Project Partnerships

This section provides some guidance for establishing effective partnerships with those organizations that are expected to make a direct contribution to the broadband project as well as its ongoing operation.

The most successful broadband projects recognize the importance and the value of establishing a partnership relationship amongst the direct contributors to the project. Partnerships in this context are not intended to imply any formal business relationship, but rather one of a recognized cooperative relationship for mutual benefit over a period of time.

Why Partnerships?

It can reasonably be asked: Why focus on “partnerships” – are contractual agreements not enough? There is no definitive answer to this. The concept of partnerships, however, particularly in the context of municipal broadband projects, is founded on the following realities:

  • Many municipal organizations do not have the resources or the expertise to complete projects on their own
  • ISPs will not enter a new market on their own without a clear positive business case
  • Other parties may be required and beneficial to project success
  • Contractual agreements alone tend to be bilateral and move both parties towards focusing on adherence to contract terms and conditions, rather than the broader goals and benefits important to an ongoing relationship.

“Partnerships are everything. Everyone is a partner – users, businesses, community members, service providers and government.”

The value of partnerships is in the recognition by each party that they each bring a unique contribution and that they will each benefit from what the other parties bring to the relationship. It also recognizes that each party is achieving their own interests while contributing to their shared interests. This is essential to making the relationship, and the project, successful in both the short and long term. In working towards a shared goal, everyone has something to gain that aligns with their core objectives.

Who are the Partners?

The key partners in a municipal broadband project are the organization leading the project – which may be a municipality or other non-governmental organization representing the community – and the ISP that will ultimately deploy and operate the broadband network. There may also be other significant partners depending on the specific circumstances. These significant partners can include other organizations that may provide access to financial resources or regional organizations that have an interest in promoting and in supporting the broadband initiative. Those that are willing and are able to make a direct contribution from the standpoint of their individual and shared interests may also be considered potential partners.

Benefits and Risks

One effect of establishing relationships with broadband partners may be a greater willingness to share risks, especially in the short term, for long-term benefits. Communities currently without broadband services may experience the following risks:

  • Unless an ISP enters the municipality with broadband, the municipality risks erosion to their own competitiveness and to the competitiveness of businesses in their region. This ultimately can lead to outward migration of citizens and businesses from the municipality or region, affecting employment, taxes, and the local economy. Municipalities and municipal broadband proponents have neither the resources nor expertise to build and operate broadband networks, nor is this their core mandate. Therefore, communities have an interest in encouraging and supporting an ISP to enter their market.
  • Any ISP is interested in acquiring more customers (and revenue), but at what cost? The risk to ISPs is one of making an up-front investment in a new market with uncertainty of sufficient return on investment (ROI). Financial resources for investment by an ISP are limited and may involve some level of debt financing. ISPs need to choose where to make their investments based upon ROI just like any other business. The absence of a broadband ISP in the municipality is an indication that (so far) there has been insufficient business case justification to make that investment.
  • Other organizations, whether private sector or other levels of government, may have financial resources and a willingness to make them available for broadband projects. They risk providing the wrong amount of funding in the wrong place at the wrong time, however, unless there is a solid plan and commitment from other parties.

It is clear that there is a convergence of interests amongst these parties as well as an opportunity for each one to offset the risk exposures of the others. It takes time for the broadband user base to establish and to grow, so creating a formula for risk sharing on a long-term partnership basis becomes a key to success.

Partnering with ISPs

It is important to recognize that while an ISP must accept some risk in entering your market they are also being offered a potentially profitable opportunity. The fact that there are presently little or no broadband services being offered in your municipality provides a significant opportunity for the first ISP that enters your municipality to offer such services. If there was insufficient motivation for an ISP to enter this market on their own, then there will be even less opportunity for a competitor ISP to come in once the selected ISP vendor is established. While there is no intent or desire to limit competition, the reality is that there is probably insufficient market opportunity for a second or a third ISP to make a good business in the same area. Therefore, it becomes even more important to establish a strong and a lasting partnership relationship with the selected ISP – one that recognizes both the risks and the rewards for the ISP and the municipality.

The relationship with the ISP as a vendor-partner is unique and is critical in these respects. In addition, other parties may be brought into the partnership to further offset the risks by providing both in-kind services and financial assistance or resources. For example, local businesses or non-profit organizations that provide technical training for users can encourage higher penetration of broadband services, improving the return on investment for all parties. The roles and responsibilities that guide the contributions of all partners through the duration of the project must be clearly defined for all to understand and to meet their expectations.

Other Partners

There may be other categories of partners where formalizing agreements can be beneficial. These may include partnering with other communities or regions on a shared initiative to achieve economies of scale and to leverage each other’s resources. There may also be opportunities to partner with middle-mile carriers to build out into your municipality.

Key anchor institutions may also become partners if they have their own plans and initiatives to address their broadband needs that align with the larger needs of the community.

Partnership Agreements

Partnership agreements are not intended to be a substitute for formal legal contracts that may be required between individual parties. It is recommended, however, that an agreement of this type be used to facilitate and to clarify common understanding amongst the partners on the key project parameters and milestones as well as their respective roles and responsibilities. This is vital at the beginning of a project, and successful projects have demonstrated that a more formalized agreement reduces ambiguity and empowers each participant to deliver their commitments more effectively. This not only facilitates effective working relationships, but it also protects the interests and benefits of each partner while ensuring the shared benefits are achieved. Once a project is underway and the partnerships become working relationships, the partnership agreement has served its purpose and becomes secondary to the dynamic of the working relationships.

An example and a guide for a Partnership Agreement is available to use and adapt as a template.