New Haven and West Hartford are looking to create high-speed fiber optic internet systems for all their residents and businesses. These are just two of the 46 municipalities that are part of the CTgig Project, a state-wide effort to increase internet speed and affordability. As city councils and town boards mull the costs and benefits of creating such a system, there are important facts that every taxpayer should know before moving forward.
1. “Totally awesome, and totally unnecessary”: Connecticut ranks high in the nation for internet availability. The issue is not that people don’t have access to the internet, but instead it’s a matter of how fast the data travels. Although Connecticut’s availability and usage is very high, those pushing for fiber optic access believe that Connecticut must invest now to stay at the forefront of the nation and make the state more attractive to businesses. Fiber optic cable can be useful for businesses that need super-fast download speeds. Wall Street investment companies, for instance, utilize them to in order to make the quickest stock trades possible, which enables them to make or save millions. But for the average internet user, the increased speed would not change much about their internet usage or lives. A typical household cannot utilize the fiber optic cable to its full potential. As reported in Slate, “It’s totally awesome, and totally unnecessary.”
2. Every town in Connecticut already has access to fiber optic cable: Currently, all 169 towns in Connecticut have access to fiber through the Connecticut Education Network and 44.1 percent of the state population has access to high-speed fiber optic technology, according to Broadband Now. Although the CEN fiber lines act as a “backbone” for the town and cities, fiber is not yet available to all homes and businesses. Running the fiber to every home and business is known as fiber-to-the-premises, or, “the last mile.” It is the most expensive part of the project, according to Wired Magazine. When cities such as New Haven or West Hartford talk about installing fiber optic cable, this is what they mean.
3. It will cost you one way or the other: Businesses currently pay up to $3,000 per month for access to fiber-optic internet. Obviously, if a town or city installed FTTP it would result in big savings for those companies. However, the costs are then transferred onto the tax payer or the utility payer, depending on the plan adopted by the municipality. The way other cities and states have done this is to team up with a company, such as Macquarie Capital, in what is known as public-private partnership. The private company then builds and installs all the lines and manages them for the next 20 years. This is paid for by a charge on either your property tax bill or utility bill that can range from $20 per month to $120 month depending on the cost of the build. It also doesn’t mean that your home will automatically have gigabyte internet speed. Under the proposal in New Haven, everyone would be charged $20 on their property taxes but those who wish to have the full 1 Gig access would pay $70.
4. When states and towns go it alone, it’s usually a disaster: States and towns have already tried to install their own fiber optic systems but, like many government projects, they have failed without the knowledge and experience of private companies to help. Utah spent $450 million on its UTOPIA project, which has been an abject failure. The state is currently talking to companies like Macquarie to help them out of this bind. In 2006, Groton attempted something similar when it borrowed $34.5 million to offer people a choice in cable, phone and internet service by creating a new network. The project was an abysmal failure. The network was sold to private investors for $150,000 in 2013 and left Groton in debt $27.5 million. Chattanooga, Tennessee, installed fiber-optic lines successfully but at high cost. Chattanooga received $111 million grant from the federal government for the project and issued $220 million in bonds. The city owns the cable lines and offers the service for $70 per month. The project also earned some detractors who claimed that it put the municipal government in direct competition with private providers. The Washington Times also cited the project as an example of waste, fraud and abuse of taxpayer money. Cable companies such as Comcast and Time-Warner have vigorously opposed these projects.
5. 5G technology could be just around the corner: Fiber currently offers the fastest internet speeds, but the cost of installation can be prohibitive. Internet providers ditched plans to create fiber networks in the early 2000’s and focused on wireless technology, which is cheaper. Looming in the background of the CT Gig fiber question is both Verizon and AT&T’s announcement that they are conducting tests on 5G wireless capability that the companies say will offer speeds comparable to fiber but without the cost of installing the lines. However, best estimates say the technology will not be available until 2020 and there is no telling how 5G will function in a real world with billions of users accessing data. But if the technology is successful, it could render the costly installation of fiber optic cable a poor investment.
For more perspective read this Op-Ed by Yankee President, Carol Platt-Liebau in the New Haven Register.