial performance of municipal fiber operations has generally been poor. Over the last decade, municipal communications operations have posted a financial record that was, at best inconclusive, and most often disappointing. While some communities highlight positive social accomplishments, the financial performance has fallen short in terms of penetration, revenues, net profitability and return on investment. In some or many instances, the projected “policy” goals have been supplanted by new policy problems in terms of cross-subsidizations and increased utility rates.”

“While some municipalities such as Cedar Falls, IA, provide some detail about most key items, many municipalities fail to supply information that is needed to perform a sufficient financial analysis.”

“The financial case for municipal fiber is difficult to justify if the municipality owns no other utility assets, as the investment costs appear very high at this time. The financial case for fiber based on the municipality’s utility assets is not as clear as many utilities suggest, and the historical data highlight those financial risks. The overwhelming majority of municipalities offering commercial fiber services are reporting operating losses, and virtually all the municipalities evaluated by the authors of this study appear to have operations that will prove to be negative in terms of net present value. The communities may believe that they derive other benefits from those operations, but the negative valuation suggests that there are subsidizations borne by the ratepayers or taxpayers. Those subsidies should be understood and should be explicit commitments by the general citizenry.”

Municipal Broadband–Digging Beneath the Surface


  1. Is it just me, or is Weinzapfel grabbing a “guaranteed” savings of $ 51 Million, and throwing it at a wi-fi inititative 45 days before he leaves office, without any approval from anyone, the same deal as the Homestead Credit ? By what authority does the Mayor have the ability to anoint a project like this ? Isn’t this exactly what went down with the Homestead Credit ? I have long felt the Arena was a sham-wow deal. Here comes another round with this wi-fi gambit. A lot more information is needed on how Johnson Controls has cooked this thing up.

  2. Mr. Friend, Mrs. Reicken, what say you?

    [Can we confirm Mr. Friend actually receives this information, so we can check to see how consistent he is, in application, of his fiscal… expertise?]

    Would the CCO be doing us a service if they would spend a few bucks to print this study and hand deliver it to those leaders that have demonstrated anger over Vectren rate increases in the past, but seem to lack the follow through to actually do anything about it?

    If the CCO really had moxie, might they also hand deliver this study to the Courier? Might they also ask their editorial board to address the concerns that their coverage to date chould be labeled “superficial” or even “spin” – i.e. promoting and contributing to the general ignorance of the masses in our fair city?

    • We will email the study directly to the two people that you have referred to and to the CP reporter. Consider it done.

  3. Something to consider….since the city is already wired with fiber that Vectren/Sigecom/Sigeco strung years ago (and yes I know some of the fiber is owned by Insight) would this not be another windfall for Vectren?

    And I know someone is going to say that Sigecom was sold to WOW but I’d bet the fiber network is still owned by a subsidiary of Vectren…

    It would kinda’ tie in with the story about Marion and the rumor that Weinzapfel is going to work for Vectren after the first of the year.



    • blanger, could you elaborate a bit more ? Are you suggesting that Johnson Controls is going to purchase from Vectren the fiber that Vectren strung years ago as part of this new wi-fi initiative? And because The King is going to work for Vectren that this was a means of “bringing some business with him” (The King) before he joined Vectren ? I thought (but it has not been made clear) that Johnson Controls was going to lay down fresh fiber to accommodate the remote meter reading for Water ? If you are correct, that is one hell of a story ! Do tell.

      • Biscuit…

        All I know is that the city has a existing fiber network (backbone) that was installed and was owned by a subsidiary of SIGECO (Vectren). When they strung the fiber they also installed nodes which basically allow the fiber to connect to coax cable that is ran to your home….so much for the technical side of it, other than to say given the huge amount of bandwidth/throughput a fiber network has till it gets to the nodes it would make very little sense to string even more fiber and put up more nodes in a redundant fashion on poles and right of way owned by Vectren when the addition of more nodes on the already existing fiber network is all that is needed.

        The question is….how much of the existing fiber network is being used? how much capacity is left? given my limited knowledge of fiber I would guess that in most parts of the city less then 50% of the capacity is currently being used, which brings up that question again why build another fiber network?

        I do also know that Vectren has a desire to go to “smart” electrical meters which are highly controversial and a quick search of Google will turn up some surprising health issues that are being said to be caused by “Smart Meters”.

        So we have in the city a existing fiber network in place, that I’m guessing has capacity to carry out the water meter/WiFi portion of this deal, more nodes will be necessary in close proximity to the water meters to pick up the low grade signal from the meters (Weinzapfel said it would not permeate into most structures) along with the fiber you’ll need a gateway server and DNS server (s) to allow the WiFi portion of the deal to have access to the internet, easy enough to bury a encrypted signal with the water meter usage data in the signal.

        Bear in mind I’m just guessing’ and the rumor of Weinzapfel going to work for Vectren is just that a rumor, but with my limited knowledge of WANs (Wide Area Networks with a fiber backbone) it would be stupid to string even more fiber on poles you going to have to pay rent on, not to mention electricity for your nodes you’ll be paying for….$51M for the entire project cannot include running redundant fiber over the city to cover every water guess would be 3 or 4 times that amount to put up more fiber and nodes.

        So do we have the makings of yet another sweetheart deal about to take place?…time will tell.


      • Biscuit…..

        I didn’t answer you question.

        Not buy the fiber network….lease bandwidth, same as Insight does now.


      • So we PAY for this with our tax money and Vectren SAVES with decreasing employees (meter readers)and their salaries and benefits, vehicles and their fuel for the meter readers and who knows what other incidentals. On top of that, if I understand this, Vectren basically rents out their existing lines so this amounts to a continuing positive cash flow forever and ever amen.

        • 292…

          If I’m correct the smart meters will be the next step and yes it will eliminate the necessity of having humans read the meters same as the water department is looking to do….but there is more to them.

          If I’m also correct that a subsidiary of Vectren still owns the existing fiber network (which if it was me…I would) then yes we will pay again for their improved efficiency.

          But do please bear in mind I am only guessing on about 50% of what I’m saying.

          Here’s how I look at it…if I owned the poles, the right of way and had built the fiber infrastructure over 90% of town, had a internet business that I had built, and had a opportunity to sell my ISP services but keep the fiber network…I would jump at the chance to do so, which is why I think that when Sigecom was sold to WOW that Vectren kept the fiber backbone and contracted a lease agreement for usage/bandwidth.


  4. If there is a market for municipal broadband WiFi then let private enterprise fill that market. Competition is the factor that will keep the cost low and the service high. Local government has no business using tax dollars to enter, or remain in, this market.

    If they insist that it will cost us nothing, then you can bet that homeland security is footing the bill. In which case your tax dollars ARE being used to pay for the system.

    This is the system that allows them to go out and put up a few cameras at strategic traffic locations so they can collect the license plate images instantly and mail you a ticket the same day. No doubt they are using that proposed estimated income in their financing scheme.


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