Municipal Fiber in the United States: An Empirical Assessment

Abstract

The apparent success of municipal fiber projects in places such as Chattanooga has led to widespread calls for other cities to undertake similar initiatives. Unfortunately, empirical assessments of municipal fiber projects’ performance are few and far between, with most of the literature consisting of advocacy pieces that have been long on rhetoric and short on data. The anecdotal nature of these analyses has led the focus almost exclusively on supposed success stories instead of analyzing the universe of municipal fiber projects systematically. To fill this gap, we present an empirical evaluation based on a unique dataset derived from the audited financial statements from 2010 to 2014, the public bond filings of every municipal fiber project in the U.S., and U.S. Census data. We conduct a discounted cash flow analysis on the data to assess whether particular projects will remain solvent or whether they will have to default on their bond obligations. We also present detailed case studies of particular projects identified as potential success stories by our analysis and by media reports. The net result is a fairly sobering picture of how likely municipal fiber projects will be able to generate sufficient returns to recover the investments needed to construct these networks and the implications such shortfalls can have.