Contributed Article

How to unlock broadband investment to derisk fiber projects through effective strategies like anchor tenancy and public-private collaboration.

By: Richard Watts, Chief Commercial Officer, International Fiber Alliance

As municipalities across the United States look to close the digital divide and futureproof their infrastructure, an increasingly effective strategy is emerging: segmented ownership of broadband networks, with municipalities building part of a network and acting as anchor tenants. This model can unlock private funding, deliver long-term returns, and ensure equitable, sustainable broadband access.

Municipal demand: A strategic role in broadband expansion

Municipalities depend on robust digital infrastructure to deliver a wide range of essential public services including libraries, traffic control, street lighting, water management, public safety, healthcare, and education. All these increasingly rely on high-speed, reliable broadband connectivity. In most cases, this connectivity must be delivered via fiber, whether to the premises or point of use, which requires significant capital investment, along with technical and commercial know-how.

Traditionally, broadband infrastructure projects have been led by private investors, operators, or ISPs. However, cities cannot rely solely on the private sector to meet their evolving digital needs. Instead, municipalities can play a catalytic role by co-investing in infrastructure and committing to use the network for their own service delivery. This act of becoming an anchor tenant, guaranteeing usage across critical services, establishes a predictable baseline demand, reducing the financial risk for private partners and making projects more attractive to investors.

Just as anchor tenants in retail developments provide financial security and attract complementary businesses, municipalities can serve as the cornerstone of broadband network financing, unlocking broader investment and accelerating deployment

A Timely imperative: Delays in BEAD funding

Recent delays in the Broadband Equity, Access, and Deployment (BEAD) Program, due to federal administrative bottlenecks and shifting policies, have highlighted the urgency for local initiatives. Inaction risks stalled development, economic setbacks, and delayed outcomes. Municipalities should not wait. By planning and launching projects now, they can leverage their own demand to attract investment and deliver on their broadband commitments.

Strategic investment to derisk and accelerate deployment

Municipalities don’t need to fund or control the entire broadband network but can play a
pivotal role in its success. By investing selectively in key parts of the infrastructure, they can
significantly derisk the overall project, making it more attractive to private investors and
accelerating deployment timelines.

Middle mile networks: Municipal funding of an intra city fiber ring that interconnects civic assets such as schools, libraries, hospitals, and government buildings creates immediate utility and anchors the network for high-priority public services. This reduces the public cost and improves the commercial case for  private partners to extend coverage to homes and businesses.

Last mile deployment: This segment delivers service to end-users and typically represents the most capital-intensive portion of the network. Municipalities can reduce their financial exposure by enabling private investors to take the lead here and focus on connecting end points for municipal services such as street cameras and public buildings that the network passes.

All these uses can then be operated over the same unifying system that intelligently differentiates city, ISP, or other commercial customers over the network.

By owning the segments that align best with public service delivery, cities maintain strategic control and gain leverage to shape broader market outcomes, all while inviting private investment to complete the picture.

Case study: Stoke-on-Trent, U.K.

The city of Stoke-on-Trent in the United Kingdom offers a compelling example. The city invested in middle-mile infrastructure by building a core city fiber ring with an awarded £9.2 million in government funding. It partnered with an open-access operator, which provided all active network electronics and operated the open-access network. This hybrid ownership model accelerated gigabit deployment, ultimately resulting in total full fiber investment for the access layer of the network passing all residential businesses. Also included were municipality services including street cameras, connectivity to municipality buildings, healthcare services, care homes, schools, and IOT devices.

U.S. case studies: Segmented ownership in practice

UTOPIA Fiber (Utah): A consortium of 11 cities that jointly own fiber infrastructure and lease it to ISPs under an open-access model. This ensured competitive service provision and has expanded high-speed access significantly across the state.

Ammon, Idaho: The city owns the fiber network and enables a dynamic marketplace of ISPs, giving residents choice and affordability. Ammon’s software-defined networking model is often cited as a national best practice.

Fort Worth and Lake Cities, Texas: These municipalities invested in middle-mile infrastructure to connect public institutions, creating a cost-effective base for private providers to extend last-mile connections.

The opportunity for part public ownership

Owning parts of the network enables:

Strategic control: Municipalities set access and usage terms aligned with public sector goals.

Revenue Generation: Wholesale and leasing fees generate long-term income.

Derisked investment: Public investment in middle-mile assets lowers entry costs and risk for private investors.

Futureproof services: Municipal services benefit from low-latency, high-capacity broadband infrastructure.

Segmented ownership aligns stakeholder interests. A city that owns a fiber ring between public buildings can serve its own traffic while reducing build costs for last mile investors or ISPs extending to homes and businesses.

Importantly, municipalities don’t need to finance the entire network. They can fund only the segment that best aligns with their strengths and priorities. This lowers the barrier to entry and makes participation feasible for other parties.

Funding options for municipalities

With U.S. cities looking to build or expand fiber networks, it’s important to consider the funding options available.

