Game of Gigs”

From Gigabit Testbeds to the “Game of Gigs”

The Third Annual Report of Gig.U August 2014

TABLE OF CONTENTS Introduction: From Gigabit Test Beds to the “Game of Gigs” ...... 4 Community Initiated Projects ...... 8 A Regional Strategy to Attract Private Investment: North Carolina ...... 9 A Public-Private Partnership Playing to Local Strengths: Urbana-Champaign, IL ...... 10 A Non-profit Model: Cleveland, OH ...... 11 Partnering with a Utility: Gainesville, FL ...... 11 Adopting Practices that Assist Local ISPs: East Lansing, MI ...... 12 Creating A Pilot Innovation Zone: Blacksburg, VA ...... 13 Using Sewers to Lower Deployment Costs: Louisville, KY ...... 13 Spectrum-Based Solution: Morgantown, West Virginia ...... 14 Other Efforts ...... 15 ISP Initiated Efforts ...... 16 Google Fiber ...... 16 AT&T ...... 17 CenturyLink ...... 17 C Spire ...... 17 Brighthouse Cable ...... 17 Cox ...... 18 Time Warner Cable ...... 18 Community Initiated and ISP Initiated Efforts Flowing Together to Create the “Game of Gigs” ...... 20 Lessons learned ...... 20 Improving a Community’s Fiber Readiness ...... 22 Lessons for All Communities ...... 25 Lessons from Trial and Error ...... 28 Potential Threats to Success: No Popping Champagne, Yet ...... 30 Change in Google Interest...... 30 Change in Competitive Opportunity Due to Mergers ...... 30 Change in Municipal Interest ...... 31 The Upcoming Metropolitan Broadband Revolution: The End of the Beginning ...... 32

INTRODUCTION: FROM GIGABIT TEST BEDS TO THE “GAME OF GIGS”

“Come Watson, the game is afoot.”

- Sherlock Holmes in The Abbey Grange

Gig.U began three years ago with three-dozen research university communities coming together to accelerate the deployment of next-generation broadband networks to enhance educational and economic development. We believed that eliminating bandwidth as a constraint to innovation would lead to economic and social progress for our communities and accelerate the discoveries university communities create for the world. We also believed market forces by themselves would not deliver such networks on a timely basis and therefore, we ourselves had to innovate in how we approached network deployments. We saw our task as creating test beds; what we were attempting to do—organize communities to stimulate private investment to upgrade or overbuild existing networks—had few precedents. This required openness to different models, some of which would hopefully succeed and some of which would likely fail. Still, taken together, those efforts would draw a map that all communities could use to create the next wireline upgrade and achieve bandwidth abundance.

“The efforts of Gig.U, municipal As discussed in this report, we have made governments and Internet Service enormous progress. Through a combination of Providers to upgrade America's efforts, scores of American communities, broadband networks is great news. In this economy, speed including over a dozen Gig.U communities, are matters, and these efforts are laying now deeply engaged in deploying of such the foundation for economic growth networks. Many of these, like our own efforts, and good jobs for decades to come.” were initiated by communities. Now, however, in Larry Cohen, President of the a radical change in the past 12 months, multiple Communications Workers of America service providers are initiating their own efforts. When we started the fundamental strategy of incumbent Internet Service Providers was harvesting past investments in bandwidth-constrained networks. Now, numerous providers, including some incumbents, are developing strategies to deploy networks capable of providing abundant bandwidth, and challenging others to enter a new, growth-oriented “Game of Gigs”. The interplay between the provider initiated and the community-initiated

efforts provides both enormous momentum and a variety of choices; precisely what we were hoping for when we started.

It would be a mistake, however, to believe “It’s great to see so many, including Gig.U, step up and help communities connect at that we have passed the inflection point at the speed of light. America has always lead which the accelerated progress towards a in next generation innovations and these critical mass of communities with world broadband upgrades, facilitated by both community leaders and private sector leading broadband networks in the United providers, will ensure that future States is inevitable and irreversible. History generations can do the same.” is littered with efforts in which initial

Kevin Martin, Former FCC Chairman and progress was reversed due to a failure to Member of the Board of Directors of Corning persevere. Further, the market forces that Inc. favor allocating scarce bandwidth on legacy networks instead of deploying abundant bandwidth on new networks are still strong, and in some ways, gaining strength. We think the years 2015 and 2016 will prove decisive in achieving our goal, but only if we, and others, spend this year with our foot on the accelerator.

This is the first of two reports we will release Previous Gig.U Reports: over the next several months. In this report, the third annual report on Gig.U, we discuss the • “Upgrading America: The One Year Anniversary of latest news regarding Gig.U community-initiated Gig.U” July 2012 deployments, progress made and lessons learned over those last three years. In the next report we • “Upgrading America: The Semi-Annual Report of discuss how the economic and political Gig.U” February 2013 environment for investment in such networks has changed, and how those changes, quite • “Gig.U Y2” July 2013 positive in terms of the mission, suggest that • “A Gigabit Garden Begins to Gig.U evolve into a different kind of initiative to Grow: Lessons from the best serve that mission in light of those changes. First Planting” December 2013 What ties the two reports together is how the Gig.U effort, in combination with other efforts, has set the stage for communities to take advantage of a new dynamic in market, one that reminds us in some ways, but not others, of the HBO series Game of Thrones. In the fictional Game of Thrones, the royal families fight for supremacy over the Seven Kingdoms, with the lives of the rest of the population either unchanged or made worse through the collateral damage caused by war. In the real life “Game of Gigs”, powerful companies, and in some cases smaller upstarts, fight for supremacy in broadband services. In both versions, the winner of game is uncertain, but in a way that is completely the 5

opposite from its fictional counterpart, our “Game of Gigs” improves life for the rest of the population; indeed, as one group documented, the entry of a new Gigabit provider in a community has proven to have an “astounding” Impact on improving services by all providers, and for all customers, in those communities. Further, while the fictional version is won through cunning, deception and military prowess, our version relies on an open public process, one that gives cities an opportunity to develop a social contract for the broadband era, determining for themselves the appropriate trade-offs to optimize the public benefits of next generation broadband network.

We mean the metaphor in a light-handed manner and certainly don’t want anyone to think we regard any of the actors in the broadband battle as occupying the same immoral universe that many of characters in the Game of Throne inhabit. Further, despite the graphic on the second page, we admit we’re not really sure that it is a case of upgrade or die for every telco or cable company. But we’re pretty darn sure it would be a good thing for the country if all the companies thought it was true.

In that light, the challenge from a public perspective is to make sure the “Game of Gigs” extends as broadly as possible. We welcome the initiative shown by many in the private sector to accelerate the game but welcome even more the community leadership that understands it should not be a passive recipient of the game’s benefits. We are quickly moving toward a moment in which all communities should be examining what they should be doing to assure that in the years ahead, they are served by broadband networks capable of meeting future, and not just current, needs. While many inputs will determine the extent of the game, early examples and multiple models play a useful role in helping other communities to enter and prosper. And in that way, on our third anniversary, Gig.U has much to be proud of.

