Holyoke: A Massachusetts Municipal Light Plant Seizes Internet Access Business Opportunities

The Berkman Center is pleased to announce the publication of a new report, "Holyoke: A Massachusetts Municipal Light Plant Seizes Internet Access Business Opportunities.”

This case study documents the success of a municipally-owned electric utility in providing Internet access services. Massachusetts has 41 such “munis” –- serving more than 900,000 people and thousands of businesses -– but only 10 are in the Internet access business as allowed by state law.  The Holyoke Gas & Electric Department’s telecom division competes with Comcast and Charter and serves 300 business customers and numerous public buildings. It has shown steady growth in revenues, and $500,000 in net earnings over the past decade. It also saves the city at least $300,000 a year on various Internet access and networking services. HG&E's telecom division is also now providing a variety of services to three other municipalities. Finally, the utility is considering a residential high-speed Internet access offering, something the muni in neighboring Westfield is piloting later this year. HG&E’s success in a competitive environment was achieved without any debt issuance, tax, or subsidy from electricity or gas ratepayers. 

Key Findings:

• HG&E Telecom saves city offices and HG&E itself more than $300,000 a year by providing Internet access and networking and telephone services to public agencies.
• The utility provides approximately 300 businesses and large institutions with telecom services and creates competition, which tends to improve service offerings from all market participants, aiding the local economy.
• HG&E Telecom forged inter-municipal agreements that extend services and accompanying benefits to the neighboring city of Chicopee and to the city of Greenfield, 30 miles north.
• While HG&E Telecom has focused on selling services to businesses, the utility is now considering a residential fiber-to-the-home (FTTH) offering, given the declining market pressure to provide television content.
• Demonstrating that a municipal light plant can diversify into the consultancy business, HG&E Telecom also recently became project and network manager for a FTTH project in the town of Leverett.
• HG&E Telecom has shown steady growth in the face of competition, never incurred debt, and has reaped a 10 percent profit in both 2013 and 2014.

The report is authored by David Talbot, Waide Warner, Carolyn Anderson, Kira Hessekiel, and Daniel Dennis Jones.