Viewpoints
Economic Development
Flagstaff’s fiber story is the latest of many public-private partnerships that are laying the groundwork for sustainable economic development.
By: Gary Bolton, President and CEO, Fiber Broadband Association (FBA)
Bringing fiber into communities is not an easy task by any stretch of the imagination, often requiring flexibility, innovation, and a true willingness for public and private sector organizations to work together for the good of the community. I’ve seen and talked to many municipalities and service providers over the past five years that have built constructive relationships that have helped to accelerate deployment, reduce costs, and get homes and businesses online with reliable, resilient, high-speed broadband as swiftly as possible.
When everyone works together towards the common goal of next-generation broadband, it is a true win-win for all involved. Getting fiber in the ground and on poles faster through cooperative efforts to reduce administrative overhead and speeding up paperwork through streamlined permitting benefits everyone, since less time waiting means construction field crews won’t be left idle waiting on approvals. Visible and vigorous community support along with willing anchor customers are vital to reassuring service providers and their investors that going into a new market is a solid business choice, instead of a riskier “If you build it, they will come” strategy that only works out in baseball movies.
Flagstaff, once a broadband desert, to become a fiber broadband oasis
The city of Flagstaff is in the scenic Arizona mountains and was, until recently, a broadband desert. The municipality was looking to upgrade its legacy microwave network, seeking a solution that could connect its facilities together in a cost-effective way. Further, local and state economic leaders wanted to provide readily available broadband throughout the county by opening up more economic opportunities for rural Arizona through remote work, better health care provided via telemedicine, and with the infrastructure for businesses to move into the area.
Flagstaff’s estimated cost to build its own limited fiber network for government use to connect 34 city-owned facilities ran towards $20 million dollars, far outside of the city’s budget. It had examined building its own municipal network, but city leaders saw getting into the service provider business came with significant upfront costs and operational challenges.
Entering the process
Instead, Flagstaff started looking for a private sector firm willing to engage in a mutually beneficial partnership. Flagstaff had some assets to offer as part of a larger arrangement, including $2 million in ARPA funding and the city’s existing conduit network, as well as a willingness to put in time and resources to streamline city processes which affect construction.
The city first issued an RFI, which led to and helped shape a formalized RFP for a public-private partnership that would both provide for the local government’s immediate needs and create an anchor customer, which could act as a launchpad for a service provider to construct a fiber network for business and residential use.
During the RFI/RFP processes, the city government and its divisions had to unite under one vision. Civic leaders made high-speed quality broadband the mission and a top priority for the community. This goal helped clarify and provide arbitration among the competing interests of different departments and stakeholders working through their differing needs and missions, ranging from protecting roads and public safety to maximizing revenue. Fiber was seen as the scaffolding for future growth, and as a long-term asset for the community that was desired by households and businesses alike.
Public-private partnership required substantial discussions
Two service providers expressed interest in Flagstaff’s RFP, with Arizona-based Wecom Fiber emerging as the best option due to solid financial backing from a global private investment firm and its prior and ongoing involvement with dozens of local community and charity organizations across the state, demonstrating its long-term involvement and commitment to the areas it served.
Wecom had built fiber in eight different rural counties in the state, establishing its capabilities and credentials as a service provider. However, creating a public-private partnership between Wecom and the city required substantial discussions to develop a clear understanding of how government processes would work on issues of concern, such as permitting and right-of-way fees. There was also a need to open up discussions on improved construction techniques not yet embraced by city engineers.
The city agreed to supply access to its conduit on a 20-year no-cost lease agreement while Wecom would build conduit to link to the city’s existing infrastructure as part of the process of its larger construction commitment to connect the city’s buildings, as well as connecting homes as businesses.
Flagstaff recognized it would need to make changes to its permitting system to facilitate construction. The city streamlined its permitting process so it could flow faster and dedicated the equivalent of one engineer to processing permits, with the ability to hire additional personnel if needed.
Overcoming controversy
Controversy came in the form of microtrenching. City engineers were initially resistant to the idea, given the public problems other municipalities saw around initial deployments, with Flagstaff’s RFP explicitly stating that the city didn’t allow the process.
Wecom continued dialogue with the city to find a path forward, since microtrenching would help to accelerate fiber deployment in a cost-effective manner. The city, however, was concerned about the impact of microtrenching could have on repaired roads and sidewalks, especially given Flagstaff’s dynamic winter weather and its impacts over the 20 years of a road’s expected lifetime.
Further discussions spurred trips to Utah by city engineers to examine microtrenching projects half a decade old, and how they handled freeze-and-thaw cycles. Next was an agreement for a small scale a small-scale pilot, so Wecom could demonstrate it could execute microtrenching with minimal issues and maximal benefits.
Community feedback was all positive, while construction crews were able to quickly move in and out with minimal disruption to roads and traffic. By the end of the pilot, the city enacted new microtrenching standards, enabling Wecom to use all of its different construction methods as appropriate.
Flagstaff’s fiscal fiber benefits
Once completed, 208 miles of fiber within Flagstaff’s city boundary will be deployed, passing over 30,000 locations with construction of the fiber network expected to generate an estimated $100 million for the local economy over the next five years.
Wecom expects to invest a total of $50 million in direct spending on fiber broadband infrastructure. Applying the Information Technology & Innovation Foundation’s calculated 2.45 multiplier for total economic benefits of broadband investment, the total economic impact over five years is expected to be in the range of $120 million.
Construction of the network will drive anywhere from 55% to 60% of the benefit through initial direct spending for a variety of things, including engineering, supporting construction crews with spending on hotels and short-term rentals, restaurants, groceries, fuel, equipment rentals, hiring local subcontractors, and purchasing materials from local suppliers.
Hundreds of jobs to be sustained
The Flagstaff project is expected to support or sustain between 125 and 175 direct construction jobs, plus another 250 to 350 indirect jobs, including to suppliers and sectors like local services logistics, retail, and hospitality. Workers need places to eat, sleep, and relax on the weekends.
The other 40% to 45% percent of durable ongoing economic development for the Flagstaff area include annual benefits continuing throughout the life of the fiber network, such as jobs for operations and maintenance, long-term network spending, and vendor support. Secondary benefits include increased broadband adoption and digital productivity, property value increases of 3% to 5% for fiber-connected homes, small business creation opportunities, and household benefits such as telehealth, remote work, and educational benefits.
It is my wholehearted belief that service providers and local government need to be active partners in building the nation’s next-generation telecommunications infrastructure by working together to reduce building frictions, which result in lower deployment and operational costs. Ultimately, that benefits the communities they serve. Flagstaff is the latest of many models of public-private cooperation across the country that are deploying the building blocks for sustainable economic development.
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