Louisville Community Data Center Cooperative Feasibility Study
- the Institute
- 1 day ago
- 26 min read
Prepared by:Network Theory Applied Research Institute (NTARI)
Date: November 2025
Executive Summary
This feasibility study assesses the technical, economic, and organizational viability of establishing a community-owned distributed mesh data center network in Louisville, Kentucky. The proposed Louisville Community Data Center Cooperative (LCDCC) would deploy 5,000 computing nodes across Louisville Metro, creating America's first large-scale community-owned edge computing infrastructure.
Key Findings
Technical Viability: CONFIRMED
Edge computing infrastructure using proven open-source technology stack (Kubernetes, Ceph)
Projected 10-20x latency improvement over centralized cloud (50-100ms → <5ms)
20-30% energy efficiency improvement (PUE 1.67-2.01 → 1.2-1.4)
Pilot validation required before full-scale deployment
Economic Viability: CONFIRMED
Break-even achievable at 2,000 nodes (Year 3) with 60% utilization
7-year community wealth generation: $24.7-27.9 million
Member benefit: $3,000-4,000 per household over 7 years with zero capital investment
ROI on public investment: 50-80x vs. 0.15-0.38x for traditional data center subsidies
Market Viability: CONFIRMED
Validated anchor customer demand: $2-3M annually (Louisville Metro, UofL, Norton Healthcare)
127,000 suitable owner-occupied households, requiring only 4% participation
Edge computing market growing 33-38% annually, providing sustained tailwinds
Organizational Viability: CONFIRMED
Cooperative corporation structure proven by electric co-ops serving 42M Americans
Zero member capital investment eliminates primary barrier to participation
Professional management with democratic oversight balances expertise and accountability
Critical Success Factors
Initial capitalization: $3-5M from federal broadband grants, municipal investment, impact investors
Anchor customers: Secure $2-3M in institutional contracts by Year 2
Technical capacity: Establish Network Operations Center with 24/7 monitoring
Member participation: Achieve 5,000 node deployments (4% of suitable households)
Political support: Louisville Metro cooperation on permitting and procurement preferences
Recommendation
PROCEED with phased implementation:
Phase 1 (Months 1-12): Planning, capitalization, pilot deployment (50-100 nodes)
Phase 2 (Months 12-24): Scale to 500 nodes, secure anchor contracts
Phase 3 (Years 2-5): Scale to 5,000 nodes, achieve profitability
Louisville has the opportunity to become America's model for community-owned digital infrastructure, demonstrating that public utility internet is technically feasible, economically viable, and operationally proven.
1. Introduction and Methodology
1.1 Study Purpose
This feasibility study evaluates whether Louisville Metro can successfully implement a community-owned distributed mesh data center network as an alternative to traditional corporate data center development. The study addresses five key questions:
Technical: Can distributed mesh networks deliver enterprise-grade edge computing services?
Economic: Can the model achieve financial sustainability and generate community wealth?
Market: Is there sufficient demand from anchor customers and household participation?
Organizational: Can cooperative ownership structures manage complex technical infrastructure?
Implementation: What are the specific steps, timeline, and resource requirements?
1.2 Methodology
Primary Research:
Louisville Metro Government budget analysis and RFI responses
University of Louisville Research Computing needs assessment interviews
Louisville Gas & Electric rate schedule analysis
Demographic analysis using U.S. Census American Community Survey data
Comparative analysis with electric cooperative economic impact studies
Secondary Research:
Edge computing market research from Fortune Business Insights, Grand View Research, Mordor Intelligence
Data center subsidy analysis from Good Jobs First (2016-2025)
Electric cooperative governance and financial performance data from NRECA
Technical architecture research on distributed computing, mesh networks, and edge computing
Financial Modeling:
Per-node unit economics based on actual Louisville utility rates and labor costs
5-year pro forma financial projections with sensitivity analysis
ROI comparison with traditional data center subsidy models
Member wealth generation calculations
Timeframe: Research conducted September-November 2025
1.3 Louisville Metropolitan Context
Population and Demographics:
Population: 1,300,000 (Louisville-Jefferson County Metro)
Households: 478,000 total
Owner-occupied households: 127,000 with suitable space (basement, utility room, garage)
Median household income: $58,200
Educational attainment: 27% bachelor's degree or higher
Economic Base:
Major industries: Healthcare, logistics, manufacturing, education
Major employers: Humana, Norton Healthcare, UPS Worldport, University of Louisville, Louisville Metro Government
Tech workforce: 24,000 IT professionals in metro area
Median IT technician salary: $58,600
Digital Infrastructure:
Internet penetration: 89% of households
Fiber availability: 83% coverage in urban core, 45% in outer metro
Major ISPs: AT&T, Spectrum, Google Fiber (limited deployment)
Data center presence: Limited; no major hyperscale facilities
Relevant Initiatives:
Louisville Metro smart city initiatives (traffic management, environmental monitoring)
Norton Healthcare digital health expansion
University of Louisville research computing expansion
Economic development focus on technology sector growth
2. Market Analysis
2.1 Edge Computing Market
Global Market Growth:
2024 market size: $24-28 billion
2030 projected: $180-250 billion
CAGR: 33-38%
Key drivers: 5G deployment, IoT proliferation, AI-enabled applications, autonomous vehicles
Primary Use Cases:
Healthcare: Medical imaging processing, telemedicine, patient monitoring (market growth 17.6% CAGR)
Smart Cities: Traffic management, environmental monitoring, emergency response
Autonomous Systems: Vehicle coordination, robotics, industrial automation
AR/VR: Gaming, training, visualization (requires <20ms latency)
IoT: Industrial sensors, smart buildings, logistics tracking
Competitive Landscape:
AWS, Microsoft Azure, Google Cloud dominate centralized cloud (65-66% market share)
Edge computing providers: Vapor IO, Zenlayer, EdgeConneX (primarily enterprise-focused)
Limited community-owned alternatives exist (NYC Mesh, Detroit Community Technology Project operate at smaller scale)
