Chris Mitchell promotes community networks. He’s at the Institute for Local Self Reliance, so his view makes sense. He follows broadband access closely. Late last week he posted an interesting article on CenturyLink, noting that CenturyLink’s plan for 1 Gbps service in Omaha is an outlier, not a sign of the times to come.
Chris points out that Omaha – or at least the part of Omaha getting the upgrade – needed the upgrade for technical reasons. And I think it doesn’t hurt that the area getting the upgrade sounds like an affluent area. It’s certainly positive news for Omaha that the upgrade is coming. And if it does well financially, it could be good news for other areas as well – but for the reasons that Chris points out, I agree that it’s probably an outlier, especially in terms of rural communities. Also I’ve heard the folks at CenturyLink say as much. Rural areas are a tough investment – tough terrain, low population density and managers are obliged to make business decisions that benefit shareholders.
What does this mean for local underserved communities? Chris looks at that question…
CenturyLink just doesn’t have the money to upgrade most of its communities. Will it in future years? That is a question that Phil Cusick of JPMorgan asked: “Okay. And, so we should look at CapEx as being essentially flat for the next few years?”
CFO Stewart Ewing response:
That’s our thinking now. Pretty flat, we could bring it down some, cut it off a little bit depending on. It’s really based on the success of these new initiatives, I mean, what we think we can drive in terms of revenue and margins going forward.
CenturyLink is not dumb or evil, it just has different priorities for investment than what communities need. The sooner local governments understand this, the better. Heck, CenturyLink itself has made this point in Minnesota:
We’re a public company. We have shareholders. We have rules and commitments. If you’re smaller, the shareholders are the owners. There’s more flexibility – especially if owners/shareholders are local.
Minnesota Public Radio summed it up:
Noting that CenturyLink wants every customer it can find, Ring pointed out that the company nonetheless needs a return on investment that satisfies shareholders and meets the demands of larger commitments and fiduciary responsibilities.
If you’re a community looking at broadband and you are served by CenturyLink (or CenturyLink is nearby), it still makes sense to invite them to the table to talk about broadband. They know broadband. They may know if your area is expecting an upgrade in the near future. They may be in a position to be swayed by growing interest in broadband. Most providers will talk to specific customers about upgrades to their service – maybe it’s a matter of aggregating those demands. But it’s also wise to keep Chris’ observations in mind. The key to a public-private partnership is finding a solution that meets the needs of the community and commercial provider and the first step may be recognizing that those needs are not necessarily the same.
An area/project to watch is the North East Central communities. They held a broadband summit in February – inviting community leaders and providers. One of the stated outcomes from the summit was an effort to continue discussion between community leader and providers. Brian Estrem from U-reka Broadband spoke about the moving the public-private effort forward…
