Internet becomes local effort

Spotty network forces town to provide own coverage

MONT BELVIEU, Texas -- For years, residents of this fast-growing town near Houston complained to local leaders about slow and spotty internet. They put satellite dishes on their rooftops. They endured intermittent service and frequent outages.

"I believe squirrels run on a wheel for my internet," one half-joked on a city survey.

The problem facing Mont Belvieu is one familiar to many towns and rural areas in Texas and around the country. Major internet service providers don't see a strong enough business case to expand their footprint, upgrade internet speeds or offer any internet service at all.

So Mont Belvieu took matters into its own hands: It decided to build and operate its own high-speed internet service.

The town of 7,500 joined a growing number of cities pouring millions of dollars into municipal broadband networks after feeling overlooked by big, publicly traded companies.

From Oregon to Tennessee, residents of cities plagued by slow speeds, high prices and few options waited to attract the attention and investment of major internet service providers. But as they watched the digital economy speed up and used the faster internet at their friends' and families' homes, they took action to ensure they wouldn't be left behind.

In Texas, where free enterprise is a prized tenet, the government of Mont Belvieu stepped in where big-name companies wouldn't.

Starting in June 2018, every household in Mont Belvieu could sign up for the city's homegrown internet service, MB Link. It costs $75 a month for speeds of up to 1 gigabit per second.

Comcast charged $75 a month and Verizon FiOS -- now Frontier Communications -- $60 a month, for 75 megabits per second, according to a 2016 study by the city. If residents wanted faster speeds closer to what MB Link ultimately delivered, they were paying up to $280 a month.

MB Link sold internet to nearly a third of households before even flipping the switch.

About half of the town's households are now signed up -- and MB Link recently began selling the service to local businesses. About 30 businesses, including the chamber of commerce, have subscribed.

This fall, the city began offering free Wi-Fi at the high school football stadium.

SPREADING BROADBAND

City-built broadband networks now serve more than 100 communities across the U.S., according to the Institute for Local Self-Reliance, a Minneapolis-based nonprofit that advocates for grass-roots solutions to community problems such as supporting locally-owned businesses or expanding neighborhood-led recycling.

About 400 additional cities have some kind of broadband network or one underway, according to the nonprofit.

Chattanooga, Tenn., is one of municipal broadband's best-known success stories. Since the region's municipal electric utility began offering internet in 2009, it's grown to more than 106,000 subscribers and bested other internet providers -- including dominant national players -- in ratings by Consumer Reports.

Christopher Mitchell, director of the Institute for Local Self-Reliance's community broadband network initiative, said cities began building broadband networks in the 1990s when they had no internet. Now, he said, they're motivated because they feel stuck with internet that's inferior or overpriced.

"Ten years ago, you might be able to say hopefully over time, you will see more expansion and more competition," he said. "But over time, very few people expect to see more competition with these companies."

The long-term investment can be a tough sell. For example, Mitchell said, local politicians may be hesitant, if they must run for reelection before the network breaks even or shows signs of traction.

Some municipal networks have flopped where cities struggled to market the service to customers and defaulted on their loans. Others have run into political challenges as state lawmakers tightened rules around the networks or prevented them from expanding beyond city boundaries.

Success can be hard to measure, Mitchell said. Sometimes, it's a network attracting thousands of customers. Other times, he said, it entices providers to enter the market, invest in upgrades and cut prices.

"The simple fact is without good government policy to create competition, I do not think it will emerge," he said. "We have done 20 years of thinking that reducing barriers would be enough to increase competition, but at this point we need local governments to step up to create the competition."

Without an electric utility of its own, Mont Belvieu created a high-speed network by running fiber-optic lines to every subscriber's home.

It also created a paper trail. At the request of the Texas attorney general's office, the city sought a legal opinion about whether it could issue municipal bonds to finance its entry into the internet business. It used case law to draw parallels between electricity and internet.

A Chambers County judge approved the use of municipal bonds, ushering in the potential for similar projects.

NO LONGER A LUXURY

In Mont Belvieu, internet is treated as another utility. When developers break ground on a new neighborhood, city code requires them to place conduits where the city can put fiber. Customers get a monthly bill from the city. Internet is listed along with water, sewer and trash.

Mont Belvieu has many ingredients that make it an appealing place for businesses. It's about 30 miles east of Houston. It has a well-ranked school district, high home values and a population that's expected to quadruple to 30,000 by 2035. Its economy is powered by petrochemical plants that store and process natural gas and an Exxon Mobil plant that produces raw plastic.

Even with its fast growth and home values topping $300,000, the city couldn't persuade major internet providers to invest further. When city officials reached out to Frontier and Comcast, both said Mont Belvieu had too few rooftops.

Frontier's vice president of corporate communications and external affairs, Javier Mendoza, said in a statement that the company "is proud of the service we provide Mont Belvieu" and said customers in the town can get up to 1 gigabit of speed.

Comcast didn't respond to questions about Mont Belvieu, but said the company "has strong partnerships with the communities we serve in Houston."

At a meeting in early 2017, City Council unanimously approved issuing debt for the MB Link project.

"When we voted for it, we had a cheer from the audience," said Arnold Peters, a City Council member who's served for about 11 years. "We've never had that -- ever."

Business on 12/24/2019

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