Who supports city-owned fiber networks? The US government.

Across the country, states have slapped restrictions on cities that want to offer Internet access as a public utility, and the big commercial ISPs have routinely opposed such projects. But what's the federal government's take? "Hey, could you guys use millions of dollars to extend fiber to more people in your communities?"

The map below highlights state-level restrictions on municipal-owned Internet services.

Municipal networks restriction map (Source: Institute for Local Self-Reliance)

The federal government has generally supported "middle mile" Internet projects with its $7 billion stimulus funding—that is, projects that connect the Internet backbone to local anchors like schools, governments, and universities, which may in turn offer services to the general public. (This week's $400 million in new grants from NTIA reflects the "middle-mile emphasis.")

But the feds are also prepared to support direct end-user Internet projects that can show a compelling track record and evidence that they can secure other funding.

That's why 9,000-person Reedsburg, Wisconsin just picked up $5,239,168 from the US Department of Agriculture's Rural Utilities Service (RUS is now run by former FCC Commissioner Jonathan Adelstein) to extend its fiber-to-the-home network into the surrounding "rural area to provide affordable advanced broadband service to residents and businesses that are currently confined to traditional dial-up, wireless, and satellite services."

Reedsburg sits 15 miles away from Wisconsin Dells, a notorious tourist attraction and the self-proclaimed water park capital of the world. The city has a long track record of public utility work; it started offering electricity and water to citizens back in 1894 (when water rates were capped at two dollars a month).

In the 1970s, though, the utility faced "a series of large, wholesale rate increases. These increases were imposed by investor-owned companies that supplied the local municipalities with electric power. Determined to gain control over their power costs, the communities joined forces in 1980 to form WPPI Energy, the state's first municipal electric company."

This allowed the cities to exert more bargaining power by banding together, and the same determination to control its destiny led the Reedsburg Utility Commission to enter the cable/phone/Internet market a few decades later. The current network uses fiber optics to offer this "triple play" of services, and the utility says that 55 percent of city residents subscribe.

The utility currently offers 10Mbps symmetrical connections for $50 a month with no contracts or promotional pricing; 5Mbps symmetrical connections are $40. Now, that fiber network will be extended into the surrounding countryside, thanks to the USDA grant money and $2.3 million in private investment commitments.

In addition, the Marquette-Adams Telephone Co-op (not a public utility but a member-owned co-operative), which covers the rural area on the other side of the Dells, got $13 million in grants and $6 million loans to extend fiber throughout its service area. The Co-op has offered telephone service for more than 50 years, and it got into the Internet game in 1996. It has more than 80 miles of fiber laid already, but most of its Internet offerings deliver last-mile connections over DSL or wireless (DSL tops out at 3Mbps, while wireless can only hit an abysmal 512Kbps).

The story has become a familiar one: small rural telcos and municipal networks all see the value of fiber and are deploying it as fast as they can. Reedsburg's Utility Commission, for instance, says that dependable Internet has actually preserved the community.

"Rural living in Reedsburg has been made easier than ever, ensuring quality of life, accessibility to large metropolitan areas, and convenience of information, all while receiving the amenities of a large city. How you ask, has this rural community of 88,00 survived and flourished? Through the use of a Fiber Optic network, making it all possible."

While the FCC's National Broadband Plan only set a 4Mbps universal service target for Internet access (and in 2020!), cities know this simply isn't enough. The Internet is too important, and fiber is the future.