Note these initiatives can be combined:

Municipal bonds: Municipal bonds are similar to a mortgage for a city. The municipality borrows funds from investors and repays them with interest over time. These bonds are often used to finance long-term infrastructure like broadband. Interest rates tend to be lower because the interest is often exempt from federal (and sometimes state/local) income taxes, making them attractive to investors seeking tax-efficient income.

Public-private partnerships: Where the city and a private company team up. The city might build the city ring network, while the private company provides electronics and runs the network. This utilizes the expertise of the municipality in building the network while the private partner handles operations and brings broadband expertise.

Federal and state grants: Grants from federal or state governments, such as BEAD, helps cities build broadband networks. Mostly focused on rural or areas requiring state intervention where it’s not viable for private investment.

Special assessment districts: Fees added to property taxes for residents or businesses that directly benefit from the broadband project.

Municipal utilities: Some cities create a dedicated municipal broadband utility, similar to water or electricity departments, to build and operate fiber infrastructure. While forming a utility doesn’t generate funding on its own, it enables the city to ring-fence broadband operations under a distinct legal and financial structure. If incorporated as a separate legal entity, the utility could raise funds specifically for broadband, such as through revenue bonds or public-private partnerships.

Anchor tenancy: With the city as the first customer, the city commits to using and paying to use the network for schools, libraries, city offices, public safety, and traffic systems. This gives investors or partners a guaranteed baseline of income, which makes the whole project less risky and more attractive.

Municipalities can make great partners

Barrier busting: With municipalities taking a proactive role in the digital network they can play a strategic role in streamlining tasks that often inhibit or delay deployment adding costs and delay projects. With partnership comes process, thus speeding up procedures to open roads and manage licensing.

Developer mandates: Cities can require that all new housing or commercial developments include fiber infrastructure just like electricity, plumbing, or roads. This is a cost-effective way to install fiber during construction rather than retrofitting later. It ensures that every new development is digitally futureproof and helps eliminate the risk of future digital inequality.

Case study city ownership

Global Example: STOKAB (City of Stockholm)

Stockholm’s city-owned company, STOKAB, is a global benchmark for municipality ownership and open access fiber networks. Since the early 1990s, STOKAB has built a comprehensive fiber network available to any service provider on equal terms.

Key successes: Enabled hundreds of ISPs to operate competitively. Attracted data centers and global businesses to the city. Over $300 million invested in fiber ring network and $150 million on FTTH. Supported Stockholm’s leadership in digital innovation and smart city applications (click here to view the full case study).

Lesson for U.S. cities: Public investment in open-access infrastructure can pay off generating revenue, attracting economic development, and improving services across education, healthcare, and public safety.

Partnering for success: The ‘commercial glue’ role of the fiber operator

Taking a role in fiber ownership comes with challenges, so partnering with a neutral host and commercial integrator derisks broadband investments by utilizing the expertise of a market player able to bring together municipalities, ISPs, investors, and technology partners into one open access technological and commercial ecosystem.

Supporting fiber investors by enabling:

• Asset monetization through multi-tenant service models
• Operational efficiency via automation and integrated software platforms
• Community impact, delivering smart city services, digital education, and healthcare support

Fiber operators ensure vendor-neutral infrastructure, streamlined ISP onboarding, demand aggregation, and go-to-market coordination, all while maintaining performance.

By combining commercial oversight with technical orchestration, the fiber operator partner unlocks both investor returns and public value from municipal broadband networks. This “commercial glue” approach has parallels with successful digital platforms: Airbnb, Uber, and iTunes, where the operator doesn’t own all assets but orchestrates their use efficiently. The fiber operator plays a similar role: harmonizing access, service delivery, and market growth.

The Stoke-on-Trent example and U.S. case studies demonstrate that municipalities can lead without going it alone.

Making the case to funders

Municipalities need clear, structured messages: “We will build the fiber ring and take services over the network if you build out to homes and businesses.”

This can create investable opportunities, particularly amid BEAD uncertainty. Projects that combine modest public investment with strategic partnerships are more likely to secure funding and support.

This modular financing model empowers cities to take partial ownership in their digital futures without being overwhelmed by cost or complexity. They maintain control, generate recurring revenue, and attract capital while reducing the risk of dependence on any single provider.

Picture a city where the public owns part of the digital highway and private providers compete to offer services. Where city networks support local traffic and anchors community development.

Final thoughts

Public investment in open access infrastructure can pay off, generating revenue, attracting economic development, and improving services across education, healthcare, and public safety.

Cities don’t need to build and fund entire broadband networks alone. By combining tools like municipal bonds, anchor tenancy, grants, and partnerships, they can control their digital future while managing cost and risk.

Call to action

As federal programs stall, municipalities must act. Segmenting network ownership while leveraging municipal demand presents a proven, fundable, and community-driven strategy.

International Fiber Alliance (IFA) is a neutral host fiber operator. IFA aggregates network investments through a single platform system allowing multiple service providers to deliver innovative solutions to their customers.

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