“Colleges Join Plan for Faster “How 1Gbps Fiber Came to “Cox Details Gigabit Rollout Computer Networks” Cleveland’s Poorest, Free of Charge” New York Times | July 27, 2011 ArsTechnica | March 24, 2010

“Google or Not, Cities Pin Hope on “Early Result from Virginia Gigabit Wireless Network Show Promise” Gigabit Networks”

Telecompetitor | October 4. 2013 GovTech.com | June 13, 2013

“AT&T Completes GigaPower “In What is Surely a Sweep in North Carolina” Coincidence, Comcast Ups Internet Speeds in KC” Multichannel News | July 17, 2014 Popular Mechanics | August 5, 2014 ” PCMag.com | May 23, 2014

“On One Year “UC2B Makes Deal to Widen Fiber Network” Anniversary, Gig.U The News-Gazette | May, 29, 2014 Delivers Impressive “Louisville Metro Council Committee Results and Valuable Approves Fiber Internet Franchises”

Lessons for Gigabit WDRB | July 22, 2014 Internet” “Touchdown! Florida Gators Get Forbes | August 6, 2012 Gigabit Broadband”

“Fast Internet Is Chattanooga’s New Gigaom | June 22, 2012 Locomotive” “Nation’s First Campus New York Times | February 3, 2014 ‘Super Wi-Fi’ Network “Michigan State University Makes Progress Launches at West on Gigabit Project” Virginia University“

Telecompetitor | July 16. 2012 WVA Today | July 9.2013 ”

“Google Spreading Fiber Fingers to More Cities”

USA Today | February 19, 2014 7

COMMUNITY INITIATED PROJECTS

In the beginning, we had little but our own optimism. The hard evidence, in terms of the absence of actual models and the well-known and problematic math of investing in capital- intensive networks, suggested such optimism was misplaced. Still, we inherited that aspect of the American character that historian Fredrick Jackson Turner attributed to life on the frontier: “the courageous determination to break new paths” and “indifference to the dogma that because an institution or a condition exists, it must remain.” Moreover, we held the view that we can always find a way to lead in technology, and that, as technological innovation is a critical realm for economic and social progress, we had an obligation to not settle for also-ran in such a foundational element as broadband capability in the global information economy.

The landscape looks different than it did just a few years ago. Many communities are taking the initiative in developing a Gigabit network strategy. Some emerged from our efforts, some emerged from the efforts of others, and all the efforts provide insight and momentum that serves to assist and inspire the next wave. The efforts include the following:

FIGURE 1: GIG.U MEMBER MAP SUMMER 2014 (CITIES IN RED ARE NEGOTIATING W/ 2 PROVIDERS, CITIES IN PURPLE ARE NEGOTIATING W/ 1 PROVIDER, CITIES WITH IND. PROJECTS ARE IN YELLOW, CITIES WITH IND. PROJECTS AND NEGOTIATING WITH A PROVIDER ARE IN BLUE, OTHERS IN GREEN)

A REGIONAL STRATEGY TO ATTRACT PRIVATE INVESTMENT: NORTH CAROLINA One of concerns raised by a number of potential providers in our national RFI was that a lack of scale in any individual community would make the economics of deployment difficult. At one point, we considered a national RFP to address that concern, but difficulties in coordinating with so many different entities and under so many different state laws made that effort impractical.

Our North Carolina members, however, appear to "This kind of private sector investment is essential to ensure our regions remain have found a middle ground that both achieves scale competitive and at the forefront of next- and enables coordination. They created the North generation applications that are Carolina Next Generation Network (NCNGN) project, important to all sectors of the economy," a collection of four universities (Duke, NC State, UNC Chapel Hill, and Wake Forest/Wake Forest Baptist Tracy Futhey, Chair of the NCNGN Medical Center) and six municipalities (Carrboro, Steering Committee and vice president of information technology at Duke Cary, Chapel Hill, Durham, Raleigh, and Winston- University Salem) that shared knowledge and resources to release a single RFP. It articulated the region’s objectives and sought vendors to build and operate a gigabit fiber network. The RFP was released in February of 2013 and attracted eight responses.

The group quietly negotiated with the eight respondents. Collectively, the group worked through a number of issues with AT&T and developed a model agreement for the elected officials in the individual municipalities to consider.. The communities improved the economics for the AT&T by accepting the uniform terms of the model agreement except for minor changes either required by local law or were more favorable for AT&T. The NCNGN members will continue to work with each other, AT&T, and other local stakeholders on targeted efforts to expand access for community sites, public housing, and small and medium businesses.

This activity has had a significant impact across North Carolina and beyond. Since signing agreements with the six NCNGN communities, AT&T has announced plans to bring gigabit connections to the Charlotte and Greensboro metro areas. Google Fiber is also eyeing the Raleigh-Durham and Charlotte metro areas for gigabit infrastructure, as is Shelby-based RST Fiber. As an article entitled Triangle Gigabit Wars put it “Perhaps the only thing faster than gigabit internet speeds are the announcements of new players stepping forward with plans to bring fiber internet to the Triangle. We've yet to connect, but already the high- speed battlefield is saturated. Up for grabs? Internet speeds up to 100 times faster than basic broadband. ” In response to the increasingly competitive landscape, Time Warner 9

Cable recently named Raleigh and Charlotte as two of seven metro areas where “TWC Maxx” service will be deployed in 2015 allowing customers to receive up to six times faster internet speeds and other entertainment enhancements. Though TWC won’t be offering gigabit speeds, the significantly faster speeds will be a drastic improvement over current offerings.

A PUBLIC-PRIVATE PARTNERSHIP PLAYING TO LOCAL STRENGTHS: URBANA-CHAMPAIGN, IL At the end of May, UC2B – a nonprofit “In the 21st Century a few American cities stand out consortium led by the university with regards to successfully combining a dynamic communities of Urbana and cultural landscape and economic prosperity. Champaign and the University of Champaign, like Chattanooga, Kansas City and Austin, has recently received national and international Illinois – announced a new model for accolades running the gamut from arts and music to gigabit connectivity. They would sustainability, livability and opportunities. We now join pursue a public-private partnership these cities as part of an elite group of communities, which will experience all the benefits of broadband with Illinois-based ISP, iTV3. fiber with this partnership. Champaign, Urbana, the University of Illinois and the private sector are moving Years ago, UC2B leveraged federal forward together to lead the U.S. in prosperity and grant money and local matching funds growth in the new frontier with what is undoubtedly to construct a high speed fiber the next great revolution.” network – first building out in low- Champaign Mayor Don Gerard income and low-adoption areas. The new public-private partnership means that iTV-3 will now operate the existing UC2B network and extend its service to even more residents, institutions, and businesses. Though the cities will not have control over the network or collect the revenue, it does not have to absorb the risk of costly infrastructure investment.

“Congratulations to Urbana-Champaign Big Broadband (UC2B) and As Telecompetitor noted at the iTV-3 on making gigabit services over fiber available throughout time of the announcement, the community. This public-private partnership provides a valuable “Gigabit network model for communities and companies throughout the country and a demonstration of the creativity that is stimulated when localities announcements have been are free to work with the private sector to improve broadband coming at a ferocious pace offerings.” lately, including five last week.

