I haven’t talked too much about BridgeNet here, the City of New Westminster’s fibre optic utility initiative. It is one of those things in the City that I am less involved in, as I am not on the Economic Development or Intelligent City committees, though it is an idea of which I am supportive.
There was a recent discussion in a community Facebook thread that breezed past traffic, talked about the current long-term lending plan, and various taxes and spending issues, but some good questions were raised about why and how the City is investing in fiber optic infrastructure. So instead of lengthening that already lengthy thread, I thought I would answer the questions here (and link back, of course). The questions are thus:
I am curious however why NW has ‘invested’ $9M of taxpayers money in a fibre optic network to compete with Canada’s four private sector service providers Bell, Telus, Rogers and Shaw?
The simple answer is that access to higher speed internet connections is something residents and businesses want, and is part of both the City’s Intelligent City initiative, and a part of our Economic Development Plan. There is a new generation of business, a new type of worker, where an internet connection is as important to their success as access to truck routes are to some more traditional industries. These types of value-added high-paying jobs are an important part of developing a City where people can work, live, shop and play in the same community. And the Big 4 Telcos are not bringing 1Gb service to New West any time soon.
Some are under the mistaken impression that the City is starting a Telecommunications company (“Telco”) to compete with the Big 4, but that isn’t the plan. If I can stretch the analogy of this being the trucking industry of the next century, it might cast a little light on what we are actually doing.
In most of Canada, consumers hoping to connect to the internet have to choose from one of the Big 4 Telcos. This is because those companies have had the financial wherewithal to build a full network, mostly off the infrastructure backbone of the telephone companies that spanned the country in the first half of the last century. In the data-as-cargo analogy, these companies are like the large railways. There are few of them, because they had to pay to install the infrastructure that they use (with significant legislative and material support from supportive governments, interested in “opening up the markets”) and as a result, they have a pretty solid grip on the competition within the market. They are, effectively, an oligopoly.
This doesn’t mean they completely lack competition. Trucking companies also move goods, and what they lack in might and capacity, they make up for in a built-in efficiency: they don’t need to build the roads or bridges they operate on. That infrastructure is built as a commons, and everyone can use them. Local, regional, and provincial governments build roads using your taxes, but they don’t run trucking companies. They can, however, choose where they build roads, and how they provide access – something they really can’t do with railways.
So it is with a dark fibre utility. The City is, essentially, building the roads (“fibre”) so that any trucking company (“ISP”) can come in and compete with the railways (“Big 4 Telcos”). There are many small ISPs who can and are willing to offer boutique and discount services in New West, but cannot build the trunk infrastructure needed to get into the business. Meanwhile, the Big 4 are concentrating their infrastructure upgrades in the biggest markets like downtown Vancouver and working to outcompete each other where the money is easy.
Far from competing with the Big 4, the City is building a fibre network that will open up competition, such that more companies can challenge the limited offerings provided by the Oligopoly, promising businesses and residents along the network much faster internet service, and more affordable and flexible service plans. We are not offering those services, but we are charging tolls to the companies that will offer them through the fibres we install. Those tolls will (for the first decade or so) pay for the cost of the infrastructure, and after that it will provide a revenue source that a future Council can use to offset taxes, much as the Electrical Utility currently does.
I guess New West has decided that running it’s own Crown Corps is a great way to ‘increase revenue’, a phrase I’ve heard repeated on several occasions at City Hall.
Yes, providing services that people want is a good way to increase revenue in the City, and it provides an opportunity to offset your taxes. Especially when a City leverages opportunities that come with operating roads and utilities, and can use its solid financial position and favorable Municipal Finance Authority rates, the City can provide things that people want for less money. Sort of the thing people who ask Cities to “operate more like a business” would suggest we do.
Governments are not for-profit businesses. I can write an entire blog post about how Governments and businesses are fundamentally different, but that would be a long digression at this point. Suffice to say, providing a utility service that improves the competitiveness of our business community, is attractive to residents and people who work at home, and doing it in a way that will first pay for its own infrastructure, then return value to future taxpayers, seems like a pretty good governance decision.
This $9M in this optional financing program also intrigues me seeing as, based on walking around town, this network at least appears to be mostly installed. How did we pay for it in the first place?
The network is not mostly installed. A couple of trunk lines are in the ground to allow communication between City facilities so our internal corporate network can run better. Those were paid for by taxpayers, like the rest of the City’s computer network system.
Perhaps what you are looking at (?) is the conduit we have installed – the plastic tubes that fibre can be fed through. The City was forward-thinking enough to install conduit while road and utility works have happened over recent years. Conduit is cheap, and it is easy to drop it in the trench while you are doing other works before the asphalt goes down. The Ministry of Transportation does similar things when they build major road projects, like the SFPR. Stick the conduit in, because you never know how you are going to use it in the future. in fact, BridgeNet will use MoT conduit for part of it’s system, a service BridgeNet will pay MoT for.
What we have not yet done (but are working on right now) is put fibre into those conduits, nor have we built the infrastructure at the junctions and end of the lines that would allow that fibre to light up. That stuff costs money, and we are investing in it now. We will also be investing in last-metre connections as customers sign up to access the services that the Internet Service Providers (ISPs) will be providing. That stuff costs money, and rather that use property tax money or dipping into reserves, it makes sense to borrow the money at the low rates the Municipal Finance Authority makes available to us, and to pay back those loans with the income earned from the operation of the Fibre Utility. Utility customers – the users of the infrastructure – will be paying this infrastructure loan back, not taxpayers.
BridgeNet is a pretty exciting initiative, and one that is about the future of the City. There was a great open house last month where industry leaders came to the Anvil Centre to talk about the potential that high-speed internet provides to Cities, to businesses, to institutions like Douglas College and our Schools, and to residents. We had four ISPs there, demonstrating the types of services they want to deliver, be it discount home 1Gb service or specific boutique offerings for office centres. There were hundreds of residents and businesses there, excited to look at the map, and all asking the same question: When will this service be coming to my street? The answer can be found at the BridgeNet Website, and the map you can find here.