The municipalities have no money to build, and more importantly, to maintain and continually upgrade, such networks. Heck, they can barely maintain utility systems that evolve far slower than internet connectivity: power and water. See: http://www.nytimes.com/2009/04/18/us/18water.html?_r=0. People outside of HN won't be anywhere near sufficiently eager to earmark sufficient public dollars to properly maintain such networks, not when pensions systems are underfunded and schools are putting teachers on furlough.
I don't know enough about fiber to have a very intelligent discussion about it, but from what I've heard, one of the nice things about fiber is that you can run increasing amounts of bandwidth through the same fiber once it's laid as the endpoints improve.
I would expect that the buildout could be funded by a municipal bond issue, with the repayment being handled via the revenue from the customer-facing companies that lease access to the infrastructure. I've heard of municipal networks like this being run profitably and being repaid in a reasonable timeframe (on the order of a decade or two), but unfortunately I don't know more than that.
I think the point is: local governments can barely pay for essential services (water, power) that most everyone in their district needs. High speed fibre that a small subset of their constituents would use is way down on the list.
I think you're right that that was his point. It wouldn't necessarily come out of their budgets, though, it could be done with debt financing on the project itself, repaid purely from the revenues from leasing access to the network to the customer facing ISPs.
I also don't think it would necessarily be used by a small subset of the constituents - it seems as though it could potentially be much cheaper than alternative high-speed arrangements, since the customer facing companies would actually have some competition. Once the initial construction debt was paid down, the govt. could likely reduce the access lease cost, which would be passed on by the competitive ISPs, further enabling access by poorer residents.
I think it would be great for the long-term economic prospects of those areas as it broadens access and makes heavy uses like remote work more viable.
Plus, a good internet connection is a much cheaper form of entertainment than many of the alternatives, including cable, so it could actually save many people money.
Large capital expenditures undertaken by municipalities are usually funded by bonds.
A municipality would issue bonds to fund the replacement of their water mains, which are breaking and pouring water into the streets every winter. It would issue bonds to renovate their elementary school, which has a leaking roof, asbestos insulation everywhere, and drinking fountains that dispense leaded water.
Municipalities have limited borrowing power, so muni fiber does have to compete against all those other priorities. And it's been a tough market for muni bonds lately.
What's more, muni fiber would be considered a non-essential revenue bond. These types of bonds carry higher interest rates than essential services bonds, or general obligation bonds.
I imagine that a fiber rollout would create entirely new revenue, though, where upgrading water mains and other existing infrastructure wouldn't, so it might be viewed by the govt as offsetting any difference in interest rates?
Well, it's pretty common for municipal power companies to return a profit to the city, which is then used to offset property taxes. In fact, a number of successful muni fiber projects have been managed by the municipal power company, or the municipal cable provider.
The problem is that a lot of municipalities aren't run all that well. Local politics can sometimes be very ugly. Muni fiber only really works when the municipal government works. Sadly, that's not as common as it ought to be.
Hm, that is a shame. I wonder if there's a way for technology to help change that. Maybe by offering a graphical budget breakdown of spending that the public can browse? I remember seeing something like that for the federal government, and it was pretty eye opening. I guess there's no incentive for a terribly run government to roll that out, though.