FCC Chairman Tom Wheeler The fifth one, announced late Thursday, comes from Urbana- Champaign Big Broadband (UC2B) and iTV3 – and it has some unique elements that would seem to make it a particularly good deal for the community.” Under the Agreement, iTV3 will:

• Invest tens of millions of dollars to build out a gigabit fiber optic Internet in Champaign/Urbana, while operating and maintaining the existing UC2B network and providing service to existing customers. • Offer wholesale access on the network to competing companies, including making unused fiber ring capacity available to competing companies to offer service where iTV has not deployed fiber to the home within five years. • Contribute to UC2B’s community benefit fund, which will promote digital literacy and adoption.

A NON-PROFIT MODEL: CLEVELAND, OH The original inspiration for Gig.U was the gigabit beta block created around Case Western Reserve University. Cleveland continues to lead with experiments related to improving the broadband services available to the community. One critical driver of the experiments is OneCommunity, a nonprofit fiber network spanning 2,460 miles and started by former Case Western University CIO, Lev Gonick. OneCommunity services the key anchor institutions in Northeastern Ohio (government offices, schools, universities, hospitals, etc.) and collaborates with the local community on broadband adoption projects and digital literacy trainings. Currently, city officials in Shaker Heights are considering a partnership with OneCommunity to extend fiber into its commercial “Across the country, civic and districts and attract more economic development. business leaders now understand OneCommunity has also formed a for-profit subsidiary, that digital infrastructure Everstream, which will provide high-speed Internet to investments have moved from ‘nice-to-have’ to ‘must-have.’ businesses – the revenue of which will circle back and feed the organization’s non-profit programming. Lev Gonick, CEO One Community OneCommunity also just released the Big Gig Challenge, a prize of $2 million to a city interested in community-wide fiber network construction project.

PARTNERING WITH A UTILITY: GAINESVILLE, FL Even if a city explores a public option for gigabit service, it doesn’t have to go all in right away. Gainesville Regional Utilities (GRU) has connected businesses, community anchor institutions, and large apartment complexes in an Innovation District around the University of Florida to 1 gigabit, 100 Mbps, and 10 Mbps speeds, but not most residences yet. The goal is ultimately to bring a gigabit to all of Gainesville. Recently GRUCom extended its

Gigabit offering to all of the student apartments (37 complexes – roughly 6,000 ethernet ports) that it provides service to throughout the Gainesville area.

Of course, using a local utility is not a “Entrepreneurs and technology leaders work in a unique model; perhaps the best-known competitive world where big ideas and enormous local gigabit provider in the United States is amounts of information need to move quickly. This the local electric utility in Chattanooga. Not is just what’s needed to attract those types of people to the Innovation District. Having a high- only are there economy of scope benefits of bandwidth community near our campus creates an a local networks provider adding a service environment that will better serve the mission of to their offerings, there are also advantages educating our students and creating a hub of high- tech economic growth for Florida.” of having a local focus. As the Community Broadband Network reported “GRUCom University of Florida President Bernie Machen brings another key benefit of community networks to Gainesville - local control accommodating local needs. When the music streaming service Grooveshark, started by two UF students, took off, its need for bandwidth exploded. Director Ted Kellerman recalls having regular discussions with Grooveshark’s founders during those times and making arrangements to get them the bandwidth they needed without breaking their startup budget.”

ADOPTING PRACTICES THAT ASSIST LOCAL ISPS: EAST LANSING, MI

“Access to ultra-high-speed broadband networks is The Greater Lansing Gig.U coalition, increasingly becoming an invaluable asset for comprised of the Prima Civitas innovators, entrepreneurs and companies looking to Foundation, the Lansing Economic Area compete globally utilizing the next generation of broadband enabled applications and software. Partnership, Connect Michigan, Michigan Expanding such networks in our region is critical to the State University, non-profits, commercial attraction of world-class talent and high tech property managers and many regional businesses to the Greater Lansing region.” partners united under a “Gigabit Ready” Jeff Smith, Co-Director of the New Economy Division for effort, with the goal of creating an the Lansing Economic Area Partnership. attractive environment for its existing ISPs to upgrade and to lower barriers to entry. To align incentives and capitalize on their partnership with local development companies, the Gigabit Ready Coalition created a Gigabit Certified Building Program operating similarly to the well-known LEED program. Now, local ISP Spartan-Net and property manager DTN Management Co. have partnered to bring residences and apartment complexes in East Lansing gigabit speeds. The efforts are focused on students and faculty, for whom broadband performance levels are a critical selling point.

CREATING A PILOT INNOVATION ZONE: BLACKSBURG, VA

“The goal [of the project] is to identify the demand for such a Blacksburg, home of the network and find sustainable sources of revenue for it to go beyond. Virginia Tech Hokies, is also This is a testbed for high-performance Wi-Fi networking, which is home to a free gigabit Wi-Fi attracting new start-ups and research capital.” network that covers about Bob Summers, TechPad President 40% of the downtown area. Initial funding to install the fiber at two locations was modest – just about $90,000 – and was collected through a crowdfunding campaign started by TechPad, a local co-working and hacking community. While the future of the network is unclear, the first few years of the project were meant to gauge local demand for faster speeds and nail down a sustainable funding model.

USING SEWERS TO LOWER DEPLOYMENT COSTS: LOUISVILLE, KY Louisville, Kentucky, home to the University of “We’re throwing open the doors and Louisville as well as a large number of information asking the world to bring us their ideas based enterprises such as Humana and UPS to connect our city with very high speed WorldPort, used an RFI and RFP to gain the fiber. Availability of and access to a high-speed broadband network has attention of a number of potential service providers quickly become viewed as critical urban and gain insight into the options for improved infrastructure, similar to electricity, bandwidth. The city stated its goals as: water and roadways. Today’s current network speeds do not provide an • Creating a world-leading gigabit-capable adequate foundation to propel the city forward in a technology-based network across the city or in targeted economy.” commercial corridors, as well as in residential areas with demonstrated demand, Louisville Mayor Greg Fisher to foster innovation, drive job creation and stimulate economic growth; • Provide free or heavily-discounted gigabit 100MB (minimum) internet service over a wired or wireless network to underserved and disadvantaged residents across Louisville; • Deliver gigabit Internet service at prices comparable to other gigabit fiber communities across the nation.

The city has also engaged concerned citizens who put up a fiber map that allows residents to indicate their interest in fiber which the city hopes will encourage ISPs to build out fiber based networks. 13

“You [Gig.U] gave us the tools when we The process attracted proposals from which the city asked and helped connect us to a focused on those from Louisville-based BGN national conversation. It has been a lot Networks, London-based SiFi, and New York-based of work from RFI to then modify our franchise terms to then issue an RFP to FiberTech (which has a residential partnership with these awards. Now more providers are Greenlight Networks). Each company put forth a coming knocking – because we have different plan with different geographic targets demonstrated we are serious and intentional about this.” within the city. The Louisville Metro Council unanimously approved all three 20-year franchise -Ted Smith, Louisville’s Chief of Civic agreements as of Thursday, July 24th, 2014. The city Innovation will not be offering tax incentives or contributing financially to deployment of these fiber networks, but continues to provide technical assistance to all firms pursuing the deployment of service in Metro Louisville.

