New England Cable & Telecommunications Association, Inc.

101 Federal Street ⚫ Suite 1900 ⚫ Boston, MA 02110

Tel: 781.843.3418

September 17, 2020

Paul F. Matthews
Executive Director & CEO
Worcester Regional Research Bureau, Inc.
390 Main Street, Suite 208
Worcester, MA 01608

Dear Director Matthews:

On behalf of the New England Cable and Telecommunications Association (NECTA), I am
writing in response to the Worcester Regional Research Bureau’s report (WRRB report),
“Broadening Broadband,” released in July. NECTA is a five-state regional trade association
representing substantially all private cable telecommunications companies in Massachusetts,
Connecticut, New Hampshire, Rhode Island and Vermont before both legislative and regulatory
bodies. In Massachusetts, NECTA represents Charter, Comcast, Cox Communications and
Atlantic Broadband which is headquartered in Quincy, MA. Collectively, our members invest
over $1.5 billion annually in the Commonwealth and employ over 6,000 Massachusetts residents
throughout New England.

Charter’s long-time commitment and investment in Worcester is undeniable with about 500
employees based in Worcester in two large facilities. Charter’s Southern New England
Management team responsible for three states is based in Worcester on Barber Avenue. This
facility has the management team for MA, NH and CT for field operations and field engineering
and has a large employee training area. Charter also has a regional customer call center and
regional newsroom and studio on Higgins Street. In January, Charter launched Spectrum News 1,
a new 24/7 format for high-quality, hyperlocal news, weather, and sports coverage for Spectrum
customers in Central and Western Massachusetts.

NECTA and the companies we represent truly understand the importance of reliable broadband
connectivity for the residents and businesses of Worcester, particularly during this time of
COVID-19, so we appreciate your focus on this important topic. However, we strongly disagree
with many of the report’s findings and its ultimate recommendations. Studies have been done of
similar efforts to provide government-owned broadband that provides a clearer picture on the
costs and risks associated with municipal broadband projects. As the WRRB report makes clear,
broadband is extremely complex and requires very costly infrastructure, and it is important for
the residents and policymakers of Worcester to understand all the facts before any taxpayer
dollars are spent on considering this initiative.

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 I. NECTA Companies’ Commitment to Worcester and Massachusetts

Massachusetts has an unrivaled position in the nation’s innovation economy, and broadband
providers are at the heart of driving that economic development success. In all four corners of the
Commonwealth, private broadband infrastructure investment is at an all-time high and providing
ubiquitous world class gig speed capable networks. As one of the most connected states in the
country, 97.9% of the Massachusetts population has access to high-speed broadband1.

In the wake of the COVID-19 crisis, Massachusetts broadband providers have taken
unprecedented steps to ensure that Massachusetts families and businesses stay connected to the
internet. Through opening up thousands of free Wi-Fi hotspots, keeping service connected for
those falling behind on their bills and expanding low-cost internet adoption programs for
families struggling to meet basic needs, these steps have enabled thousands of Massachusetts
families, businesses, and students to access vital internet services for work, health care and
education. This commitment to ensuring that the most residents and businesses get high-speed
connectivity is evident in the investment NECTA member companies make in their networks
year after year.

II. Past Investment Equals Connectivity and Competition in Worcester

In Worcester, direct investment by Charter has resulted in the availability of high-speed

broadband with speeds including 400 MB up to 1G available to all homes and businesses.
Contrary to the WRRB report stating that 18 percent2 of Worcester residents have no access to
the internet, at least 99% of Worcester residents have access to Charter’s proven and reliable
high-speed broadband service, including their low-cost broadband plan Spectrum Internet Assist
for low-income families. Further, in addition to Charter’s high-speed broadband, Worcester
residents also have internet options from other private providers, including Verizon, HughesNet
and Viasat. These data points are extremely important, as the report leads readers to believe that
a large percentage of Worcester residents have no access to internet and most residents lack
effective competition when neither claim is accurate.

III. Worcester’s Challenge: Broadband Adoption

There is a fundamental and meaningful difference between having access to broadband

connectivity—meaning the physical infrastructure exists outside your home or business, and the
service is available to purchase—and the actual adoption or purchase of that broadband service.
This misunderstanding will lead people to believe that physical broadband infrastructure is the
solution needed to solve access problems, when programs to help with broadband adoption are
the most efficient, least costly and much more effective solution. While there are still some
towns in Massachusetts that are unserved by broadband due to the lack of broadband
infrastructure, Worcester is not one of them. For those remaining unserved towns, the

1
FCC Report: https://docs.fcc.gov/public/attachments/FCC-20-50A2.pdf
2
Page 3 of the WRRB Report cites data from the U.S. Census Bureau’s 2018 self-reported American Community
Survey that 67% of city households had a broadband internet subscription and 18% had no internet access of any
kind.