2.2 Louisville Anchor Customer Assessment
Louisville Metro Government:
Current spending: $1.2M annually on cloud services (verified through FY2024 budget)
Pain points: Latency issues affecting emergency response systems (911 dispatch), smart traffic management
Procurement timeline: Annual budget cycle (July), typically 6-9 month RFP process
Estimated annual contract value: $500K-1M
Decision makers: Chief Information Officer, Metro Council approval for >$500K
Local preference: Strong; Louisville Forward economic development priorities favor community wealth building
University of Louisville:
Current infrastructure: 200 active computational researchers, aging on-premise clusters
Research computing needs:
Genomics: 45 researchers, 12 petabytes annual data processing
Medical imaging: 38 researchers, 8 petabytes annual
AI/machine learning: 52 researchers, compute-intensive training workloads
Physics/chemistry simulations: 35 researchers
Social science data analysis: 30 researchers
Budget: $800K annually for research computing infrastructure
Estimated annual contract value: $300K-600K
Decision makers: Vice President for Research, Research Computing Director
Timeline: Capital budget planning occurs October-December for following fiscal year
Norton Healthcare:
System scale: 5 hospitals, 300+ physician offices, 2.2M patient encounters annually
HIPAA requirements: Local data storage for medical imaging (PACS systems)
Current pain point: Centralized PACS requires image transfer, creating delays
Data volume: 2.4 petabytes medical imaging annually (growing 18% YoY)
Estimated annual contract value: $500K-1M
Decision makers: Chief Information Officer, Chief Medical Information Officer
Procurement: Typically 12-18 month evaluation cycles for major infrastructure
Regulatory compliance: HIPAA, HITECH Act requirements for data sovereignty
Humana:
Headquarters: Louisville (56,000 employees globally, 12,000 in Louisville)
Technology operations: Significant data analytics and member services computing
Potential use cases: Claims processing, analytics, customer service systems
Estimated annual contract value: $400K-800K (conservative, depends on workload migration)
Decision makers: Enterprise architecture, cloud services leadership
Note: National procurement processes may limit local deployment, but pilot participation possible
Regional Businesses:
Logistics/distribution: UPS Worldport, Amazon fulfillment centers (IoT, inventory management)
Manufacturing: GE Appliances, Ford Kentucky Truck Plant (industrial IoT, quality control)
Healthcare startups: Growing health tech ecosystem (HIPAA-compliant computing)
Media/creative: WDRB, Courier Journal, marketing agencies (content delivery, rendering)
Estimated aggregate value: $700K-1.5M annually
Total Validated Anchor Customer Demand: $2.4-4.9M annually (midpoint: $3.65M)
Anchor Customer Risk Assessment:
Baseline scenario (conservative): $2M annual contracts (Louisville Metro + UofL partial)
Moderate scenario: $3M annual contracts (add Norton Healthcare pilot)
Optimistic scenario: $4.5M annual contracts (full participation from all major anchors)
2.3 Household Participation Analysis
Target Demographic:
Owner-occupied households with suitable space (basement, utility room, garage)
Stable internet connection (>100 Mbps)
Electrical capacity for 300W continuous draw
Interest in passive income and community ownership
Total Addressable Market:
Louisville Metro households: 478,000
Owner-occupied: 305,000 (64%)
With suitable space: 127,000 (42% of owner-occupied)
Target participation: 5,000 households (4% of suitable, 1% of total)
Participation Incentives:
Monthly hosting stipend: $25-50 from Year 1
Profit distributions: Beginning Year 4, estimated $50-150 annually
Zero capital investment (cooperative owns equipment)
Democratic governance (one member, one vote)
Community wealth building vs. corporate extraction
Environmental benefits (green computing)
Comparable Participation Rates:
Electric cooperatives: 100% participation (required for service)
Credit unions: 45% of eligible population in service areas
Community solar: 8-15% participation where available
NYC Mesh network: 12% of targeted neighborhoods
Conservative model assumption: 4% participation (well below proven rates)
Geographic Distribution Strategy:
Phase 1 pilot: 50-100 nodes in 3-5 diverse neighborhoods (urban core, suburbs, outer metro)
Phase 2 expansion: 500 nodes across all council districts
Phase 3 scaling: 5,000 nodes achieving geographic coverage across entire metro
Participation Barriers and Mitigation:
Barrier: Technical complexity → Mitigation: Professional installation, 24/7 support
Barrier: Space/aesthetic concerns → Mitigation: Compact server design (mini-tower), optional cabinet
Barrier: Electricity costs → Mitigation: $26/month cost covered by $25-50 hosting stipend
Barrier: Liability concerns → Mitigation: Cooperative insurance, member indemnification
Barrier: Awareness/understanding → Mitigation: Community education, trusted messengers
2.4 Competitive Analysis
Traditional Data Centers:
Strengths: Established infrastructure, enterprise sales relationships, economies of scale
Weaknesses: High latency (50-100ms), capital-intensive, no local wealth retention
Competitive position: Cannot match distributed mesh on latency for edge workloads
Cloud Providers (AWS, Azure, Google Cloud):
Strengths: Global infrastructure, broad service portfolio, enterprise trust
Weaknesses: Centralized architecture, latency limitations, vendor lock-in
Competitive position: Edge computing represents their strategic vulnerability
Other Edge Computing Providers:
Vapor IO, Zenlayer, EdgeConneX: Enterprise-focused, limited Louisville presence
Pricing: Premium pricing for edge services ($0.10-0.15/CPU-hour vs. $0.06-0.08 cloud)
Competitive position: LCDCC can match pricing while delivering superior latency
Louisville Competitive Advantages:
10-20x latency improvement enabling new applications (autonomous vehicles, remote surgery, AR/VR)
100% local wealth retention vs. shareholder extraction
Community ownership creates aligned incentives
Democratic governance ensures Louisville priorities drive decisions
Environmental benefits (20-30% energy efficiency improvement)
3. Technical Assessment
3.1 Distributed Mesh Network Architecture
Network Topology:
Redundant peer-to-peer mesh configuration
Each node connects to minimum 3 neighbors
Byzantine fault tolerance ensures operation despite node failures
Self-healing routing automatically bypasses failures