SPECTRUM-BASED SOLUTION: MORGANTOWN, WEST VIRGINIA Consistent with the mission to accelerate the “Not only does the AIR.U deployment deployment of next generation networks and services, improve wireless connectivity for the PRT System, but also demonstrates the Gig.U joined with other higher education associations, real potential of innovation and new public interest groups and high-tech companies to technologies to deliver broadband form the AIR.U initiative (www.airu.net). Designed to coverage and capacity to rural areas and small towns to drive economic evaluate and test the application and sustainability of development and quality of life, and to networks utilizing “white spaces” spectrum, the AIR.U compete with the rest of the world in initiative is leveraging this new technology to upgrade the knowledge economy. This may well offer a solution for the many West the broadband available to underserved campuses Virginia communities where broadband and their surrounding communities. access continues to be an issue, and we are pleased to be able to be a test site The AIR.U initiative was born out of the Gig.U RFI for a solution that may benefit effort, further validating the strong willingness to thousands of West Virginians.” work together within the extended higher-ed WVU Chief Information Officer John community, and to drive innovation with emerging Campbell. technology to address the increasing need to upgrade the bandwidth available to the rural universities and our colleges throughout the country. The founding Higher Ed organizations together represented over 500 colleges and universities nationwide, and include the United Negro College Fund, the New England Board of Higher Education, and the Corporation for Education Network Initiatives in California and the National Institute for Technology

in Liberal Education in addition to Gig.U. Founding partners also include Microsoft, Google, the Open Technology Institute at the New America Foundation, a think tank based in Washington D.C., the Appalachian Regional Commission and Declaration Networks Group, Inc.

AIR.U launched the nation's first campus 'Super Wi-Fi' “As chairman of the Senate Commerce network launched in July, 2013 at West Virginia Committee, I have made promoting University. AIR.U partnered with Gig.U member West high-speed Internet deployment throughout West Virginia, and around Virginia University, and WVNET (a regional network the nation, a priority. That is why I am provider for the West Virginia education community) excited by the announcement of the to provide free public Wi-Fi access for students and new innovative wireless broadband initiative on West Virginia University’s faculty at the Personal Rapid Transit platforms, a 73- campus.” car tram system that transports more than 15,000 riders daily. Since the launch last summer, the Chairman of the Senate Committee on Commerce, Science and Transportation network has been extended to support additional Sen. Jay Rockefeller public Wi-Fi service on the WVU campus and Municipal Park areas, as well as providing upgraded internet connections to underserved WVU campus facilities. More information regarding the WVU network can be found here. The University of New Hampshire is also working on a similar white spaces test bed project.

OTHER EFFORTS The above is not an exhaustive list. A number of other Gig.U communities are reviewing their options in light of the lessons learned by the efforts of others and will be making announcements later this year. Moreover, a number of other individual communities are also taking the initiative, developing plans, issuing RFIs and RFPs or otherwise taking steps to improve the broadband in their communities. The work of Gig.U communities provides, as intended, examples for others to following as can be seen in the campaign of Providence mayoral candidate Jorge Elroza who has proposed a “Providence Digital Rivers Project” to provide the city gigabit speed Internet service, adding that “he would like Providence to model the North Carolina Next Generation Network.”

ISP INITIATED EFFORTS

While the Gig.U efforts were largely community initiated, a world-leading broadband network takes at least two—a willing community and an interested provider. Fortunately, the interest of service providers has taken a quantum leap since we started, dramatically accelerating the opportunities for communities that wish to have gigabit capable networks. These ISP initiated efforts include:

GOOGLE FIBER While we are proud of the efforts by “In the markets that Google Fiber has entered, or planned Gig.U communities, there is no doubt to enter, the competitive responses by incumbents have that the prime force in driving been astounding. After Google Fiber entered Kansas City, moving us into the “Game of Gigs” Time Warner Cable doubled its top available speed, has been the Google Fiber effort, upgraded the connection speeds of many of its current which has already announced customers between 30 percent and 50 percent, and cut deployments in Kansas City, Austin prices across the board. Kansas also saw the largest year- over-year increase in Internet connection speeds with an 86 and Provo. Google has further percent increase from the fourth quarter of 2011 to the announced that it would enter into fourth quarter of 2012. In Austin, Texas, where Google discussions with 34 communities in announced plans to build a gigabit network, AT&T 9 regions (three regions of which responded by announcing plans to build its own gigabit have been involved with the Gig.U network and Time Warner Cable announced that it would effort) with the hope—though not offer free WiFi access to its customers throughout the city. And in Provo, Utah, another market that Google Fiber has the guarantee—that Google will recently entered, Comcast has responded by significantly deploy its fiber networks in those increasing the speed of its residential offerings while at the communities. It has indicated it will same time lowering prices.” make a public announcement about their deployment plans in these Letter from the Computer and Communications Industry Association communities later this year. As others have noted, in terms of improved speeds and prices for consumers in areas, “the competitive responses by incumbents have been astounding.” One measure of the impact is that the state of Kansas saw a year-over-year jump of 97 percent improvement of its speeds to 34.4 Mbps — the largest jump in bandwidth of any state in the country.

AT&T Shortly after the Google expansion announcement and the NC NGN project announced it had come to an agreement with NC NGN, AT&T announced that was also considering expanding its footprint of Gigabit capable fiber networks to 100 cities and municipalities in the United States. While Google’s efforts no doubt were important, equally important has been the reaction of local governments. As AT&T CEO Randall Stephenson’s noted, “(c)ities and municipalities are beginning to hold up their hands and say we would like you come in and invest. And they’re actually beginning to accommodate and tailor terms and conditions that make it feasible and attractive for us to invest. That being the case, you will see us do more and more cities around the country.” We have seen that play out this year with the first set of deals done by AT&T to provide its GigaPower service completed with the six communities that were part of the Gig.U affiliated North Carolina Next Generation Network (NC NGN) project. AT&T as also moved forward with agreements in Nashville and Dallas.

CENTURYLINK Last year, CenturyLink has announced trials of Gigabit networks in Omaha and Las Vegas. In February of this year, CenturyLink announced it would be offering a Gigabit service to Multi-Tenant Unit office buildings in the Salt Lake City area. In April, CenturyLink began an effort to seek out apartment buildings in Portland, Oregon that would be interested in obtaining a Gig. Both Salt Lake and Portland are cities with which Google Fiber has expressed an interest.

Then, in another wave of upgrade announcements at the end of the summer, CenturyLink revealed that they would provide gigabit speed availability in thirteen additional cities. Sioux Falls, Spokane, Colorado Springs, Albuquerque, Tucson, and Phoenix will receive business service only. Seattle, Portland, Denver, Jefferson City, Columbia, Minneapolis- St.Paul, and Orlando will receive both residential and business service.

C SPIRE CSpire, a company offering mobile and wire line services in Mississippi, ran a contest similar to Google, offering to provide Gigabit networks to a selected group of communities in the state. As a result, CSpire says it will be deploying Gigabit networks in nine communities.

BRIGHTHOUSE CABLE Brighthouse Cable, which provides cable and broadband services to 2.4 million subscribers in five states, became the first cable company to announce it would upgrade to offer a gigabit product to its residential customers, with a trial in Tampa serving a new community of 6,000 homes. 17

Cox Cox announced it would offer gigabit services throughout its territories. Cox said it would start in Phoenix, Las Vegas, and Omaha, areas already targeted by Google and CenturyLink, another demonstration of the importance of competition in accelerating network upgrades.

