Open Access Networks Foster Competition And Benefits Subscribers

The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch. 

Hello everyone, and welcome to another edition of the Broadband Bunch. I’m Craig Corbin, thanks so much for joining us. Among all the cities across the nation, which would be considered to have the most sophisticated fiber network? The Big Apple? LA? San Francisco? Would you believe Ammon, Idaho, population 16,500? The city of Ammon has created a true local open access network where residents own the fiber and the service providers are in head to head competition. Network participants have access to a smarter grid that offers access to a variety of municipal services, including public safety and utility services with more planned in the future.

Craig Corbin:

Our guest today is the Mayor of Ammon, ID, Sean Colletti.  Sean served on the Ammon City Council for more than a decade and for the past two and a half years as Mayor. He received his BA in Political Science from Brigham Young University, earned his Juris Doctorate from the University of Connecticut School of Law and is a member of the Hopkins Roden law firm.  Welcome to the Broadband Bunch.

Starting the City of Ammon Fiber Optic Utility

Craig Corbin:

Ammon fiber is really a leader in open access for municipalities. Tell us how this all got started.

Sean Colletti:

Early in the 2006, 2007 timeframe, the city decided that we wanted to connect our utilities and our buildings with fiber optics. We’re a small city where we have approximately a little over 17,000 people. I think back of that time, we probably had 11 to 12,000 people, and we created a fiber ring. It was for the city only at that time, for our city use. We connected water tanks and pumps etc. so we could analyze what they were doing from the public works building and communicate better and more effectively internally.

Sean Colletti:

Then at some point, we realized that this fiber connects through the city and we could give access to it for businesses. So, we started allowing businesses to hook onto it and within a few years after that, we said, “Well, what about residents? We could allow residents to connect to it as well.” But the real magic happened, when we decided what the Ammon model would be.  The Ammon model is an open access and opt in model. If you want it, you can have it. If you don’t want it, you don’t have to have it.

Open Access Network Model

Sean Colletti:

Open access allows for multiple providers to compete to deliver service to the one line into your house. You own the line that runs into your house and that competition lowers the cost of the service dramatically. That model has really made all the difference and made it a very popular program, not just in Ammon, but throughout Idaho and the United States.

Craig Corbin:

That provides ultimate flexibility for your constituents and puts the onus on the providers from a competitive standpoint to offer the best bandwidth at the best price – making it a win-win for your constituents.

Sean Colletti:

Absolutely. We recently did a survey of our residents to determine the popularity of the program and it was 85% in support of it. That’s a pretty high support rate and we’re really just getting started.

Craig Corbin:

Obviously, it’s been well received. Would you give us an overview of the existing coverage or footprint?

Sean Colletti:

Prior to allowing fiber to go to residents, there were probably only two or three Internet providers in Ammon. So, we determined that we weren’t being served very well with Internet. We now have four providers on the Ammon fiber system, and they are competing, like I said, one with another and they’ve come up with approximately 16 different plans between them. We have about half of the cities’ residential neighborhoods connected to fiber so far.  But my plan is to get the entire city, all the neighborhoods connected within a five-year period from the date that I became Mayor.  I think we’ll be able to do that effectively.

Fiber Broadband as Public Utility

Craig Corbin:

Your Technology Director, Bruce Patterson has said that “the key component to your success has been that the broadband infrastructure is a utility and that you found a way to make it true public infrastructure”, just like roads and power. So the City has that component, along with choice and the tremendous value of competitive pricing.

Sean Colletti:

The separation of the infrastructure from the Internet is something that people don’t have very well in mind.  Policymakers especially, still don’t understand that really there are two components there. When we separate the two, we allow for the infrastructure to become a utility like we do with water and sewer and our streets. The true power of the Internet can really be unleashed when you allow for that competition. But currently, the standard in the United States obviously is for the Internet companies to control the infrastructure as well, which leads in a lot of cases to lack of competition.

Open Access Competitive Pricing

Craig Corbin:

We’ve talked about the fact that it’s very competitive from a pricing standpoint, give us an overview of average pricing that most of your constituents would see.

Sean Colletti:

I actually pulled up our portal. All of the residents that are on Ammon fiber have access to a portal that provides all of the different pricing.  I’ll start by going back to when we first started giving fiber to residents. Only a few years ago, a one gig connection was $99.99 on Ammon fiber. That’s not something that the city sets, obviously. We don’t get involved in what the service providers rates are. They decide those all by themselves.

Sean Colletti:

Last year, the rate dropped for one gig fiber down to $9.99. That’s the lowest cost fiber optic plan on our system, $9.99. And so then in June, once that happened, then we had another provider come in and say, “Well, I’ll offer a 250 Meg plan up and down for $9.88, and also a 100 Meg for $8.88.” And then not to be out done, they said, but for those that don’t have the financial wherewithal, we’ll also offer just basic 15 Meg up and down plan for $1.88. When that happened last June, I tweeted about it and it got nationwide attention, “Well, what’s going on in Ammon?”