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Commonwealth’s Massachusetts Broadband Institute (MBI) has policy solutions and funds in
place that are actively working to get those areas connected.
The reality is, despite the widespread buildout and existing availability of broadband fiber
throughout Worcester, barriers to adoption exist that prevent some families from subscribing to
existing service. Barriers can include subscription costs, language barriers, digital literacy, and a
host of other complex societal issues that make it difficult for families to purchase these services.
Building extremely expensive, duplicative physical infrastructure will not address these barriers
or dramatically increase adoption rates. In fact, if Worcester decides to build their own
broadband network, it could negatively impact Worcester’s tax rates if it fails like it has in so
many communities across the country such as Groton, CT and Burlington, VT.

Rather, low-cost broadband options exist across Massachusetts that current residents may not
know about. For example, Charter’s Spectrum Internet Assist provides reliable, high-speed
internet access at an affordable price to residents who qualify3. For families with school-aged
children who qualify for the National School Lunch Program (NSLP), you can qualify for
Spectrum Internet Assist. For $17.99/month, eligible households receive discounted 30 Mbps
high-speed internet with no data caps or contracts. Seniors 65+ on Supplemental Security Income
are also eligible.

Charter also recently launched the Stay Connected K-12 program where they work directly with
school districts to assist them in offering high-speed, cable broadband internet access to students,
educators and staff to help address the lack of internet connectivity faced by some students.
Educating residents about broadband adoption and the low-cost options currently available to
them could be impactful and much more cost efficient than building an entire new broadband
infrastructure system that could fail and cost taxpayers millions of dollars.

IV. Real Costs, Challenges and Risks of Municipally Owned Broadband Networks
The WRRB report examines municipal broadband as a concept by selecting incompatible
examples, based on population and unrealistic funding sources, from around the country to
showcase how it might work in Worcester. However, it does not include examples of the many
failed projects from around the country. Additionally, it does not contemplate actual
construction costs and more importantly the ongoing maintenance and upgrade costs imposed on
any infrastructure owner. The report also fails to note the fact that the municipal projects cited
are heavily subsidized by taxpayer dollars to remain sustainable.

The WRRB report completely fails to include in its findings that there are numerous examples of
failed government owned broadband networks across the country. Unlike gas, electric and water
industries, broadband networks require continuous, expensive capital outlays and network
upgrades to keep pace with consumer demand. Broadband infrastructure is not comparable to a
water pipe that gets put into the ground and does not need to be touched for twenty years. Private
broadband providers like Charter have to continuously update and invest in their networks so
they remain resilient, secure from cyber threats and outpace the latest trends in technology.
These companies make investments 18 to 24 months in advance of projected consumer trends

3
https://www.spectrum.com/browse/content/spectrum-internet-assist.html

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and spend hundreds of millions of dollars annually on these continuous updates. In fact, it is the
actual cost of infrastructure buildout and maintenance that typically deters private companies
from overbuilding in areas already served by a provider. To provide the clearest example of the
challenges of building and maintaining a broadband network, examine the experience of Google,
one of the world’s wealthiest corporations. An October 2016 Washington Post article described
how Google is no longer expanding its “Fiber” network efforts because it is not profitable4. If a
company that can afford to lose millions of dollars on projects cannot figure out how to make
broadband profitable, it is difficult to see how Worcester or any municipality could be capable of
doing the same.

The WRRB report acknowledges that in 2018 Springfield estimated that a fiber optic system for
the city would cost at least $50 million for buildout, not factoring in upgrades and maintenance
costs. Given that Worcester has a 16.2 % larger land mass than Springfield with a 20% higher
population and over 25% more households, we can safely estimate that both buildout and
ongoing maintenance costs would be significantly higher5.

The WRRB report does accurately convey the fact that Worcester has a non-exclusive contract
with Charter, so no other entity—public or private—has ever been prevented from investing and
building in Worcester. But, confronted by the reality of infrastructure buildout, upgrades and
maintenance costs, prudent public and private entities have thus far not chosen to undertake this
risky and highly unlikely to be successful proposition.

V. The Long Track Record of Failed Government Owned and Operated

Broadband Networks

Simply put, government does many things well, but the track record of government owned
networks (GONs) is riddled with inefficiencies and failures. Municipalities are not well equipped
to keep pace with the ongoing high costs, dynamic pace and complex technical nature of
providing Internet capability. The short history of GONs is littered with failed projects that took
years to even get started, wasted public dollars and then left the taxpayers on the hook for the
remaining bills.

