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Ownership

This is first thing to decide as it has knock on effects to all other aspects of the project.

If you have an HOA, or other incorporated community entity, you might default to having that entity own the network, but this decision has tradeoffs and deserves careful thought.

An HOA or similar existing community entity is responsible to their residents, and only their residents. It might make sense for cost, logistical, technical or community issues to provide fiber service to other nearby communities, either at the beginning or in the future. But the HOA or community entities might be legally barred from doing so, not to mention the entanglements of HOA dues possibly helping people who do not pay dues.

Depending on your community, your HOA or legal entity may function like a normal government, ie. not particularly fast moving, risk adverse, and prone to cost overruns. These are not good qualities to have when owning and running a highly dynamic asset in a fast moving technological space.

Having said all that, it may be that the HOA is the only entity that can own the network. If the HOA is paying for most or all of the network to be built (no other subsidies available), then it would be hard to make the case that some other entity other than the HOA own the network. How the network financing is structured will be a big determinant to ownerhip structure.

Possibilities for ownership of the network include:

  • A special purpose non-profit company
  • A for-profit company run by an entrepreneur
  • The HOA or existing community entity

See sections on Management and Outlying Communities to help you decide on the best structure for the project.

Ballooning Costs

Here's a mini case study. I was involved with an HOA that had been charging residents an extra fee to pay for special projects over and above regular maintenance. They put together their budget for their fiber network and decided to use that special fee for the next ten years to fund the network. Residents thought this was fine, assessments don't go up, all is well, the vote passed handily. When final construction bids came in, the network costs almost doubled. Rather than sharpen their pencils, fix their management mistakes or make adjustments to reduce costs, the HOA did what any government does - they decided to simply borrow more money and extend the special project fee out another 7 years. Again, the residents didn't complain since their HOA fees weren't going to change. Of course, now, there will be no funding for any other special projects for 17 years!

The point is that HOAs and governments are spending other people's money and have zero incentive to save money since they have the power to tax and borrow and that is by far the path of least resistance when costs start to rise.

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