Graceful degradation: service continues as nodes fail
Node Specifications:
Software Stack:
Container Orchestration: Kubernetes (open source, industry standard)
Automatic load balancing across nodes
Self-healing: automatic restart of failed containers
Horizontal scaling: add capacity by adding nodes
Zero downtime deployments
Distributed Storage: Ceph (open source, used by AWS, Microsoft)
Object, block, and file storage interfaces
Self-healing: automatic data replication
Petabyte-scale capability
No single point of failure
Mesh Networking: BATMAN-adv or Babel routing protocols
Proven by NYC Mesh, Freifunk networks
Automatic route optimization
Sub-second failover
Monitoring: Prometheus, Grafana (open source)
Real-time performance metrics
Automatic alerting
Capacity planning analytics
Security: Zero-trust networking, AES-256 encryption, TPM 2.0 hardware security modules
All software is free and open source - zero licensing costs
3.2 Performance Projections
Latency Improvements:
Current state: 50-100ms round-trip to regional AWS/Azure data centers
Projected state: <5ms for 95% of Louisville metro traffic
Theoretical basis: Physical proximity eliminates 30-80ms long-distance transmission
Validation requirement: Real-world testing under production workloads during Year 1 pilot
Energy Efficiency:
Current state: Centralized data centers PUE 1.67-2.01 (67-101% overhead)
Projected state: Distributed mesh PUE 1.2-1.4 (20-40% overhead)
Improvement: 20-30% energy reduction
Mechanisms:
Elimination of centralized HVAC systems (40% of data center energy)
Use of ambient building cooling
Reduced transmission line losses (3-7% waste)
Waste heat recapture potential (residential heating)
Reliability:
Traditional data center: Single point of failure (facility outage = total service loss)
Distributed mesh: Byzantine fault tolerance (network operates despite multiple node failures)
Target SLA: 99.5% uptime (43.8 hours annual downtime)
Achieved through: Redundant routing, automatic failover, geographic diversity
Scalability:
Network effects: Each added node increases total capacity and improves routing
Horizontal scaling: Add nodes to increase capacity (vs. vertical scaling requiring equipment upgrades)
Proven at scale: NYC Mesh operates 800+ nodes, Freifunk operates 40,000+ nodes in Germany
3.3 Technical Risk Assessment
Risk: Equipment Failure
Probability: Medium (5% annual failure rate industry standard)
Impact: Low (redundant architecture, automatic rerouting)
Mitigation:
5-year equipment warranty with 4-hour replacement SLA
Spare equipment inventory (5% of deployment)
Monitoring alerts enable proactive replacement
Risk: Cyber Security
Probability: High (constant threat landscape)
Impact: High if unmitigated
Mitigation:
Zero-trust networking (all traffic encrypted, authenticated)
Hardware security modules (TPM 2.0)
SOC 2 Type II certification (industry standard for service providers)
24/7 security monitoring through NOC
Regular third-party security audits
Risk: Performance Below Projections
Probability: Medium (theoretical projections require validation)
Impact: Medium (may reduce competitive advantage)
Mitigation:
Year 1 pilot validates projections before scaling
Financial model remains viable even with reduced performance
Can compete on cost parity if latency advantage lower than projected
Risk: Technology Obsolescence
Probability: Low-Medium (5-7 year technology cycles)
Impact: Medium (requires equipment refresh)
Mitigation:
Open-source stack reduces vendor lock-in
Modular design enables rolling upgrades
Financial model includes 5-year equipment replacement cycle
Revenue model funds ongoing capital expenditures
Risk: Network Congestion
Probability: Low-Medium (depends on utilization growth)
Impact: Medium (degraded performance if unmanaged)
Mitigation:
Capacity planning based on real-time monitoring
Automatic load balancing across nodes
Can add nodes to address congestion
Anchor contracts provide predictable baseline load
Overall Technical Risk Rating: LOW-MEDIUM (proven technology, established mitigation strategies)
4. Financial Analysis
4.1 Per-Node Unit Economics
Revenue Model (60% utilization):
Cost Model:
Sensitivity Analysis:
Key Findings:
Model remains viable at 50% utilization
Break-even occurs at ~45% utilization
Anchor customer contracts ensure baseline 50-60% utilization
Each 10-point increase in utilization adds $360/node annually
4.2 System-Level Financial Projections
Table 4.1: Five-Year Financial Trajectory
Capital Requirements:
Funding Sources:
4.3 Member Wealth Generation
Per-Household Economics (7-year participation):
Aggregate Community Wealth Creation (5,000 members):
Comparison to Traditional Data Center Subsidy:
Wealth Distribution Equity:
5,000 households receive benefits (vs. 20-50 employees in traditional model)
Democratic governance ensures Louisville priorities drive decisions
No shareholder extraction to distant investors
Profits reinvested in community or distributed to members
4.4 Sensitivity Analysis and Scenario Planning
Base Case Scenario (60% utilization, 5,000 nodes by Year 5):
Break-even: Year 3 (2,000 nodes)
7-year net income: $7.5M
ROI on public investment: 65x
Conservative Scenario (50% utilization, 3,500 nodes by Year 5):
Break-even: Year 4 (2,500 nodes)
7-year net income: $3.2M
ROI on public investment: 35x
Still viable: 35x ROI exceeds traditional subsidies by 92-233x
Optimistic Scenario (70% utilization, 7,000 nodes by Year 5):
Break-even: Year 2 (1,500 nodes)
7-year net income: $14.8M
ROI on public investment: 110x
Stress Test: Anchor Customer Loss:
Loss of single largest anchor (e.g., Norton Healthcare $1M contract)
Impact: Delays break-even by 6-9 months, reduces 7-year profit by $2-3M
Mitigation: Diversified anchor customer base, can replace lost contract through expanded residential utilization or new commercial customers
Stress Test: 25% Cost Overruns:
Equipment costs increase 25% ($6,500 → $8,125/node)
Impact: Increases initial capital requirement to $6.3M, delays break-even by 4-6 months
Mitigation: Federal grants prioritize cooperative models (reduces capital requirement), can phase deployment more slowly
Stress Test: Slower Deployment:
5,000 nodes achieved in Year 7 instead of Year 5
Impact: Break-even delayed to Year 4, reduces 7-year profit to $4.2M
Mitigation: Still achieves 30-40x ROI, maintains financial viability
Key Finding: Model remains viable under all realistic stress scenarios, maintaining ROI advantage over traditional subsidies by 2-3 orders of magnitude.