TIME WARNER CABLE Time Warner Cable told Los Angeles, CA in mid-July that the company planned to deliver gigabit speeds by 2016. This news comes months after the city released its own RFI and AT&T expressed interest in negotiating for GigaPower service. Details on exact pricing or how Time Warner’s plan will match the city’s original RFI wish list remain unclear. In response to the RFI, at least one other company, Dutch start-up Angie Communications, has also expressed interest in building out in Los Angeles.

OTHER PROVIDERS It is not just the larger cable providers who are now looking at offering Gigabit services. Brighthouse Cable, which provides cable and broadband services to 2.4 million subscribers in five states, became the first cable company to announce it would upgrade to offer a gigabit product to its residential customers, with a trial in Tampa serving a new community of 6,000 homes. Suddenlink, which provides cable services to 1.4 million subscribers in 8 states, just announced a Project Gigaspeed, in which they will upgrade their faster tiers in all their areas to a gig by 2017. In making the announcement, the company noted how Google and AT&T are establishing gigabit level speeds in the market and this effort will help the Suddenlink stay competitive. Further, even equipment makers are getting into the game. Adtran just announced its own “Gig Communities” initiative designed to get a gig to 50 communities this year and to 200 by the end of next year.

As you can see on the diagram on the next page, these ISP efforts greatly overlap and, together with the independent community-initiated efforts, have propelled the “Game of Gigs” forward.

COMMUNITY INITIATED AND ISP INITIATED EFFORTS FLOWING TOGETHER TO CREATE THE “GAME OF GIGS”

A year ago, ISPs such as Cox and Time Warner Cable were antagonistic toward gigabit upgrades. They responded to gigabit initiatives with comments suggesting that upgrades were too expensive and, further, that they knew best what their customers wanted and the customers did not want higher speeds.

Now they are singing a different tune. But we don’t mean this as criticism. Rather, they deserve credit for recognizing how the landscape has changed. While the model for Google Fiber and a number of the Gig.U communities are different, these efforts have successfully demonstrated the feasibility of next generation network deployment and the popular demand for faster speeds. Community-led efforts – whether it’s focused on the creation of an Innovation District, the implementation of a fiber readiness plan, or the release of an RFP – place pressure on service providers to address that community’s desire for an 20

upgrade. Above all, the dynamic of competition drives incumbents to think anew about the adequacy of their service offerings. It’s not an accident that there is a tremendous overlap between where Google is looking at entry and where incumbents are looking at upgrades. It’s not an accident that Comcast, Verizon, and Time Warner have recently announced speed increases, with a focus on communities where gigabit efforts by others are proceeding. It is a happy bit of luck that because of the non-identical footprints of the incumbents—Google putting pressure on AT&T puts pressure on Cox which puts pressure on CenturyLink which puts pressure on Time-Warner, etc.---the game can expand more rapidly than it would if only two companies with identical footprints were playing. The combined efforts of Google Fiber, experimental local ISPs, and community organizing creates the “Game of Gigs” – a game that creates pressure on incumbent market participants to rethink their strategy and focus on delivering bandwidth abundance. This is a game that all communities should think about playing and, as they do, they should consider the lessons Gig.U communities have learned in their own efforts.

Some have expressed skepticism that anything will result from these efforts, suggesting instead that this is all simply a version of “Fiber to the Press Release.” We understand the skepticism—after all, many of the players have not yet told Wall Street that their capital budgets will reflect the new investments necessary to upgrade their networks. We believe, however, that such a response demonstrates a misunderstanding of the moment we are in. Companies don’t undertake new capital expenditures because they want to; they do so because they can justify the expense in light of a new opportunity or to defend an existing revenue stream. It should be remembered that in 2009, when the National Broadband Plan was gathering information about planned investments, no incumbent providers had publicly announced plans for world-leading networks in the United States. That some have done so now represents a positive change in their perception of both the opportunity and the threat.

As we note later in this document, the progress can stall; the proposed deployments may never occur. The important challenge, however, is not to merely note the difficulties, but to understand the dynamics so that we can act to increase the probability that a variety of forces will come together over the next few years to make those capital investments both wise and necessary. As a starting point, we can focus on those steps communities can take to improve the likelihood that their residents will enjoy the benefits of this “Game of Gigs.”

LESSONS LEARNED

IMPROVING A COMMUNITY’S FIBER READINESS As we knew starting Gig.U, and as we learned again every time an effort began in earnest, the formula for making the math of next generation deployment work creates challenges for both current providers and new entrants. But as we have found in every community in which we have worked, the basic approach also involved the same elements; the key is for communities to take steps that reduce three factors—capital expenditures, operating expenditures, and risk—and increase three factors—potential FIGURE 2: STRATEGIES FOR FIBER READINESS revenues, system benefits and the threat of competition.

The Google Fiber and Gig.U experiences over the last three years have demonstrated there are three basic strategies for doing so: using existing assets more effectively, regulatory flexibility and efficiency, and aggregating demand.

Asset utilization and improvement.

Every city has a number of assets that if better utilized or improved could lower the cost of deploying next "In general we go where it's easy to build. If you make it hard for me to generation networks. The process begins with an build and other places are easy, I will inventory of those assets that can affect deployment. go elsewhere. A city committed to The most obvious are rights of ways, including pole being gigabit-friendly can make a difference. All of this can add up to access and fees, conduit access, and building access. real savings." Gig.U created as asset inventory for this purpose. Milo Medin, Google Fiber Next comes making data and other information available regarding conduit, ducts, and other rights-of-way, as well as government- controlled facilities to which publishers can attach equipment. Cities can establish policies

that make rights-of-way and poles available to providers on a clearly defined, reasonable basis though a rapid approval process.

Make-ready work on poles is also a critical factor. Cities should ensure that make-ready work is done expeditiously, coordinate with new providers to save costs and allow them to perform the work themselves through approved contractors.

Even without a specific provider in mind, cities can act—with minimal cost—to upgrade assets to ultimately reduce the cost of new networks. For example, cities can install ubiquitous fiber conduit or even dark fiber that can be leased to approved entities. With a “dig once” philosophy that requires such installation anywhere there is road construction, cities can reduce deployment costs along roadways by 90% while adding less than 1% to the cost of construction, and also, minimizing disruption to neighborhoods. Cities can use pole maintenance policies to provide space for new attachers.

Cities can also use building codes and community development plans to drive fiber investment. For example, cities can adopt rules that require new construction and major renovations to include structured wiring that facilitates fiber deployment. Again, if done as part of a larger construction project, the incremental cost is minimal. If done on its own, the incremental cost is huge.

Regulatory flexibility to accommodate new business models

Perhaps the most important innovation that enables gigabit projects was one raised by a number of providers in the Gig.U national RFI and also used in the Google Fiber and AT&T projects: instead of requiring a built out everywhere without any indication of demand, let consumers determine where the build out should take place.

In Kansas City, city officials did not dictate the map for Google’s build out. Instead, neighborhoods made that decision. Google built in those neighborhoods where there is sufficient demand to justify the investment. It worked out to nearly the same level of coverage. About 95% of neighborhoods in Kansas City qualified.

