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    • Seattle, WA

    Introduction

    Seattle is, in a few words, not very similar to East St. Louis.  In fact, the city government is conversely very trusted by the citizens, at least for its ability to handle a project of this nature.  (Early polls showed that the citizens were very receptive to the idea of the City helming such a project.)  It may not be immediately obvious what lessons can be learned from Seattle’s story, but the biggest might be that caution should be exercised when dealing with commercial partners.  Also, Seattle serves as an example that large projects like a broadband initiative involve a lot of beaurocracy and negotiations, which can easily consume more time than expected.  Seattle is now considering the possibility of stimulus funds.

    Actors & Initiation

    Seattle has recently been rated by a few different magazines as “one of the most wired cities in the U.S.”  However, the City government recognized in the mid 2000s that this was not enough to keep up with the already recognized demands of the present and future, particularly for business.  According to the Deputy Director of the Department of Information Technology, “While we do have providers that do provide Internet for small businesses, the businesses that are outside the core area of downtown, it is very costly and not always at the speeds that are necessary for business.”

    It was the City, with the involvement of City Light (the municipally-owned electric utility), that initiated the project.  However, funds were not to come from a public referendum, nor from grants (originally).  The idea was that all funds would come from the private sector, which might include investments from potential commercial partners.  It is worth noting that this project was initiated in 2005, well before the Obama Administration broadband stimulus funds were available to be considered.

    Plans & Considerations

    Seattle originally considered several different options as far as who was to build the infrastructure and who was to manage/sell service over the infrastructure.  Basically, it was a matter of the type and amount of control that was divvied up between the public sector (the City) and the private (contracted companies).  Four major options were considered.

    • The City could contract with a commercial entity that would both build and sell services.  This option was more quickly discarded.  (See Philadelphia for where this model led to failure.)
    • The City could build infrastructure out to neighborhoods, and then attract investors/companies to provide last-mile service
    • The City could build Fiber to the Home, and contract with private entities to provide the services over the infrastructure
    • The City could build Fiber to the Home, and also act as the service provider, which would be essentially like “Creating another utility”

    In 2007, the City contracted with a consulting firm to provide a Feasability Report examining the outlook and potential problems of these different basic possibilities.  (The Report identifies the Retail, Wholesale, and Hybrid models of construction & service, which basically overlap with the kinds of propositions above but define some specifics.)  I found this document to be extremely valuable.

    The most key point to be taken away from the document (especially with relation to the ESL possilibities):

    • The “Wholesale” model (in which the City owns the infrastructure and charges retailers for the ability to sell service over it to customers) probably only works if you can trust the retailers you are contracting with.  ISPs currently tend to provide much greater download speeds than upload speeds.  There is also concern about the common practice of ISPs to “cherry pick” customers, which means to focus almost exclusively on selling the more expensive services to the approximately 20% of customers who will pay for them, and neglect marketing to and servicing the other 80% of customers.  Apparently, the pool of existing companies in the Seattle area is not necessarily diverse or considered optimal for finding partners that would be expected to work closely enough with the goals of the City.  Know your commercial partners.** THIS IS KEY: “One of the biggest concerns with a wholesale model is that there is no mature set of retailers in the U.S. waiting to provide services over this type of open access network. There is a budding retail market in Europe, but the only open access network in this
      country is in Provo, Utah and they have attracted only one service provider. The eventual vision for an open access network would be to have dozens of service providers offering a wide array of different services. Such a network would be high in innovation and have enough competition to keep prices very competitive. The wholesale concept loses much of its appeal to the City if there are only a few retail providers. If the handful of providers fails, then the City fails. It would be particularly troublesome to rely on retail providers that are trying this economic model for the first time. There is little downsideto such a company abandoning the market, but a huge downside for the City.” (p.24 of the Feasability Report, emphasis added)

    Now

    As it stands, Seattle still appears to be in negotiations for this project, and little action has been taken yet.  An article from November 2009 claims that the biggest obstacles are currently “(1) money and (2) political will.”  Seattle’s previous mayor had been paying less attention to the project.  “[Former Mayor] Mallahan favored leaving local broadband deployment in the hands of telecom companies. When the issue came up during the campaign, the former T-Mobile executive said that public broadband is ‘not even close to being a priority’.”  While the City’s budget is currently tight, Seattle’s recently elected new mayor Mike McGinn has plans that focus more on efforts to bring affordable access to underserved areas.  This is where hopes for a stimulus grant enter.  Seattle is currently in the process of investigating and possibly applying for such a grant.

    In some ways, Seattle’s plan is like Lafayette’s (See Lafayette, LA).  Fiber would ideally become a utility.  Mayor McGinn’s campaign page, in fact, expressed optimism for Seattle’s ability — in fact, necessity — to undertake this project.  “Seattle City Light, the Metro bus system, and our municipally owned water system are now national models that have proven their worth time and time again.”

    Competition?

    Meanwhile, the private sector has been bringing new and pervasive Internet services to the city of Seattle.  One of the most notable is a large WiMax network from Clearwire, which is actually owned by several investors, including Sprint-Nextel (holding by far the largest share), Comcast, Intel, Time Warner Cable, and Google.  This wireless network is very pervasive, covering a large portion of the Puget Sound region, not just Seattle.  A coverage map can be seen in the article Clearwire to turn on WiMax service….  The service just went on-line at the beginning of December 2009.

    The Clearwire network definitely has the advantage of being pervasive.  However, its speeds are limited (3-6mpbs, possibly up to 10mpbs).  This is clearly not sufficient for business usage, and so this network does not exactly impede the City’s plans if business development is still one of its goals in the project.  Also, subscribers are locked in to having to pay the company’s subscription fee in order to use the service, and so this does not meet the demands of underserved areas where users still can’t afford it.

    There is still a demand in the city of Seattle for community broadband infrastructure and service.  However, from the looks of it, none of the major providers listed above are likely now to be partnering with the city.  If Seattle does not receive stimulus funds, it may once again have to reevaluate its plans for this project.

    Resources

    Clearwire (=recent)