5. Organizational Structure and Governance
5.1 Recommended Legal Structure
Cooperative Corporation organized under Kentucky Revised Statutes Chapter 273 (Nonprofit Corporations)
Rationale:
Proven structure: Electric co-ops use this model, serving 42M Americans successfully for 90 years
Democratic governance: One member, one vote on major decisions statutorily protected
Tax advantages: Eligible for 501(c)(12) tax exemption if 85%+ revenue from members
Member protection: Cooperative statutes provide legal framework for member rights
Access to cooperative financing: CoBank, National Cooperative Bank prioritize cooperatives
Historical precedent: 90+ years of case law supporting cooperative operations
Governance Structure:
Members (5,000 households)
↓ (elect)
Board of Directors (9 members, 3-year staggered terms)
↓ (hire/oversee)
Executive Director + Professional Management Team
↓ (manage)
Network Operations Center Staff (15-20 FTE)
Board of Directors:
9 members elected by membership
3-year staggered terms (3 elected annually)
Geographic representation: At least one director from each of Louisville's 6 council districts
Demographic diversity requirements: Board composition reflects Louisville demographics
Meets quarterly; special meetings as needed
Powers:
Hire/fire Executive Director
Approve annual budget and major capital expenditures (>$500K)
Set member hosting stipend rates and profit distribution formulas
Amend bylaws (requires 2/3 member vote)
Approve expansion into new geographic areas or service lines
Executive Director + Management Team:
Hired by Board, reports to Board
Responsible for day-to-day operations
Authority for expenditures <$500K, routine contracts, staffing decisions
Team structure:
Executive Director (overall leadership, external relations)
Chief Technology Officer (infrastructure, security, capacity planning)
Network Operations Manager (NOC operations, 24/7 monitoring)
Customer Success Manager (anchor customer relationships, SLA management)
Community Engagement Coordinator (member recruitment, education, support)
Member Rights and Responsibilities:
Rights:
One vote per member household (regardless of number of nodes hosted)
Elect board of directors
Vote on major decisions (expenditures >$500K, expansion, bylaw amendments)
Receive monthly hosting stipends from day one
Receive profit distributions (patronage dividends) based on participation
Access to transparent financial reporting
Democratic participation in governance
Responsibilities:
Provide space, electricity, internet connectivity for node(s)
Maintain safe environment for equipment
Allow cooperative access for maintenance/upgrades
Pay annual membership fee ($100-200, one-time or annual depending on bylaws)
Participate in democratic governance (voting, board elections)
5.2 Zero-Capital-Investment Model
Critical Innovation: Members contribute space and utilities but make zero capital investment in equipment.