But this model dramatically reduced cost. First, it lowered the risk. Second, it facilitated a build out neighborhood-by-neighborhood instead of house by house, which in turn results in significant savings in capital expenditures.

Similarly, many cities that have attracted next generation networks have also been flexible in terms of expediting permitting and inspections. Again, in construction time is not just money. It’s a lot of money. Speeding up these processes can be critical to lowering the costs.

Demand Aggregation

A final key strategy is demand aggregation. The pre-commitment tactic noted above enables demand aggregation. So does creating a web site that both pushes and pulls information. Another Gig.U tool provides a frame for such a web site. There are many such tactics, and the city should approach the issue as it would if going after any important economic development project. When that happens, city agencies, anchor institutions, like universities and health care facilities, major business interests, and other community institutions come together to pitch in various ways, to make the economics work for the project. This is no different. FIGURE 3: TACTICS FOR FIBER READINESS

Drilling down deeper, there are a number of tactics that are within the existing power of most communities to successfully carry out these strategies. (See Figure 3). Communities can and should have different points of view as to which strategies are most appropriate to serve their needs. For example, some of these tactics involve the utilization of anchor institutions but the providers have different points of view about the role of schools, libraries, and health care facilities in a new deployment. Another variable is the presence of a university, which is a kind of an uber anchor institution. Universities tend to attract a lot of high-bandwidth users to the communities that surround the campus, one reason why university communities have proven to be such an attractive magnet for gigabit deployments.

Again, attracting new investment is a process, rather than a turnkey solution. Whether through an RFI or through some other means, communities need to test the waters to determine its options and how to best leverage it assets and policies to attract the new investment. Looking at the bigger picture, however, it is through these strategies and tactics that we can see how local communities and ultimately the country can accelerate an economically viable next generation upgrade.

LESSONS FOR ALL COMMUNITIES The experiences over the last several years have also provided a number of lessons for all communities—regardless of size, density, or demographics-- that wish to have improved bandwidth for their businesses and residents. These lessons include:

• Organizing community resources and stakeholders are essential for making gigabit projects economically viable. While different cities have different demographics, different construction costs, and other variable factors that affect the feasibility of a gigabit network, communities that have moved forward are similar only in that they have decided to make improving the broadband available to the community a high priority. Any community has the ability to organize community resources and their regulatory processes to lower capital expenditures, operating expenditures, risk and raise revenues – the key to making gigabit projects economically viable. Also, any community with a vibrant tech or start-up community should leverage that energy to produce project support. These stakeholders are first adopters and already understand the “why” of gigabit speeds.

• Start with a clear understanding of how your city rules and assets affect deployment costs. The organizing effort starts with a detailed understanding of how communities’ policies and assets affect the economics of network deployments. Gig.U, the Fiber to the Home Council and others have developed tools for this exercise and the public documents from the Google Fiber project also provide a road map for how cities should think about the impact of their rules and assets on network economics.

• As it takes a long time to plan and deploy a network – and it always takes longer than you think – the right time to start thinking about how to improve the economics is today. Every day, cities make decisions that can affect the cost deployment. Every time a street is dug up, every time an area is developed or redeveloped, there is an opportunity to lower the cost of a future deployment. Every time such actions occur without an eye toward lowering the cost of next-generation broadband facilities, the future cost of such a network increases.

• Incumbents only respond to a potential change in the status quo. Inaction by a city leads to inertia in the market. In every community we have worked with, action by the city has always resulted in an effort by the incumbent providers to respond in an incremental fashion. This is not to criticize the incumbents; it is simply to suggest that as to cities and their broadband networks, the old saying that “the squeaky wheel gets the grease” turns out to be true. For example, without its 25

RFP, it is doubtful that Los Angeles would have received an offer by Time Warner Cable to offer a gig throughout the city.

• Cities who act will have to choose between the quick, short-term win and the harder, longer term win. When cities become “the squeaky wheel” they often have an opportunity to obtain some quick concessions from incumbents, in exchange for stopping a process that opens the door to new providers. There is no general rule for responding; some cities may best be served by taking what is in front of them, others have the potential for far greater gains. What is certain is that cities should be prepared to analyze the short-term and long-term risks and opportunities so has not to be pressured into making a quick decision based on a desire for a “quick win” but rather should be looking toward the art of the possible in maximizing the long- term prospects for broadband abundance for the community.

• While success depends upon broad support, it also depends on quick decision- making. One reason Google chose Kansas City as its initial project was that the unified government structure gave Google that confidence it would get quick decisions on a variety of issues as the project proceeded. Other projects have not gone as quickly as hoped due to multiple decision makers. For a project to be successful there must be a broad coalition of interests supporting it, but that coalition must have confidence in the local leadership to enable that leadership to act quickly on behalf of all; otherwise, there will be delays that ultimately raise the costs and could injure the project’s long-term prospects. Further, as the nature of the project is different than traditional municipal projects, it is often difficult, within the existing government structure to find a high-level executive to “own” the project and assure its completion. Empowering such a person, and making sure the project is not an orphan, has been critical to the success of projects to date.

• There is no one size fits all solution; there are multiple solutions to different community needs. And there are multiple trade-offs. But all efforts improve the situation relative to the status quo. As one can see from the multiple ways in which Gig.U communities have approached the opportunity, there are many different ways to accelerate the deployment of a next generation network. Each has advantages and disadvantages relative to alternative approaches. What is common to al, however, is that the cost to the community of such efforts is negligible and the benefits are significant. There is no cost to asking questions; indeed simply asking the right questions causes incumbent providers to become more interested in how the city is thinking and more responsive to future needs. Competition – even the

threat of competition – tends to improve the performance and the offerings of the incumbents.

• Experiments don’t always work the first “Though we are disappointed in light of recent news that the Gigabit Squared time. That’s why they are called initiative with Seattle no longer seems experiments. Make sure the community viable, the Citizens Telecommunications leadership understands this and that and Technology Advisory Board (CTTAB) wants to be clear in reaffirming our earlier there is a path to learn from experiments position on broadband for the City: the an improve performance in successive Citizens Telecommunications and iterations. Pioneers don’t have the Technology Advisory Board (CTTAB) urges the Mayor and the Council to move advantage of a clear and certain map. In forward without further delay to bring a each of the efforts to date, mistakes were Fiber-to-the-Premise network to Seattle. made. They key is not to let the mistake While much has changed with technology in the last several years with respect to determine the fate of the project, but rather broadband, the issues of affordability, to figure out how to correct the error and access, reliability, and consumer choice still continue to move forward. A good example persist throughout the City. As stated in our 2010 position statement: Access to a of the right way to approach the long-term broadband internet connection at all objective is the work of the Seattle Citizens premises in the city is the critical – indeed, Telecommunications and Technology the cornerstone – technology that will enable Seattle's citizens, businesses and Advisory Board. As the letter from the institutions to compete and thrive in the organization, cited in the sidebar notes, the global marketplace. State-of-the-art disappointment in the inability of Gigabit Internet access is essential to Seattle's ability to compete and lead in the 21st Squared to deliver on its promises does not Century global economy. CTTAB envisions diminish the centrality of world-class access to the Internet for all Seattle broadband to the economic future of the citizens, businesses, and institutions that is fast, fair, and everywhere.” city. The Seattle Citizens Telecommunications • Scale matters. As these projects are not and Technology Advisory Board cookie-cutters, there are significant start- up costs. In that light, scale is an advantage; the larger the ultimate addressable market, the more a provider is willing to risk those start-up costs. It is unlikely, for example, that the eight respondents to the NCNGN project would have been willing to respond to six different RFPs. While the regional approach appears to be working there, it is important to remember the prior rue that quick decision-making also matters. So larger efforts must make sure the desire for sale does not result in complicated and lengthy decision-making.