Sean Colletti:

But then not to be out done, the initial company that had the one gig up and down for $9.99 said, “Well, we’ll just do a 15 Meg plan up and down for free. So the cheapest plan on our system is a free plan, 15 Mb up and down.”

Sean Colletti:

So, 15 Meg is just basic Internet, but you’d be surprised to learn that some of the Internet that’s offered in the area by incumbents doesn’t even reach 15 Mb. It’s just amazing how fast that happened in a matter of days and those prices have not changed ever since then.

Fiber Network Expansion via Local Improvement Districts

Craig Corbin:

That was a price war, just like the old fashion gas wars that you used to see between the providers. Obviously, there’s incentive to expand the footprint.  Would you talk about plans for building out to new homes?

Sean Colletti:

We’re currently in our fourth build-out. In Idaho, we found that the best way that we’re able to finance these build-outs is through a Local Improvement District (LID), but it’s called an opt-in Local Improvement District. So, you say, “If I want it, then I’ll opt in” and then we’ll build it out to those homes. Of course, fiber is passing homes that don’t want it. So in the future, they may request to get connected.  The LID model allows for the residents to pay off a construction component over a 20-year period and the amortization is helpful.

Sean Colletti:

What it does is it brings in an operation and maintenance component as well as a construction piece, and then add the service cost, so that the one gig plan is actually a little less than $50. Around $47 for one gig per month. Currently, in our fourth LID, we’re going to be passing over 650 homes. The fifth one, (that I’ve really pushed for and we’ll see if we can do this), will be a citywide LID that would connect any additional residents that want it. I do think that within the next few years, we’re going to be in every neighborhood, citywide.

Pride in Great Customer Service

Craig Corbin:

It’s fantastic that it is possible to provide that ultimate bandwidth at such a low price. A big part of your success has been due to the customer service that all of the team takes great pride in. Would you talk about the passion that all of those that are involved in this project bring each and every day?

Sean Colletti:

They really believe in what they’re doing.  It shows that in 2018, we were named the Consumer Product of the year in Idaho! Then this year, just only a month or so ago, we were recognized as having the cheapest Internet in America and the seventh cheapest in the world! That says a lot and it really lights a fire under our fiber optics team, because they just think, “Here we are, little old Ammon, Idaho, 17,000 people.” We have 55 city employees and Ammon is a really conservative, low tax city and the fiber team has done just the unthinkable.

Sean Colletti:

They’re asked every day by other cities in Idaho and across the United States, “How do you do that? And how can we do what you’re doing?” And so, they’re talking to city leaders across the United States, in the limited spare time that they have, trying to spread the word and to encourage others to do what we’re doing, which in turn, helps what we’re doing.

Craig Corbin:

It really spreads the message that it is possible for any size municipality to be successful with fiber broadband.  You referred to interest from other sister municipalities across the country and I know that you’ve got some projects going on right around the corner in Idaho Falls. Tell us about that.

Sean Colletti:

Idaho Falls is also expanding their fiber optic system. While we’re not doing exactly the same type of program, theirs is also a competitive program – it’s open access with competitive pricing. We are partners in this. We are sister cities. Combined we total probably about 85,000 people and we support each other all the way along.  We have mutual interest in expanding fiber optics throughout our county.

Sean Colletti:

So I’m excited! Every time that they move into a new neighborhood, I get excited. And I think every time we move into a new neighborhood, they get excited. It’s going to make our little corner of the earth, Bonneville County, Idaho, a very nice place to work from home and step out right into the beautiful outdoors – to have the best of both worlds in a low tax, low pollution nice place to live.

Great City, Great Fiber Infrastructure, No Contracts, No Data Caps

Craig Corbin:

That’s a pretty great combination.  Ammon is growing at a rate of about 1000 residents a year. And so obviously the word has gotten out about the healthy living, great facilities and marvelous infrastructure in a beautiful part of the world. It has to be rewarding, both personally and professionally, to look at what is in place, what’s growing and take great pride in it.

Sean Colletti:

I’m very proud of it.  It’s a really bright shining spotlight on our city and it makes it fun to continue to do the job of the Mayor. I’m a part-time Mayor, my full-time job is as an attorney. But I love the time that I get to spend working on City of Ammon projects and it really has been highlighted by what we’re doing in fiber.

Craig Corbin:

You are also helping bridge the digital divide.  We talked about the pricing and the bandwidth availability, but also notably there are no data caps, no contracts, and the residents can switch providers at any time.

Sean Colletti:

That’s correct. When the cable is hooked into the fiber, it really is a 1 Gig up and down system. It’s just amazing! Even with a Wi-Fi connection, you’ve still got lightning fast speed in your home. Without data caps, there’s really nothing that can hold you back from doing what you need to do on your system if you’ve got a residential fiber.

Join us on The Broadband Bunch Facebook page to see the latest episodes, news and photos. The Broadband Bunch is sponsored by ETI Software.