Build the Fourth Utility | Black & Veatch

Build the Fourth Utility

Build the Fourth Utility

By Steve Truebner Sales Director - Connected Communities

The “new normal” has become a common phrase during the current COVID-19 pandemic. As individuals are forced to move their lives online, the pandemic accelerates the trends that are already driving the digital economy. As Microsoft CEO Satya Nadella recently observed, “We’ve seen two years’ worth of digital transformation in two months.” 

Even after a vaccine, this trajectory is likely to continue because our digital culture is shifting. Laptops and software are rapidly replacing textbooks. Working from home and video conferencing have been validated and now embraced as cost-saving measures by corporations. Telehealth services are now common, and allow healthcare providers to offer flexible, efficient critical care for patients.

High-speed broadband internet enables our new normal, which is why it is considered “The Fourth Utility”—broadband is essential for citizens to effectively participate in society. Like electricity in the 1930s, many rural communities lack basic internet connection. But the truth is, rural and urban communities struggle with bandwidth needs, provider options, and affordability. This means that whole communities, regardless of location, are missing out on economic, educational, and social opportunities.

“Reliable high-speed broadband is one of the greatest influencers on a community’s quality of life,” said Fred Ellermeier, vice president of Black & Veatch’s telecommunications business. “It’s also a chief indicator of which businesses and industries stay competitive.”

Multiple economists and studies have proved the relationship between internet speeds, enabled by fiber, and economic impact on a community. The benefits of local job creation, educational opportunities, career training, employment options, entrepreneurship, eCommerce, property values, and government innovation can increase local gross domestic product by 1-2% annually for a period of 10 years.  

This economic growth and improved quality of life is why elected officials across the country are exploring locally-owned broadband. However, many times they find that traditional financing models do not produce the expected benefits because the return on investment is almost solely focused on customer subscriptions or take rate. Just because service is available does not mean residents will sign up. 

“Communities are beginning to think about digital infrastructure as a ‘start-up utility’,” according to Chris Perlitz, Managing Director with Municipal Capital Markets Group. “Developing a funding strategy at the front end of the process helps manage the payback expectations and keeps the original project goals in sight.”

Building critical infrastructure, such as roads, bridges, and utilities, requires a forward-thinking financial perspective for the long-term investment. The public-private partnership (P3) model, which shares investment and risk among the entities, has emerged as a best in class approach for broadband infrastructure. 

P3s are advantageous because the public entity owns the fiber asset, just as they would a road or bridge, and uses the network to optimize government services. The private partner, in most cases an internet service provider, would operate the system and provide service to the community. Other investors, parties of interest, and applicable grants can be incorporated into the partnership. Collectively, the shared investment approach satisfies multiple financial thresholds and delivers equitable broadband throughout the community. 

Communities with project designs that are “shovel-ready” or nearly complete are better able to take advantage of infrastructure funding opportunities. Now is the right time to assess options and develop a plan for broadband deployment. As a leader in the design and deployment of broadband infrastructure, Black & Veatch recommends these steps for a successful broadband deployment:

  1. Conduct a Feasibility Study – This is a high-level assessment to verify the opportunity and options for a broadband project. The study components include community objectives, local market overview, customer surveys, conceptual design, cost estimates, deployment options, and funding scenarios. 
  2. Address Long Lead Times or Program Hurdles – The feasibility study highlights technical, logistical, or regulatory issues that will need to be addressed. Tackle tough issues head on and address long lead-time items early, such as asset mapping, service provisioning, billing, operational needs and operations integration.
  3. Create a Deployment Plan – Once the feasibility study is complete, it’s time to advance from the conceptual design to the detailed design. Black & Veatch’s recent webinar shares best practices in the engineering, procurement ,and construction of broadband infrastructure.

Bandwidth needs of communities, industries, and businesses will continue to grow exponentially each year. Community leaders that build their Fourth Utility will effectively close the urban and rural digital divides, and open economic, social, and educational opportunities for their citizens.

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