• Above all, local leadership is the single most important ingredient for success. If there are local leaders who put this at the top of their agenda, it can happen. If 27

not, it won’t. Gig.U can be proud of what it has done over the past several years. It has provided a national platform for communities to help each other chart a path whereby every member community benefits from the efforts of others. But the single most critical variable for success is local leadership. In every community where an effort has moved forward, there has been strong local leadership that has made it a priority for local political, business, and civic leadership. Of course, one major obstacle to attaining this necessary condition is the fact that, in most city governments, there it is no one’s job to worry about next generation speeds. Chief Innovation Officers are not required to focus on broadband networks specifically and even cable, information or telecommunications offices often carry out more traditional functions.

FURTHER LESSONS FROM EXPERIMENTATION When we began, we understood the need to experiment and that, by its very nature, experimentation involves a risk of failure. After all, the broadband bonanza we enjoy today owes a great debt to such visionary efforts as Time Warner’s Qube, Apple’s Newton, and @Home. All failed as a business matter, but each demonstrates that a failed project can still advance the mission.

In that light, it is not surprising that some of the projects Gig.U helped stimulate have stalled out. Most notably, two early projects involving the vendor Gigabit Squared have been put on hold, as Gigabit Squared was not able to meet early benchmarks in moving forward with the projects.

Looking back, we think its relevant to note that all the Internet Service Providers of current Gig.U affiliated projects are entities with existing business lines that are either upgrading existing networks or moving into an adjacent geographic or product market. Gigabit Squared, by contrast, was a true new entrant. Such an entity carries operational and financing risks that are much greater than established players. Further, the cost to an established company of not meeting its obligations, and thereby creating problems for their existing business lines, are greater and the incentives to finish the job, whatever it takes, are also greater. The greater risks associated with a true new entrant are neither new nor surprising. Indeed, both the communities that entered into agreements with Gigabit Squared did due diligence and included contract provisions to minimize the communities’ risk. As a result, the financial losses to the communities were relatively circumscribed, with the biggest loss, in some sense, being a loss of time. Despite that setback, we have a high level of confidence that those communities will find a way to realize their original vision. 28

We could have taken the view that no new entrants should be allowed to participate in Gig.U projects. We believed, however, that there was value in opening the door as broadly as possible, particularly, as was the case in 2011, when so few wanted to enter. New entrants, in any business, have a high failure rate, yet when one looks at the history of innovation, new entrants are often the change agent that causes the greatest improvement in the performance of a sector. Preemptively closing the door to those who might bring the freshest perspective was not wise, in our view. As noted by a key participant in the process that created the University of Illinois/Champaign-Urbana/iTV3 partnership, the Gigabit Squared process helped stimulate those communities to organize their thoughts and assets in a way that has led to a successful negotiation with an existing business seeking to expand both its geographic reach and product offerings.

Nonetheless, what matters at the end of the day is how the ideas are turned into action, and for that to happen, the math has to work. And the math, as we knew but learned again, is tougher when a new entrant without existing business lines plays an essential role.

“When Gig.U issued its RFI seeking partners from the private sector, the vast majority of the responses did not address our communities’ needs. However, the Gigabit Squared (GB2) response spoke eloquently to what some of us were looking for. The Gig.U RFI helped GB2 focus its thinking about what was doable and desirable.

Then GB2 issued its own RFI to Gig.U members, and many of us leveraged our responses to that RFI as a mechanism to get our communities organized and to determine what we really wanted in a private partner. Without the deadline discipline forced on our community by the GB2 RFI, I doubt we would have ever come to the consensus we did about our Community Broadband Principles. I can easily imaging that our elected officials and our self-appointed local experts debating those principles forever.

As a former journalist, I have always appreciated the value of deadlines to help focus people’s thinking and efforts. Much of my professional journalism time was spent at UPI, where we literally had a deadline every minute at some news outlet - somewhere in the world. Gig.U and the follow- on activities of its members and would-be private partners created all sorts of deadlines that helped both communities and private companies figure out what they wanted to do and how they wanted to get it done.

I know that overall the history writers will not be kind to Gigabit Squared, but even in their implosion and flame out, they added great value to our efforts in Champaign-Urbana. It is too early to declare iTV-3 a success, but without Gigabit Squared, there would probably not been the opportunity for iTV-3.”

- From Michael Smeltzer, Former CIO, University of Champaign-Urbana

POTENTIAL THREATS TO SUCCESS: NO POPPING CHAMPAGNE, YET

While we are more optimistic than ever that the movement toward upgrading wire line broadband networks will lead to a critical mass of communities obtaining world-leading networks at affordable prices, we don’t believe we have passed an inflection point in which the momentum for such deployments is irreversible or inevitable. We believe it is important to be candid about potential turns in the road that could lead to the “Game of Gigs” ending before its benefits are fully delivered.

CHANGE IN GOOGLE INTEREST. While we are hopeful that Google will proceed in deploying its Google Fiber network in numerous communities and even move to a further expansion phase, we recognize that this business line is not core to Google’s current revenue model and it has the option of simply not proceeding with further deployments. We note this as a risk not because we favor the Google model but because we are realists who understand that Google’s entry into the next generation broadband market is the single greatest input driving a number of competitive responses that improve the environment for achieving our own mission. If Google were to withdraw, or even just indicate that it was not proceeding further, incumbents and others would likely slow down their own efforts and progress would likely stall.

CHANGE IN COMPETITIVE OPPORTUNITY DUE TO MERGERS We do not take a position on whether the government should approve or reject the proposed mergers involving broadband providers but we are cognizant that the purpose of these mergers (like all mergers) is to improve the competitive position of the merging companies. The question for our efforts is whether that improvement makes the economics of deploying next generation networks easier or harder for both the merging entities and for others. It is not within the scope of our work to do the necessary economic analysis, but it is not difficult to see that the government’s review could have either a positive impact or a negative impact on the barriers to entry and upgrades. If negative, the mergers and their review processes could also lead to progress stalling out.

CHANGE IN MUNICIPAL INTEREST Gig.U has benefitted enormously from the growing interest in cities for world-leading broadband networks. There are many signs that that interest will continue to grow. However, cities have a number of priorities and changes in the economy might distract the leadership from devoting political capital to an initiative that often takes longer than the term of that leadership. If city priorities change, the momentum that we currently see could fade.

In this regard we note that as Google and others seek to provide upgraded services, some have argued that cities should be wary of such deployments as they may create a new digital divide. We agree with the view that cities should seek to assure that their broadband policies in aggregate result in all their residents having an opportunity to use broadband networks that offer full access to participate in economic, social and civic life.

