The Emerging World of Broadband Public–Private Partnerships: A Business Strategy and Legal Guide

Local governments increasingly see before them exciting new opportunities to develop next-generation broadband in their communities—and to reap the many benefits that broadband will deliver to their residents and businesses. The goal of most of these communities is to get optical fiber connections to every home and business. Once the fiber is available, the sky is the limit in terms of offering gigabit-and-beyond speeds today and well into the future.

Fiber can support high-bandwidth services to the home and business, and also serves as the key platform for wireless broadband; it is fiber “backhaul” that enables wireless networks to offer high speeds. Fiber also offers symmetrical speeds—a key differentiator for next-generation service providers compared to incumbent telephone and cable companies whose upload speeds typically lag far behind download speeds.

Many localities are likely aware of new private sector investments in fiber and of municipal fiber success stories such as Chattanooga, Tennessee; Wilson, North Carolina; and Lafayette, Louisiana. In addition, emerging public–private partnership models are being developed and implemented by communities that lack the capital or expertise to deploy and operate fiber networks, or to act as Internet service providers (ISPs), on their own. These models include:

• Localities encourage new private investment through economic development incentives and other measures to reduce costs for private sector infrastructure deployment;
• Localities negotiate formal public–private partnerships that resemble transit and toll-road construction projects, with public funding and private execution; and
• Localities create hybrid models where a locality and private partner find a creative way to share the capital and operating risk related to a broadband network.

As localities evaluate broadband public–private partnerships, they should consider both the opportunities and potential pitfalls, and pay particular attention to three interwoven issues: risk, benefit, and control. These factors are the key considerations not only for state and local governments, but also for private sector network operators and service providers. A successful partnership must align each side’s needs, and will inevitably involve trade-offs within this framework.

The report also examines, with a public sector audience in mind, the major legal issues that may arise in a broadband public–private partnership project, from early planning through the negotiating stage.