Tag Archives: broadband

Michigan law makes fight for municipal broadband an uphill battle

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By Sheila McGarth
WKTV Contributing Writer

There are a number of reasons that a municipality may seek government-run broadband such as faster service at a lower cost, encourage economic development, and provide economic development. (pxhere.com)

For more than a decade, municipalities around the United States have been starting their own government-run broadband networks to bring high-speed internet to their residents. 

They might do so for a variety of reasons: to provide residents faster service at a lower cost, to encourage economic development, to provide high-speed internet to areas that private Internet Service Providers aren’t interested in serving, or to bring more economical connections to urban areas where residents can’t afford the service provided by private ISPs.

But due to laws on the books in Michigan, cities can face significant obstacles in starting their own network.

Michigan is one of 18 states that put restrictions on municipal broadband programs. Under the Metropolitan Extension Telecommunications Rights-of-Way Oversight Act of 2002, public entities can provide telecommunications services only if they have first requested bids for the services and received fewer than three qualified bids. They also must subject themselves to the same terms as those specified in their Request for Proposal.

 

Around the United States, measures regulating municipal broadband are enacted largely due to the influence of telecommunications companies wishing to be shielded from competition, according to MuniNetworks.org, a Community Broadband Networks Initiative of the Institute for Local Self-Reliance.

According to the Common Cause Education Fund, which tracked the spending of telecommunications companies for the years 2019 and 2020, Comcast spent $13 million on lobbying in 2019 and $14 million in 2020. The company spent $15 million on political contributions and expenditures in the 2020 election cycle. AT&T spent $11.5 million on lobbying in 2019, $11 million in 2020, and $13 million in political contributions in 2020.

Some small cities in the Michigan, such as Marshall, have been able to start their own network because they sent out a Request for Proposal and no ISPs responded, according to the Battle Creek Enquirer.

The City of Holland is hoping to be the next Michigan city to have its own fiber network available to all residents. Holland plans to expand an existing downtown network to every address in the city if voters approve a millage in August that would pay for its construction. The city’s Board of Public Works would run the fiber network as a public utility.

Holland is exempt from the Metro Act provisions because their fiber system predates the Metro Act, according to Ted Siler, utility services director for the city. They started it in the 1990s to connect their public utilities.

But even though the regulations don’t affect Holland’s plans to build a fiber network in the city, there are still parties pushing to stop it.

In late May, Holland residents began getting a “push poll” text from G1 Research. While purporting to be an opinion poll, the questions aligned with talking points by conservative commentators who believe municipal broadband networks place a unnecessary burden on taxpayers.

Daniel Morrison, a broadband activist who leads the civic group hollandfiber.org, said he didn’t know who was behind the push poll. All he had were “rumors and suspicions,” he said.

But he believes the Holland community supports the plan.

“I think the community is behind this because we have such a well-respected utility that takes good care of us,” he said. “It’s very clear to residents why a community-owned broadband utility fits in really well and would be an improvement over what they have now.”

Telecommunications companies aren’t the only ones trying to halt municipal broadband networks. Conservative lawmakers routinely introduce legislative restrictions because they feel municipal networks raise taxes and are not a cost-effective solution.

Holland representatives believe there is support to have a government-run broadband within their city.

Some studies have shown that municipal networks don’t attract enough users to pay for themselves. Elizabeth Hicks, U.S. affairs analyst at the advocacy group the Consumer Choice Center, cites a 2017 study by the University of Pennsylvania Law School concluding that of 20 municipal fiber projects that reported results of their municipal operations, 11 generated negative cash flow, and only two were on track to break even.

“What happens if there’s not enough consumers who end up signing up for the municipal broadband services or network? If that does happen – and what we see happen across the country with other municipal broadband networks – is the taxpayers within that municipality are stuck holding the bag for this failed network. So not only do they have a network that doesn’t work, but now they’re paying for it with their own tax dollars.”

But according to MuniNetworks.org, several of the cities that were subjects of the University of Pennsylvania Law School study disputed the accuracy of the numbers used in the calculations. The authors of the study issued a correction to some aspects of their report. The University of Pennsylvania released an updated study in January this year which again found that the actual performance of municipal broadband projects fell short of their financial forecasts.

Hicks said she believes everyone should have access to high-speed internet at reasonable prices, but that municipal networks are not the most effective way to do that. She said she has seen public-private partnerships work in rural areas where it’s cost-prohibitive to bring fiber. Cable and satellite service could be other options to consider, she said, or government subsidies for broadband in areas where there are ISPs providing service, but it’s too expensive for residents.

“There are a lot of unique solutions – I just don’t think jumping to a municipal broadband network should be the first one,” she said, adding that more than 200 communities nationwide currently offer municipal broadband, but only a small percentage of them have been successful.

In Holland, if the ballot measure passes, city residents will pay a millage of about $12.50 per month for building the system. Those who choose to connect would pay about $42 per month for service of 1 gigabit per second. The cost will depend on the “take rate,” in other words, how many people sign up. The more people who sign up for the service, the lower the cost will go.