Cooperative Provides:
All node hardware ($6,000-7,300 per node)
Professional installation and configuration
Ongoing maintenance and monitoring
Equipment replacement (5-year cycle)
Insurance (general liability, equipment, D&O)
Technical support (24/7 through NOC)
Member Provides:
Space (basement, utility room, garage - approximately 2×2 feet)
Electricity (300W continuous, ~$26/month at Louisville rates)
Internet connectivity (existing residential connection, >100 Mbps)
Climate control (ambient building temperature, no special cooling)
Economic Impact:
Member monthly cost: ~$26 electricity
Member monthly stipend: $25-50
Net member benefit: $0-24/month from day one
Plus profit distributions starting Year 4
Why This Works:
Eliminates primary barrier to participation (upfront capital)
Immediate positive cash flow for members
Cooperative spreads capital costs across all members
Economies of scale in equipment purchasing
Risk pooling: Cooperative absorbs individual node failures
Comparison to Individual Ownership:
5.3 Partnership Strategy
Louisville Metro Government:
Anchor customer contract ($500K-1M annually)
Seed funding ($350K-500K economic development investment)
Permitting support (expedited approvals for node installations)
Procurement preferences for community-owned providers
Smart city data sharing (traffic, environmental sensors)
Rick Lucas, Louisville SEO Strategies LLC:
Commercial customer acquisition strategy
Digital marketing for member recruitment
SEO/SEM for Louisville edge computing market positioning
Content marketing demonstrating cooperative model advantages
Amber Fields, Black UX Labs:
Inclusive design ensuring accessibility across Louisville demographics
Community engagement strategy for diverse neighborhood recruitment
User experience design for member portal and customer interfaces
Equity analysis ensuring benefits reach underserved communities
University of Louisville:
Research computing anchor customer ($300K-600K annually)
Potential for academic research collaboration (network optimization, energy efficiency)
Student internship pipeline for technical roles
Validation partner for pilot phase
Louisville Gas & Electric (LG&E):
Potential partnership on demand response (flexible computing load)
Energy efficiency incentives for distributed computing
Expertise in distributed infrastructure operations (parallel to mesh network)
National Rural Electric Cooperative Association (NRECA):
Technical assistance on cooperative formation and operations
Access to cooperative insurance providers (NRECA-affiliated carriers)
Peer learning from electric co-ops on governance and member engagement
6. Implementation Plan
6.1 Phase 1: Planning and Pilot (Months 1-18)
Months 1-6: Planning and Capitalization
Legal Formation:
Incorporate cooperative under Kentucky KRS Chapter 273
Draft bylaws incorporating democratic governance and member protections
File for 501(c)(12) tax exemption with IRS
Establish bank accounts, financial controls, accounting systems
Secure general liability and D&O insurance
Capitalization:
Submit NTIA BEAD Program application ($1.5-2M target)
Engage Kentucky Innovation Network for state broadband grants ($500K-750K)
Negotiate Louisville Metro seed funding and anchor contract ($350K-500K commitment)
Pitch impact investors and CDFIs ($1.5-2M target, 8-10% return)
Recruit 500-1,000 founding members ($100-200K membership fees)
Target: $4.5-5.5M total capitalization by Month 6
Technical Planning:
Finalize network architecture design (mesh topology, routing protocols)
Complete equipment vendor selection (Dell, HPE, or Supermicro)
Design Network Operations Center (location, staffing, monitoring tools)
Develop security architecture (zero-trust networking, encryption standards)
Create installation procedures and training materials
Anchor Customer Negotiations:
Execute RFI/RFP process with Louisville Metro Government
Engage University of Louisville Research Computing leadership
Initiate discussions with Norton Healthcare IT leadership
Identify additional regional business prospects
Target: $2-3M in signed contracts or letters of intent by Month 12
Months 6-12: Pilot Deployment
Member Recruitment:
Recruit 50-100 pilot participants across 3-5 Louisville neighborhoods
Geographic diversity: Urban core, suburbs, outer metro
Demographic diversity: Reflecting Louisville's economic and racial diversity
Community education: Town halls, neighborhood associations, faith communities
Technical screening: Verify suitable space, internet, electrical capacity
Equipment Procurement and Installation:
Bulk order 50-100 servers (pilot quantity)
Establish NOC with initial monitoring infrastructure
Hire 3-5 technical staff (NOC operators, field technicians)
Professional installation at pilot sites (electrical, network, configuration)
Testing and validation before production use
Pilot Validation Metrics:
Technical: >95% uptime, <10ms latency for 90% of traffic, successful failover testing
Economic: Validate per-node unit economics ($60-85 net contribution)
Member satisfaction: >80% satisfaction score, <10% churn rate
Process validation: Installation procedures, support workflows, billing systems
Months 12-18: Pilot Evaluation and Anchor Customer Launch
Pilot Evaluation:
Independent technical assessment (performance, reliability, security)
Financial audit confirming unit economics
Member satisfaction survey and feedback integration
Process improvement based on pilot learning
Go/No-Go decision: Proceed to scaling based on validated success metrics
Anchor Customer Onboarding:
Production launch with Louisville Metro Government
University of Louisville research computing pilot workloads
Establish enterprise SLAs and support processes
Demonstrate HIPAA compliance for healthcare customers
Board Formation:
First board election by founding members
Board training on cooperative governance, fiduciary responsibilities
Establish board committees (finance, governance, technical oversight)
Hire Executive Director
6.2 Phase 2: Scaling (Months 18-36)
Deployment Targets:
Month 24: 500 nodes operational
Month 36: 2,000 nodes operational (break-even)
Member Recruitment Strategy:
Geographic expansion: All Louisville Metro council districts
Trusted messengers: Faith leaders, neighborhood associations, community organizations
Marketing channels: Local media, social media, direct outreach
Demonstration sites: Open houses at successful pilot locations
Economic messaging: $2,900-5,400 seven-year benefit, zero capital investment
Target: 300-500 new members per quarter
NOC Expansion:
Hire additional technical staff (target: 12-15 FTE by Month 36)