The highest profile of failed municipal broadband stranded assets includes municipal owned
networks in New England cities already served by private broadband providers: Groton, CT and
Burlington, VT. In both cities, their government owned networks were constructed in the mid-
2000s, and the networks quickly collapsed under the weight of soaring debt and tepid consumer
demand. Burlington Telecom jeopardized the financial standing of the entire city when it failed,
costing taxpayers tens of millions of dollars. In nearby Groton, the municipal utility there
unloaded its underperforming broadband network at a $30 million loss. Promising gigabit speeds
at unrealistically low prices, promoters of these GONs convinced taxpayers to spend millions of
dollars, only to have costs spiral, consumer adoption fall far below projections, and operating
and maintenance costs overwhelm revenues.

4
https://www.washingtonpost.com/news/the-switch/wp/2016/10/26/why-google-fiber-is-no-longer-rolling-out-to-
new-cities/
5
https://www.census.gov/quickfacts/fact/table/springfieldcitymassachusetts,springcdptexas,worcestercitymassachuse
tts/PST045219

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While the WRRB report found Chattanooga and other municipal broadband examples to be
successful, a study by Professor Christopher Yoo at the University of Pennsylvania found
precisely the opposite. Professor Christopher S. Yoo and coauthor Timothy Pfenninger
developed a financial assessment of U.S. municipal fiber projects to determine their cash flow
status and long-term financial viability. The authors determined that more than half of the
projects were cash flow negative, and the vast majority of those which were cash flow positive
would take in excess of 100 years to pay back cost of build-out—including Chattanooga, TN.
What the WRRB report fails to mention is that the Chattanooga network was constructed using
tens of millions of dollars in federal funding. Further, according to Professor Yoo’s research,
only two of the nineteen government owned networks studied earn enough revenue to cover the
costs of development over 30 to 40 years of useful life, and eleven of the networks do not
generate enough revenue to cover even operating expenses6. Questioning the economic viability
of these projects, the authors state, “City leaders considering such projects, as well as state and
federal officials interested in supporting them, need to understand the documented costs and risks
before encouraging new municipal fiber programs to form.”

The WRRB report also focuses heavily on the example of the Town of Shrewsbury’s broadband
service through SELCO, Shrewsbury Electric and Cable Operations, to show that a municipal
owned broadband service can be successful. It is important to note that it is much easier for
municipal electric departments to enter into the broadband business because they have existing
infrastructure and an existing customer base. Further, the report references that SELCO is also in
the process of upgrading their technology which will cost around $30 million. One rationale
behind this construction project is to offer increased speeds that their current network cannot
support, gigabit speeds all of our members provide throughout their Massachusetts service
territories, including Worcester. The cable industry is currently testing 10 gigabit broadband
speeds—technology that will revolutionize the way consumers manage their digital lives and is
further described below.

Lastly, it is important to highlight that when projects receive state or federal funds to support
initial buildout of broadband infrastructure—as the report highlights as an option as a way to
finance the Worcester initiative—it is likely that they will require ongoing taxpayer subsidies to
remain sustainable. For example, the OpenCape fiber network received $32 million in federal
funding during the American Reinvestment Recovery Act (ARRA) in 2010 for initial
construction and buildout to an area already served by Comcast. 10 years later, the OpenCape
network still does not have the customer base it originally projected in order to remain
sustainable. Year after year, OpenCape comes back to the legislature requesting more taxpayer
dollars to provide for maintenance and continued operation. In New Hampshire, a similar open-
access network project called FastRoads received millions of dollars in taxpayer grants to be
built, but also had difficulty attracting enough subscribers to break even. Monadnock Economic
Development Corporation, FastRoad’s parent entity, ended up having to pay thousands of dollars
monthly to keep the project afloat until they ultimately sold the network to another private entity
for a substantial loss. While we do not mean to criticize the OpenCape operation or the former

6
Municipal Fiber in the United States: An Empirical Assessment of Financial Performance (Pfenninger and Yoo
2017)

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New Hampshire entity, it is important to demonstrate just how difficult it is to make these
broadband models work without continued investment from taxpayers.

The research and projects cited above show that government entry into direct ownership of
broadband facilities is risky and costly. This is especially true in the COVID-19 era when public
funds are increasingly scarce as states and localities’ revenue streams are shrinking and many
areas are already having to cut budgets for essential services like first responders and public
education.

VI. Existing Broadband Network Capability and Tomorrow’s 10G Technology

Finally, the WRRB report briefly touches on different broadband technology and uses “fiber to
the premise” (FTTP) as a reason and justification for exploring a municipally owned network in
Worcester. But the need for FTTP networks simply do not align with the reality of network
patterns or consumer demand. Even during the COVID-19 pandemic, as millions more people
work and learn from home using more upstream traffic for Zoom and other platforms, traffic still
remains asymmetric, meaning downstream usage is still the primary use and need from
consumers7. This data proves that investing in FTTP or costly symmetric networks does not
match with actual consumer demand.