Holland leaders are confident they will have the numbers needed to ensure success. The City and its Board of Public Works surveyed residents in 2018 and found that the vast majority of residents were in favor of a community-owned solution that provides high-speed internet access.

Morrison said demand for fiber connection in Holland’s existing downtown pilot project area has been strong. They have more than 200 customers in 150 buildings, he said.

The Covid pandemic and the lockdowns that followed brought the need for high-speed internet into sharp focus, he said.

“Everyone understands now the value of a good, reliable internet connection. We look at our very reliable utility that has been lowering electric rates, and say ‘We want (internet service) to be a utility just like water, sewer, or electricity.’ That’s what we want. We want to be in control of our own destiny. Not leave that up to a big telecom company.”

Holland to offer high-speed internet if Aug. 2 proposal passes

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By Sheila McGrath
WKTV Contributing Writer

On Aug. 2, the City of Holland could join a short list of cities that has broadband as a city utility. (pxhere.com)

When Holland voters go to the polls on Aug. 2, they will decide on a milage proposal that would give residents a benefit that’s relatively rare in the United States: a publicly funded, city-wide broadband internet network available to anyone living within the city limits.

 

The Holland City Council voted in April to take the measure to the voters. Now, the city is immersed in a campaign to educate voters about the benefits of the proposal.

If the ballot measure passes, Holland would join cities like Chattanooga, Tennessee; Sandy, Oregon; Cedar Falls, Iowa, and several others spread around the country that have a broadband network run by the municipality.

“Covid made it very clear that home internet is not a luxury,” said Daniel Morrison, a local broadband advocate who runs Hollandfiber.org, a civic group that has long championed the idea. “I’ve been banging this drum for years – that it’s not just people’s Netflix. It’s a utility. Covid changed the perception of that. It’s how you work. It’s how you go to school, it’s how you do everything, It’s not just entertainment. But even entertainment is important too.”

If the ballot measure passes, the funds raised by the millage will extend a fiber network that already exists in the downtown area to the rest of the city. The network will be owned and maintained by the Holland Board of Public Works and operated in the same way as other utilities, such as water or electricity.

“For the average family, we expect this would give them better choice in internet providers and lower – possibly significantly lower – prices,” Morrison said. “Better service at a lower price is what we’re seeing.” 

Downtown business in Holland already have been enjoying the faster upload speeds offered by the city’s fiber connections. (pxhere.com)

Residents would be able to choose between several different Internet service providers that offer service packages using the new fiber network, bringing a more competitive environment. 

Residents would pay to hook up to the service – $820  per address – but would be allowed to pay that off at a cost of $7 per month for 10 years, according to hollandcityfiber.org, the city website explaining the proposal. A sample internet service bill provided by the city shows an estimated monthly cost of $42 for internet service – $7 for the monthly installment payment for connection,  $7 for internet access and $28 for maintenance of the network.

The millage would levy up to 1.5 mills in its first year, and about 1.12 each year after that for the life of the 25-year bond, according to hollandcityfiber.org. The millage would cost about $12.50 per month for the owner of a $200,000 home with a taxable value of $100,000. If approved, the project to run the fiber throughout the city would start in 2023 and be finished two years later.

Morrison said that for businesses in Holland, the service would let them take advantage of high-speed uploads they may not have had before. Businesses in the existing downtown service area are already reaping the benefits, he said.

“There are some companies in town that do video work and they’re able to upload finished projects crazy fast over our current downtown service area,” Morrison said. “It’s unlocking so much potential of high-speed, high-availability options for businesses outside the downtown area.”

Pete Hofswell, Holland’s broadband services superintendent, said Holland first developed a fiberoptic system in the early 1990s  to connect, monitor and control the city’s public utilities.

That system has been growing slowly ever since, but expanding broadband access to the rest of the city has been a priority for many years, with ongoing discussions between the city council and the board of public works, Hofswell said.

“City Hall would get back to us and challenge us, saying ‘How can you get this service into more people’s hands?’ They see the value of it. They want to connect everybody in our town.”

A survey of residents taken in 2021 showed that 65% believed community investment was needed to ensure sufficient broadband access for all, and more than 72% agreed that community based broadband would benefit the community, according to hollandcityfiber.org.

Because Holland has had its fiber optic network for decades, the city is in a unique position to expand its network without being hampered by regulations that might affect other communities attempting to put a publicly funded fiber network in place.

The services are governed by the Metropolitan Extension Telecommunications Rights-of-Way Oversight Act, Public Act 48 of 2002, and Michigan Telecommunications Act, Public Act 179 of 1991. In Michigan, public entities by law can provide telecommunications services only if they have first requested bids for the services and received fewer than three qualified bids. And they have to abide by same terms and conditions as those specified in their request for proposals.