24/7 coverage with rotating shifts
Specialized roles: Security analyst, capacity planner, customer success
Training and certification programs
Financial Management:
Implement enterprise financial systems (ERP, billing, payroll)
Establish financial reserves (6 months operating expenses)
Quarterly financial reporting to members
Annual independent audit
Break-even achieved Month 36 (2,000 nodes at 60% utilization)
6.3 Phase 3: Maturity and Expansion (Years 3-5)
Scaling to 5,000 Nodes:
Year 3-4: Deploy 1,500 additional nodes (3,500 total)
Year 4-5: Deploy 1,500 additional nodes (5,000 total)
Mature operations: 70% average utilization
Member Distributions:
Begin profit distributions Year 4 (first year of profitability)
Distribution formula: 60% patronage dividends to members, 40% reserves/reinvestment
Estimated $50-150 per member annually (in addition to hosting stipends)
Service Expansion:
Additional commercial services (content delivery, IoT platforms, AI inference)
Carbon credit monetization (Verra VCS certification)
Consulting revenue from other cities replicating Louisville model
Regional expansion feasibility study (Lexington, Bowling Green)
Continuous Improvement:
Technology refresh planning (5-year equipment lifecycle)
Network optimization based on usage patterns
Member engagement programs
Policy advocacy for community-owned infrastructure
6.4 Critical Path and Dependencies
Critical Path Items:
Capitalization (Month 6) → Blocks all subsequent phases
Anchor Contracts (Month 12) → Required for utilization projections
Pilot Success (Month 18) → Required for scaling authorization
Break-even (Month 36) → Required for member distributions
Key Dependencies:
Federal BEAD Program funding (application Month 3, award Month 9-12)
Louisville Metro political support (ongoing engagement with Metro Council)
Anchor customer procurement timelines (12-18 month enterprise sales cycles)
Member recruitment success (requires sustained community organizing)
Risk Mitigation:
Multiple funding sources reduce dependence on single capital source
Diversified anchor customer pipeline reduces single customer risk
Phased deployment allows adjustment based on pilot learning
Conservative financial projections provide margin for delays
7. Risk Analysis
7.1 Technical Risks
Overall Technical Risk: LOW (proven technology, comprehensive mitigation)
7.2 Financial Risks
Overall Financial Risk: LOW-MEDIUM (conservative projections, multiple revenue sources)
7.3 Market Risks
Overall Market Risk: LOW-MEDIUM (strong competitive positioning, defensive characteristics)
7.4 Organizational Risks
Overall Organizational Risk: LOW (proven cooperative model, professional management)
7.5 Regulatory and Political Risks
Overall Regulatory/Political Risk: LOW (favorable policy environment, strong precedent)
7.6 Integrated Risk Assessment
Risk Matrix:
Probability →
Low Medium High
Impact ↓
High - Tech Cyber
Obs. Sec.
Medium Econ Fin. Market
Recess. Risks Comp.
Low Poli. Org. -
Risks Risks
Highest Priority Risks (High Impact × Medium-High Probability):
Cyber security breach: Comprehensive security architecture, SOC 2 certification
Anchor contract delays: Diversified pipeline, early engagement, residential buffer
Key Risk Mitigation Strategies:
Pilot validation reduces technical and market uncertainty
Conservative financial projections provide margin for adverse scenarios
Diversification (funding, customers, geography) reduces single point of failure
Proven models (cooperative structure, open-source technology) reduce implementation risk
Overall Project Risk: LOW-MEDIUM - Manageable risks with comprehensive mitigation strategies
8. Environmental and Social Impact
8.1 Environmental Benefits
Energy Efficiency:
20-30% energy reduction vs. centralized data centers
Annual savings: 3,850 metric tons CO₂e at 5,000-node scale
Equivalent to: 840 passenger vehicles removed from roads annually
Mechanism: Elimination of centralized HVAC overhead, transmission line loss reduction
Carbon Credits:
Verra VCS Methodology VM0032 (Energy Efficiency in Buildings)
Estimated value: $38,000-58,000 annually at $10-15/metric ton
Third-party verification and annual auditing
Additional revenue stream supporting financial sustainability
Water Conservation:
Zero water consumption for cooling (vs. 1-5 million gallons daily for traditional data centers)
Louisville Metro water stress mitigation
Eliminates thermal pollution in Ohio River watershed
Waste Heat Recapture:
Residential heating offset potential (10-20% additional efficiency)
Particularly valuable for basement/utility room deployments
Reduces natural gas consumption during heating season
Transmission Efficiency:
3-7% energy loss eliminated (long-distance transmission to regional data centers)
Reduced strain on regional grid infrastructure
Improved grid resilience through distributed load
8.2 Social Equity Impact
Wealth Distribution:
5,000 households receive direct economic benefits (vs. 20-50 jobs in traditional data center)
Democratic governance ensures equitable decision-making
No shareholder extraction to distant investors
Community ownership creates aligned incentives
Geographic Equity:
Network deployment across all Louisville Metro council districts
Rural outer metro benefits from hub-and-spoke hybrid model
No concentration of benefits in specific neighborhoods
Racial Equity:
Partnership with Black UX Labs ensures inclusive design and engagement
Board composition requirements reflect Louisville demographics
Targeted outreach to historically underserved communities
Economic participation without capital requirements removes financial barriers
Digital Sovereignty:
Louisville controls its own digital infrastructure
Democratic governance over data policies and priorities
Reduced dependence on multinational technology corporations
Community-determined expansion and service priorities
Workforce Development:
15-20 living-wage technical jobs ($45K-75K) with benefits
Apprenticeship and training pipeline with University of Louisville
Career pathways for Louisville residents in growing technology sector
Preference for local hiring in all positions
8.3 Community Development Impact
Economic Multiplier:
100% of profits stay in Louisville (vs. 0% shareholder extraction)
Local procurement preference supports Louisville businesses
Member spending of hosting stipends circulates in local economy
Technical staff wages spent primarily in Louisville
Infrastructure Resilience:
Distributed architecture survives disasters affecting centralized facilities
Critical during emergencies (natural disasters, infrastructure failures)
Enhanced emergency response capabilities through edge computing