In reality, broadband networks in Worcester and across Massachusetts are performing extremely
well and meeting the increased demand for service during the COVID-19 crisis. NCTA, the
Internet and Television Association, launched a dashboard of aggregated data from cable internet
service providers back in March to publicly provide key metrics during the pandemic to better
inform consumers about usage trends and network performance across the country. Despite an
increase of 27.8% in upstream growth and 15.7% of downstream growth in demand for internet
services in Massachusetts, NECTA company networks, including Charter, remain resilient and
are meeting the demand for Zoom meetings, distance learning, telemedicine, binge-watching,
and keeping small businesses operating8. Since 2000, the cable broadband industry has invested
$300 billion to construct world class, state-of-the-art, high-speed national broadband networks –
and this data demonstrates the resiliency of that infrastructure and shows that investment is now
paying off for consumers.

Given that level of unparalleled investment both nationally and in the Commonwealth, the report
misconstrues the capability and forward-looking capacity of cable broadband providers’
networks. Charter’s Worcester services are provided over networks consisting primarily of fiber
and coaxial cable – a hybrid fiber coax network. Those fiber rich networks are supported by
cutting edge DOCSIS technology, which drives today’s ubiquitous gigabit speed capable
offerings. Charter customers can choose from a menu of speed options and price points based on
customer need. For Worcester residents, these are the same cutting-edge product offerings and
speeds for the same prices as Charter’s customers in Manhattan, Los Angeles, and across the
country.

7
NCTA Article: https://www.ncta.com/whats-new/downstream-traffic-still-dominates-our-lives
8
NCTA COVID Dashboard: https://www.ncta.com/COVIDdashboard

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NECTA company networks are also future proof. Today, cable operators are beginning to launch
a next-gen network 10G initiative that aims for approaching symmetrical upload and download
speeds of 10 Gigabits with low latency and advanced security. 10 gigabit networks, or 10G,
offer a powerful, capital efficient technology platform that will enhance current 1 gigabit
offerings to speeds of 10 gigabits per second. 10G is going to play a central role in ensuring that
the continued growth of connected devices and increased demand and reliance on video work to
their full potential. The 10G platform aims to transform the way consumers live, work, learn and
play.

While this may seem theoretical, the roadmap to delivering this service has been in place for
years with a fiber rich broadband network that is capable today of providing up to one gigabit
speeds, to all Massachusetts customers. By continuously enhancing these existing networks with
a combination of new hardware, software and other engineering techniques, the migration to 10G
is efficient and will not require a massive, costly and protracted network overhaul. This is in
sharp contrast to the estimated $30 million investment SELCO is undertaking with their FTTP
project for speeds that will likely not have 10G capability.

VII. Conclusion

While NECTA understands and agrees with the urgency to ensure that all residents and
businesses in Worcester have access to broadband connectivity, we strongly caution Worcester
leaders against entering the broadband business. While we believe even spending money to study
this issue is a waste of taxpayer dollars, we would urge the WRRB and city leaders to do a more
thorough cost-benefit analysis of providing municipal broadband and be realistic about the
potential risks to Worcester taxpayers before moving forward with any initiative.

Professor Yoo and Mr. Pfenninger’s research report cited above clearly cautions against this
approach, stating: “unfortunately, city leaders who turn to existing municipal fiber analyses for
guidance will discover that these studies limit their focus to the supposed success stories instead
of systematically analyzing these systems’ financial performance. Understanding how likely a
project is to remain financially solvent is critical, because any shortfall would require a city
either to inject additional taxpayer funds into the project or to default on its loan obligations.
Either option would be costly and would hinder the municipality’s ability to address other
priorities.9”

As stated above, government-owned networks are not a wise use of scarce municipal, state or
federal funds in areas where the private market is already providing services. Public subsidies
should be targeted only to unserved areas, or to help with broadband adoption efforts through
low-cost broadband programs. While the WRRB report framed a potential municipal broadband
service as an economic development tool for Worcester, the cost alone could significantly harm
the city’s finances and divert municipal funds away from other areas that need it most. In
Worcester, consider the millions of dollars spent on potential broadband buildout that could be
used for city needs—investing in Worcester public schools, affordable housing, grants to small

9
Municipal Fiber in the United States: An Empirical Assessment of Financial Performance (Pfenninger and Yoo
2017)

7
businesses, business district revitalization, and much more. Those are real economic
development initiatives that would have a much greater return on investment than constructing a
duplicative broadband system with at best questionable long-term viability.

We thank you for your time and attention to this letter and hope that the WRRB can further
explore the true costs of municipal broadband to Worcester. We appreciate your commitment to
this topic. Lastly, we hope we can work with you as a partner moving forward to make sure that
all Worcester residents have the technology and tools needed to stay connected. Should you
have any questions please do not hesitate to reach out.

Sincerely,

Timothy Wilkerson
President, NECTA