But Ted Siler, utility services director for the city, said that because Holland has been providing broadband service for more than 30 years and its service predates the Metro Act, “we’re exempt and grandfathered in.”

Morrison said he’s not worried about regulation popping up to derail Holland’s plans. But other communities might not be so lucky.

“The telecom companies have had their hands in legislation for decades to try to prevent cities from doing what we’re doing. We’re lucky that we been doing this for 30 years in Holland so we’re unaffected by that legislation now,” he said. “But I feel bad for other communities that won’t  have the same luxury we do. It’s going to be harder for them.”

Wyoming makes plans for its $13.1 million COVID relief funding

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By Joanne Bailey-Boorsma
joanne@wktv.org

Residents identified they would like to see ARPA (COVID) funding used for is on the city’s water and sewer system. (City of Wyoming)

It was a pretty exciting in the fall when the City of Wyoming, like municipalities across the state and country, learned it would be receiving $13.1 million in federal COVID-19 relief funding.

Similar to the most recent round of stimulus checks the U.S. government gave to American residents, the City of Wyoming’s $13.1 million also was part of the American Rescue Plan Act (ARPA) designed to rescue the economy. The federal government gave states about $350 billion dollars, of which Michigan received $250 million.

Deputy City Manager John McCarter said the city has received about $6.5 million of the estimated $13.1 million with the remainder expected to be paid out this year.

But like anything that comes from the federal government, there are a few strings attached to the money, such as what it can be spend not, when it needs to be spent and how cities must report expenditures. According to the U.S. Treasury, those guidelines are:

  • Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to collection in the most recent fiscal year prior to the emergency.
  • COVID-19 expenditures or negative economic impacts of COVID, including assistance to small businesses, households, and hard-hit industries, and economic recovery
  • Premium pay for essential workers
  • Investments in water, sewer, and broadband infrastructure

Source: National League of Cities

While cities can use the funding for premium pay for essential workers, according to the National League of Cities, Government Finance Officers Association , and the Michigan Township Association, the money cannot be used to relieve other payroll costs, deposited into any pension fund or used to cute taxes

The money must be used for COVID-related needs. An example given by the Michigan Township Association (MTA) is because of the COVID pandemic, a community’s parks had high usage which resulted in damage and higher than normal maintenance needs, the ARPA money could be used for those parks.

Also, according to the MTA, the ARPA money could be used to bring staffing back to pre-pandemic levels, but only if reductions were a direct result of the COVID pandemic.

How ARPA funds impacts city staffing

The question of using the grant funding has been raised instead of the city seeking an income tax, which is one of two proposals Wyoming residents will vote on May 3.

The additional police and fire staffing that are required to address the community’s needs are a recurring expense that should be support by recurring revenue, McCarter said.

“When you consider the ARPA funding, it is a one-time payment, it will not support the recurring expenses that hiring additional staff includes.” McCarter said, adding that the leaders at the federal level have referred to the bill as a “once in a generation funding opportunity.”

“Because it is a one-time payment, using it to fund police and fire, which is an ongoing expenditure, would not be fiscally responsible as the city needs long-term funding to maintain staffing levels,” McCarter said.

The question of using the grant funding has been raised instead of the city seeking an income tax, which is one of two proposals Wyoming residents will vote on on May 3. The first proposal is the income tax, which would be up to 1 percent for Wyoming residents and .5 percent for non-residents, which according to state law, is the maximum cities are allowed to levy an income tax. City officials have stated that if passed, the income tax would be up to .8 for residents and .4 for non-residents.

The second proposal is to reduce the city’s property taxes for homeowners and businesses by about 58 percent, going from around 12 mills to 5. Both proposals must pass to take effect.

It is estimated that the city would generate about $6 million annually if the proposals are approved. The money would be used to fund 27 additional firefighters (doubling the department), 13 police officers and 1 crime analyst with $600,000 annually being dedicated to update and maintain the city’s parks.

 

The City of Wyoming is hoping to use its remaining ARPA (COVID) funds for large-scale capital projects. (Supplied)

City of Wyoming projects being considered for ARPA funding

The city has used $437,280 of the ARPA funding to make modifications at city hall which has included a drive-thru for the treasurer’s office, court building upgrades, a city hall kiosk, police flock cameras, and a police desk officer reporting system, McCarter said.

In November, the city did conduct a survey of residents to determine what they would like to see the funds used for. From that survey, residents indicated that their top priorities were equipping first responders and improvements to water and sewer systems. Also receiving strong support was construction of affordable housing and a community clean-up program. Other projects listed were improvements to city facilities to address public health, assistance with home repairs, improvements to parks and grants for improvements to businesses and mobile parks and recreation programs.

The remaining $10 million, which also must follow the ARPA use guidelines, will be used on large scale capital investments and matching funds for grants and other funding sources. City Council is scheduled to resume discussions about how to spend ARPA funding in June.

Municipalities have until Dec. 31, 2024 to obligate the ARPA funds and must spend the APRA money by Dec. 31, 2026.