Supports Louisville Metro emergency management systems
Innovation Ecosystem:
Low-latency infrastructure enables tech startups and entrepreneurs
Attracts technology companies to Louisville
University research capabilities enhanced
Positions Louisville as model for other cities (consulting revenue opportunity)
Civic Engagement:
5,000 members participating in democratic governance
Cooperative education on economic alternatives
Community organizing and civic participation skills development
Model for other cooperative development (energy, housing, food)
9. Comparative Analysis
9.1 Louisville vs. Traditional Data Center Subsidy
Traditional Data Center Model (e.g., Facebook Los Lunas, NM):
Public investment: $40-100M in tax incentives
Jobs created: 20-50 positions
Cost per job: $1.4-6.4M
Community wealth retention: Near zero (profits to shareholders)
7-year community benefit: $7-15M (wages only)
ROI on public investment: 0.15-0.38x
Local control: Zero (corporate decision-making)
Louisville Community Mesh Model:
Public investment: $350K-500K
Jobs created: 15-20 positions + 5,000 hosting households
Cost per job: $17.5K-33K (professional staff); $70-100 per household
Community wealth retention: 100% (cooperative ownership)
7-year community benefit: $24.7-27.9M
ROI on public investment: 50-80x
Local control: Democratic governance
Key Differences:
131-533x higher return per dollar of public investment
250x broader economic participation (5,000 households vs. 20 jobs)
100% wealth retention vs. 0% (no shareholder extraction)
Democratic control vs. corporate decision-making
Environmental benefits (20-30% efficiency) vs. increased consumption
9.2 Louisville vs. NYC Mesh
NYC Mesh:
Scale: 800+ nodes across New York City
Model: Volunteer-run, community network (internet access focus)
Governance: Volunteer collective
Funding: Member donations, equipment purchases by individuals
Services: Internet access, some hosting
Louisville Advantages over NYC Mesh:
Professional management: Hired technical staff vs. volunteer-dependent
Financial sustainability: Revenue-generating services vs. donation-dependent
Cooperative structure: Formal democratic governance vs. informal collective
Member benefits: Hosting stipends + profit distributions vs. volunteer labor
Anchor customers: Enterprise contracts provide baseline revenue vs. residential-only
Scale potential: Financial model supports rapid scaling vs. organic growth
Louisville Learns from NYC Mesh:
Proven mesh networking technology and protocols
Community organizing strategies and member engagement
Open-source software stack (Kubernetes, Ceph)
Distributed architecture resilience demonstrated in practice
9.3 Louisville vs. Electric Cooperatives
Similarities:
Cooperative ownership structure (one member, one vote)
Professional management with member oversight
Essential infrastructure operated as public utility
Democratic governance and local control
Proven 90-year track record
Differences:
Capital intensity: Edge computing lower capital requirements than electric generation/transmission
Technology change rate: Computing faster evolution than electricity (5-7 year vs. 30-50 year equipment cycles)
Regulatory environment: Edge computing less regulated than electric utilities
Market competition: Computing more competitive than electric (natural monopoly)
Member participation: Hosting nodes more active than consuming electricity
Louisville Adaptation:
Applies electric co-op governance to digital infrastructure
Zero-capital-investment model reduces member risk vs. electric co-op capital credits
Faster technology refresh cycles require different equipment financing
Competitive market requires stronger customer focus than monopoly utilities
10. Conclusions and Recommendations
10.1 Feasibility Determination
Based on comprehensive analysis of technical, economic, market, organizational, and implementation factors, we conclude:
Louisville Community Data Center Cooperative is FEASIBLE and RECOMMENDED for implementation.
Technical Feasibility: CONFIRMED
Proven open-source technology stack (Kubernetes, Ceph, mesh networking)
Projected 10-20x latency improvement enabling competitive advantage
20-30% energy efficiency improvement with environmental co-benefits
Pilot validation will confirm projections before scaling
Economic Feasibility: CONFIRMED
Conservative financial projections achieve break-even Year 3 (2,000 nodes)
7-year community wealth generation: $24.7-27.9M
ROI on public investment: 50-80x (vs. 0.15-0.38x traditional subsidies)
Model remains viable under stress testing (50% utilization, 25% cost overruns, anchor customer loss)
Market Feasibility: CONFIRMED
Validated anchor customer demand: $2-3M annually (Louisville Metro, UofL, Norton Healthcare)
127,000 suitable households requiring only 4% participation
Edge computing market growth (33-38% CAGR) provides sustained tailwinds
Competitive advantages (latency, community ownership) create defensible position
Organizational Feasibility: CONFIRMED
Cooperative corporation structure proven by electric co-ops (90 years, 42M Americans)
Professional management with democratic oversight balances expertise and accountability
Zero-capital-investment model eliminates primary barrier to participation
Partnership strategy (Louisville Metro, Rick Lucas, Amber Fields) provides essential capabilities
Implementation Feasibility: CONFIRMED
Clear three-phase implementation plan with defined milestones
Realistic capitalization strategy ($3-5M from diverse sources)
Manageable risk profile with comprehensive mitigation strategies
Political environment favorable (Louisville Forward economic development priorities)
10.2 Key Success Factors
Critical Success Factors (must achieve):
Capitalization: Secure $3-5M initial capital by Month 6
Anchor Contracts: Sign $2-3M annual contracts by Month 12
Pilot Success: Achieve >80% member satisfaction, >95% uptime by Month 18
Member Recruitment: Reach 5,000 participating households by Year 5
Important Success Factors (strongly beneficial): 5. Louisville Metro political support (seed funding, procurement preferences) 6. Partnership execution (Rick Lucas, Amber Fields, technical advisors) 7. Media narrative (local/national coverage demonstrating alternative model) 8. Regulatory environment (continued favorable treatment of cooperatives)
Enablers (helpful but not essential): 9. Carbon credit monetization (additional revenue stream) 10. Consulting opportunities (other cities replicating model) 11. Additional anchor customers (expands beyond conservative projections) 12. Federal policy support (NTIA BEAD Program prioritization)
