The 5th utility: Gillette looking at expanding fiber network to homes

GILLETTE — The city of Gillette is looking at the concept of fiber-optic internet as a utility.
Fiber-optic internet, or fiber, is a broadband connection that hits speeds of 1 gigabit per second. The city has been building out a fiber network since the early 2000s.
Most of the city’s buildings are connected, and the fiber network goes all the way out to the Madison water pipeline source. Fiber also has been built out to facilities owned by other local government entities, such as the county, hospital and school district.
“You all have done an amazing job in Gillette in investing in a dark fiber network that is probably the best in the state,” City Administrator Hyun Kim said at a recent city council retreat. “Most cities do not have what we have. What can we do to use that for economic development?”
A dark fiber network is made up of unused fiber optic cables that have no service on them. When cables are carrying data, they have light pulses passing through them, and when they’re not, they’re not lit, hence the name “dark fiber.”
Fiber to the home will happen eventually, Kim said. The question is whether the city wants to help accelerate that by expanding its network to residents.
Big broadband companies are investing in fiber, but they’re focusing on large cities.
“It’ll take them a really long time to look at Gillette,” said Ry Muzzarelli, the city’s development services director.
“If we’ve learned one thing from the pandemic, it’s that connectivity is no longer just a luxury,” Kim said.
Muzzarelli said fiber to the home has been on the city’s radar since 2015. That year, the city hired a firm out of South Dakota to look at the community’s access to high-speed internet.
Back then, a full-scale citywide deployment to provide broadband had a price tag of about $50 million. The firm’s recommendation was that the city partner with an internet service provider to build out the network.
Muzzarelli said the $50 million figure isn’t too far off from how much it would cost today.
If the city picked a neighborhood as a test site for fiber to the home, it would cost $1.6 million to build out fiber to 290 households, and that’s if all 290 homes opted in.
It would cost $150,000 to design the network throughout the entire city, bid out the construction for that one neighborhood and for nine weeks of construction management, Muzzarelli said.
Ammon, Idaho, is a town of more than 17,000 people. In the early 2010s, the city loaned itself money to build the fiber network. Local improvement districts were created, and once 50% to 70% of the people in those districts opted in, it began construction. It bought boring machines and hired crews to run them.
It cost Ammon about $3,600 to build out the network to each household. This is paid back over the course of 20 years, or $23.50 a month. Ammon charged $16.50 for the city utility, and $10 for open access for any internet service provider to sell bandwidth, for a total of $50 per month per household for gig service.
Fort Morgan, Colorado, went with a public-private partnership. It used its reserves to build out a fiber network past every home and business. It partnered with an internet service provider for a 20-year agreement. The ISP handled all of the construction, installation, maintenance and customer service, and it pays a monthly lease fee to pay back the city for the construction.
This model had a lower adoption rate than Ammon with less than 40%, and it costs $92 a month for gig internet, but it was able to get it done more quickly.
“We’re not quite ready to make a recommendation,” Muzzarelli said. “We need to do some more due diligence on the staff side.”
There is a lot of federal funding available for broadband expansion, but Gillette’s been unsuccessful in the past because that money is directed toward communities with less coverage.
Some of the city council members expressed concern that the city would be creating a monopoly, but Muzzarelli said that if the city partnered with an ISP, that wouldn’t push the other ISPs out of the market. That company still needs to convince people to sign up.
“That ISP that you partner with, they can’t just hose the residents, because the residents won’t sign up and then they won’t have the funds to pay the city back,” he said. “They can’t just charge $200 a month, because they won’t get enough market take to make the math pay off.”
Some people won’t ever need gig service, while others aren’t going to want to change their internet service provider.
The fiber internet will be 100% optional, and no one will be forced to change if they don’t want to, Muzzarelli said.
“If you go with the Ammon route, all the risk is on the city, you don’t have a partner,” Muzzarelli said. “If the city doesn’t do a good job of convincing citizens to sign up … then we’re stuck with the entire bill.”
The city council was on board with city staff continuing to look into it. 
Councilman Tim Carsrud said this should be less a question of connection for homes and more a question of how this can attract businesses to Gillette.
“The folks in Gillette want us to diversify, bring in business, which brings jobs, which brings us tax money, and to me, yes I’d love to have faster speed at my house, but we want businesses to want to come here because of it,” he said. “The biggest conversation should be that.”
 
This story was published on April 2, 2022.