Financing community broadband

Back in 2000, I began promoting the idea that one way communities should finance broadband was by selling shares in a stock ownership corporation. In this way, the entire community could participate in the ownership of a Knowledge Economy business. A stock ownership approach to community broadband has several advantages.

• It can distribute ownership broadly across the entire community, truly making it a community enterprise (much the way coops have very successfully operated for decades).
• Both public and private partners can participate. Local governments that want to lower the cost of broadband for schools and government offices and services can buy into the enterprise. Private providers like ISPs can buy into the enterprise and have voting rights and representation.
• If the share price is low, it gives everybody in the community a chance to own stock. As the venture crosses the break even point, dividend distributions are returned to the owners, who in most cases are also customers.
• It allows the community to self-finance; that's a much better approach than trying to start these efforts by relying entirely on grants.

I'm delighted to see that a group right here in the New River Valley is doing what I suggested. The New River Valley Planning District Commission plans to fund a regional fiber network by selling stock to public and private partners.

The only thing I wish they had done differently would be to set the minimum share buy lower. Shares are currently priced at $11.25, and a minimum purchase of 1,000 shares is required. I understand they are trying to raise cash quickly and with a minimum of marketing, but why not sell as little as one share? Payments could be made via Paypal, and it would be easy to generate a digitally signed PDF stock certificate that is emailed to the purchaser.

There are disadvantages to having many small owners, but there are a lot of advantages, including the possibility of raising more money by expanding the investment pool. By using exclusively electronic communications with shareholders, costs can be kept low.

Another approach would be to require a minimum of ten shares, or at the current share price, an investor would have to come up with $112.50. That is still a very low barrier, and I bet lots of people in this area would love to invest in their own community, along with the opportunity to make some money as the network expands.

I remain convinced this is a viable approach almost anywhere in the country, even in distressed rural communities. Most households in America are spending between $150 and $300 PER MONTH on telecom. Why not give those households an opportunity to buy into their own future and own a piece of the telecom infrastructure, rather than leaving them at the mercy of the marketplace?

Congratulations to the NRV PDC for their boldness and vision.