Over two thirds of the world’s population is expected to live in cities by 2050, underscoring the critical need for municipalities to save energy, increase security, efficiently deliver services, and reduce costs to accommodate a massive increase in urban populations. But how will cities get there? One thing is for certain: A city can’t be “smart” without a solid network infrastructure.
The introduction of the smartphone in 2007 was a watershed event that changed the public’s expectations about wireless data and download speed. In the mid-2000’s, many wireless carriers were coming off of a period of slow growth and limited access to capital, which left them flat-footed as consumers pushed for bigger and faster bandwidth. Compounding this issue is the rapidly growing Internet of Things (IoT) – a global network of machines, devices and systems connected to each other and the internet – which in itself is another game changer in the realm of information technology.
Numerous existing data networks in cities are outdated copper-based systems that either can’t support the desired bandwidth speeds or don’t physically reach far enough to meet the strategic technology goals of the city or the information needs of its residents. Cities are struggling with their infrastructures and looking for solutions to become more efficient through expanded network infrastructure services and smart cities technologies.
Network Expansion Problems
Typically, municipalities have well intentioned plans but lack the financial resources to start or expand their broadband and smart city initiatives. Cities may have existing technology assets that support their traffic control (i.e., water management, street lighting systems, etc.,) but many are still operating on outdated copper-based networks rather than fiber optic systems. Cities are struggling to fund fiber-based upgrades to their current networks in order to implement smart city initiatives such as smart grid, IoT, or sensors.
Smaller cities and municipalities often lack in-house technical expertise as well as funding options. They know that in order to attract residents and businesses they need to develop the access and connectivity, but they don’t possess the resources (both human and financial) to build and manage network infrastructure components. These municipalities benefit from design, operational, and financial guidance in addressing their broadband shortfalls, which in turn, helps them create a realistic roadmap to better connectivity. Funding is without a doubt the biggest hurdle to acquiring or enhancing their network infrastructure design.
Mid-sized cities and public utilities need $10-15 million or more to build out a network. Financing options such as grants, bonds, partnerships, and private funding are available to meet their capital goals. A combination of funding sources in often needed, but none are easy to acquire. It can be difficult to navigate and apply for grants. Municipal bonds can be highly political and often come with restrictions on how the money is used. Engaging in a public-private partnerships (P3) requires experience with private property access issues, carrier contractual requirements, and ongoing management expertise.
Network Infrastructure Solutions
Smaller municipalities face even steeper challenges. With a small resident populations and tax bases, it’s tough for small towns to reach economies of scale and generate a positive ROI on their network infrastructure solutions, making it all the more difficult to secure or attract the necessary financing.
Leasing offers an attractive financing option for any size municipality at any stage of broadband upgrade or expansion. Leasing is relatively easy to secure and can make a good addition to your capital stack. With capital projects like fiber infrastructure deployments, a city has the ability to match a funding option to the life expectancy of the asset. These leasing solutions can enable new fiber solutions to come online sooner than bond funding and it does not impact the general fund of cities.
Landmark Dividend provides financing through private investment and the leasing of real property assets. Our leasing options can provide equally long terms which can create significant cash flow benefits for cities. For example, when buying a home, most people don’t take out a 10-year loan because the monthly payment becomes unmanageable; yet, with a 30-year term, owning a home becomes more affordable. For more information about Smart Cities financing solutions from Landmark Dividend, click here to provide your information and we will contact you as soon as possible.