Unfortunately some raise the concerns about a digital divide in ways that appear designed to stop or slow down "We should worry about the digital divide caused by new competition, rather than solving any digital divide affordability and the lack of digital issues. In doing so, such critics make arguments that readiness more than any ignore history, economics and facts. For example, some theoretical divide caused by new fiber options." critics say the Google Fiber project is ignoring low- income communities in Kansas City when in fact it will Blair Levin, Gig.U Executive Director connect 95% of the neighborhoods there. As we have noted, for communities that wish to have both an upgrade and assure that 100% of all residences have access to an upgraded network, there are options, such as how Macuarie is proposing to finance its build-out of a network to a number of communities in Utah.

We have not seen significant momentum at the municipal level for stalling gigabit projects but if some of the arguments that have been raised gain traction, it could change the political calculus in some cities, increase the cost of upgrades and reduce the momentum for next generation networks.

THE UPCOMING METROPOLITAN BROADBAND REVOLUTION: THE END OF THE BEGINNING

Nearly a half century ago, Sen. Daniel Patrick Monihayn famously said, “If you want to build a world class city, build a great university and wait 200 years.” More recently, Bruce Katz, of the Brookings Institute has described a rapidly evolving Metropolitan Revolution, for which one core element is the presence of an innovation district. Among the key ingredients for such a district are universities and great broadband.

"Given the focus of innovation in these Whatever one’s time horizon, the relationship [innovation districts], robust access to high between universities, cities, and economic growth speed broadband is also of paramount is compelling. With value creation in the economy importance. In St. Louis, a business model is being developed to install gigabit-speed becoming even more dependent on the collection, fiber optic cable under the street at the storage, analysis and dissemination of information, same time construction is underway for a we should expect it to become even more so. planned trolley line to serve one of the city’s innovation districts. Amazon couldn’t consolidate headquarters in South Lake Progress, however, is not self-executing. Good Union without ample bandwidth." ideas may be born from multiple discussions but they are only refined with experimentation. Gig.U Robert Puentes, Brookings Institute members have undertaken both of these tasks to the benefit of their communities as well as for others.

University communities were well positioned to pioneer these upgrades. They have critical levers. With major research institutions housing fiber assets or adding to the demand for faster Internet speeds, there were natural leaders ready made to take their communities to the next step of bandwidth abundance. Due to their need to retain and attract talented students, researchers, and professors, these communities were early to see the value of better, cheaper, faster broadband as an economic and social engine.

But the effort is not limited to university communities. In last decade city governments have emerged as admirable hubs of innovative thinking and policy experimentation. Accountable to their budgets and their local constituency during economic hardship, mayors, city councils, CTOs, and CIOS have gotten creative about efficient government services and economic development. With broadband impacting the success of education, public safety, health care delivery, and the entrepreneurial environment, its no wonder that many leaders are looking at network infrastructure as a worthy community concern.

Another important reason for cities to step up and take steps to create bandwidth abundance is that the federal government is unlikely to drive this agenda. It has not been 32

entirely absent. The NTIA distributed Broadband Technology Opportunity Program infrastructure grants, which have been important puzzle pieces in some projects, and FCC Chairman Tom Wheeler recently came out in defense of a municipality’s right to determine its own broadband model apart from state-level interference. Further, there has been broad bipartisan support for network upgrades. Too often, however, at least in the past, the support from federal officials has merely been the statement of aspirations, and has lacked any coherent strategy or plan. Thus, it is not surprising that the first waves of gigabit deployments emanated from local efforts.

But rather than focus on cursing the darkness, we have chosen to light a candle. And we believe that candle can, and will, be used to light many more. For what is at stake here is not, as some said when we began and continue to say merely “bragging rights” but rather the quality of the platform by which we as an economy and a society collectively provide ourselves and future generations the opportunity to continually improve every aspect of our lives. Cities are grasping that need, and that opportunity.

Indeed, if mayors 100 years ago had perfect foresight, they would have made certain plans—not just a world-class university but also land for an airport, designs for roads that could handle combustion vehicles, long-term access to water and inputs for electricity— that would have created the foundation for greater prosperity today. We cannot have perfect foresight, but we know this. The economy will increasingly be delivered over bandwidth. Economic value creation, which for several millenniums was primarily based on the manipulation and distribution of physical objects, increasingly will be based on manipulating and transporting bits of information. Every service provided by every large institution will be transformed by that information exchange. The Internet of Things will transform our homes, our jobs and critically, the communities in which we choose to live.

So while our foresight cannot be perfect, we know today that as mayors make plans for their communities to thrive in the information age economy, they need to make plans that make sure the community has the bandwidth it will need well into the future.

Winston Churchill, after the Allied victory at the second battle of El Alamein in 1942, famously said, “this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” So it is with our effort. When we came together three years ago, and over the many paths we have taken since that time, it was never certain that there would be sufficient success to drive the next great American broadband upgrade. While again, that success is not certain, we believe there is a good chance that this is the end of the beginning and in the next several years numerous cities and the entire country will benefit from the map created by the Gig.U communities.

Acknowledgements

This project reflects the work of many who have worked countless hours for little, or in some cases, no pay, out of a desire to advance the vision and mission of Gig.U. Those to whom great thanks is owed include:

• Elise Kohn who jumped in to run the RFI process, and gave Gig.U a great foundation for its later successes. She also has managed the NC NGN process; • Ellen Satterwhite who came in to assist Elise and took over the principal role of coordinating Gig.U activities during phase two and continues to assist, notwithstanding the full time job she has at the Glen Echo Group; • Maura Corbett and all our friends at the Glen Echo Group who have done a wonderful job assisting with our meetings, honing our message, and generally helping us leverage limited resources into what has become a big effort; • Denise Linn a Harvard Ash Summer Fellow and student at the Kennedy School of Government who took on the principal role of producing this report; • Scott Berendt who came to us from the FCC and One Economy to develop the community assessment tool; • Andrew MacRae who came to us from NTIA to develop the community engagement tool • Mark Delbianco a veteran telecommunications lawyer, who kindly volunteered to draft the Generic Request for Proposals; • Our friends and former colleagues from the NBP at the FCC, Erik Garr (now with PWC) and Paul De Sa (now with Bernstein) who have been wonderful sounding boards on technology, process, economics and all the other multiple issues that have come up over the last three years; • Unnamed sources from incumbent ISPs who provided important data about the barriers to an upgrade and told us what we needed to hear even if we didn’t want us to hear it; • The Village. It really does take one. In this case, Gig.U benefitted enormously from the inspiration and insight of others with a similar vision and mission, including Lev Gonick of One Community, Joanne Hovis of CETC, Jim Baller of the Baller, Herbst Law Group, Heather Gold of the Fiber to the Home Council, the leadership and membership of NATOA, and many others: and • Charlie Firestone, Tricia Kelley and all the rest of the staff at the Aspen Institute Communications and Society Program who have housed us and helped us in a myriad of ways that have enabled us to move rapidly from idea to organization to action.

While all the team in D.C. have made great contributions, it has been clear from the early days that ultimately, success depends on the leadership and energy of the members and the local leaders. Gig.U, at its best, helped the university communities get a great head start over other communities in catalyzing an upgrade to a world-leading network, but whatever success was achieved ultimately reflected far more important local action by local actors. While the successes to date, they all have in common that local ingredient, and for that, we at Gig.U offer our greatest gratitude.