The Institue of Local Self Reliance reports on Duluth…

Last April, the Duluth Economic Development Authority signed a $65,000 contract with Entrypoint LLC to examine the possibility of building a community-owned fiber network in Duluth. The result: a new Digital Access Master Plan that proposes the city spend $7-9 million to build a pilot open access fiber network in Lincoln Park next year.

“Reliable high-speed internet is no longer a luxury,” Duluth Mayor Emily Larson proclaimed in a recent state of the city address. “It’s an essential utility no less important to our future success than our roads, water, and electricity.”

Under the proposal, 75 percent of the new network would be buried fiber and 25 percent would be microtrenched along public roads. The $7 to $9 million estimated price tag is based on a 60% take rate, short-term interest at 5 percent, and a long-term interest rate of 3 percent for 20 years. The initial pilot project would bring fiber to an estimated 1,900 Duluth residents next year.

“A 60% take-rate may seem aggressive given the strong market position of the incumbent cable operator,” the plan states. “However, the survey data suggests a strong desire among residents and businesses in Duluth to see competition, choice, better pricing, and the reliability of a fiber optic network.”

The plan moving forward…

Last June, the Minnesota Department of Employment and Economic Development (DEED) announced that the state would be doling out $95 million in broadband expansion grants, with a maximum of $5 million for each potential target community. Another $68.5 million in funding for Minnesota communities is poised to arrive via the American Rescue Plan Act.

If the pilot goes well, the city will then decide whether to embrace a full, citywide fiber network at an estimated price tag of between $76 and $80 million.

Assuming the full network were to be built over a 48 month period, the plan predicts Duluth would need to subsidize the network for 14 months. Once the network reaches 21,709 premises, the investment will be paid back by operational surpluses. The plan assumes a $79.9 million network build cost would be funded with debt at a 3 percent interest rate over 20 years.