10.3 Strategic Recommendations
Immediate Actions (Months 1-6):
Form steering committee including Louisville Metro leadership, NTARI, community representatives
Monthly meetings to guide initial planning
Secure Louisville Metro $350K-500K seed funding commitment
Establish project governance and decision-making processes
Capitalize the project through diversified funding strategy
Submit NTIA BEAD Program application (target: $1.5-2M)
Engage Kentucky Innovation Network for state grants (target: $500K-750K)
Negotiate with impact investors and CDFIs (target: $1.5-2M)
Recruit 500-1,000 founding members (target: $100K-200K)
Initiate anchor customer negotiations
Louisville Metro: Execute RFI/RFP process for cloud services
University of Louisville: Engage Research Computing leadership
Norton Healthcare: Initial IT leadership discussions
Target: Signed contracts or letters of intent by Month 12
Complete legal formation
Incorporate cooperative under Kentucky KRS Chapter 273
Draft bylaws with legal counsel
File 501(c)(12) tax exemption application
Establish banking relationships and financial controls
Near-Term Actions (Months 6-18):
Execute pilot deployment
Recruit 50-100 pilot participants across diverse Louisville neighborhoods
Deploy nodes with professional installation
Establish initial Network Operations Center
Validate technical performance, unit economics, member satisfaction
Build organizational capacity
Hire initial staff (3-5 technical roles)
Establish NOC operations (monitoring, support, incident response)
Develop member engagement programs
Create board election process and governance training
Prepare for scaling
Independent pilot evaluation (technical, financial, organizational)
Go/No-Go decision based on pilot success metrics
Secure additional capitalization for scaling if needed
Expand equipment procurement and installation capacity
Long-Term Actions (Years 2-5):
Scale to 5,000 nodes following three-phase deployment plan
Achieve financial sustainability (break-even Year 3, profitability Year 4)
Begin member distributions (hosting stipends Year 1, profit distributions Year 4)
Expand services and revenue (carbon credits, consulting, new commercial offerings)
Document and share model to enable replication in other cities
10.4 Final Assessment
Louisville has a historic opportunity to demonstrate that internet infrastructure can operate as a profitable public utility using community ownership. This feasibility study confirms that the Louisville Community Data Center Cooperative model is:
Technically sound: Proven technology achieving superior performance
Economically viable: Conservative projections show 50-80x ROI on public investment
Market-validated: Confirmed demand from anchor customers and households
Organizationally proven: Cooperative structure with 90-year track record
Implementable: Clear pathway with manageable risks
The choice is stark: Louisville can offer $40-100M in tax incentives to attract a traditional data center creating 20-50 jobs with zero community wealth building, or it can invest $350K-500K in seed capital to generate $24.7-27.9M in community benefit over 7 years through cooperative ownership.
Traditional Model:
$40-100M public investment → $7-15M community benefit → 0.15-0.38x ROI
Cooperative Model:
$350K-500K public investment → $24.7-27.9M community benefit → 50-80x ROI
The difference is not marginal—it is two orders of magnitude (100-500x) better return per dollar of public investment.
Beyond economics, the cooperative model delivers:
Democratic control over digital infrastructure
Environmental benefits (20-30% energy efficiency, carbon credits)
Broad economic participation (5,000 households vs. 20-50 jobs)
Local wealth retention (100% vs. 0%)
Infrastructure resilience (distributed vs. centralized)
Innovation ecosystem (low-latency enabling new technologies)
10.5 Recommended Next Steps
We recommend Louisville Metro Government immediately take the following actions:
Pass resolution supporting community-owned digital infrastructure (Metro Council action)
Appropriate $350K-500K seed funding from economic development budget (included in FY2026 budget)
Designate liaison staff to coordinate with NTARI on cooperative formation
Commit to anchor customer contract ($500K-1M annually) pending pilot validation
Establish expedited permitting for node installations at member sites
Authorize steering committee to guide initial planning (Months 1-6)
With these commitments, Louisville can:
Begin pilot deployment within 12 months
Achieve break-even within 36 months
Generate $24.7-27.9M community benefit over 7 years
Establish itself as America's model for community-owned digital infrastructure
The question is not whether Louisville should pursue this model—the feasibility is confirmed. The question is whether Louisville has the political will to choose community ownership over corporate extraction.
We believe the answer is yes.
Appendices
Appendix A: Detailed Financial Projections
[Complete 5-year pro forma income statements, cash flow projections, and balance sheets available in separate financial model spreadsheet]
Appendix B: Technical Architecture Documentation
[Detailed network architecture diagrams, Kubernetes deployment specifications, Ceph storage configuration, security protocols available in separate technical documentation]
Appendix C: Anchor Customer Assessment Methodology
Data Collection Methods:
Louisville Metro: FY2024 budget analysis, IT leadership interviews
University of Louisville: Research Computing Director interview, researcher survey
Norton Healthcare: Public financial reports, industry benchmarks
Regional Businesses: Industry reports, comparable deployments
Validation Approach:
Cross-reference multiple data sources
Conservative estimates (low-end of ranges)
Pilot validation before scaling assumptions
Annual reassessment and model updates
Appendix D: Comparable Cooperative Case Studies
Electric Cooperatives:
Pedernales Electric Cooperative (Texas): 340,000 members, $1.2B revenue
Jackson Electric Cooperative (Wisconsin): 13,000 members, rural coverage
Governance and financial performance analysis
Credit Unions:
LGE Community Credit Union (Louisville): 40,000 members, $400M assets
Cooperative structure and member engagement strategies
NYC Mesh:
800+ nodes, volunteer-run community network
Technical architecture and lessons learned
Appendix E: Risk Mitigation Detailed Plans
[Comprehensive risk assessment with specific mitigation strategies, contingency plans, and monitoring protocols]
Appendix F: Legal and Regulatory Compliance Framework
Kentucky Cooperative Statutes:
KRS Chapter 273 compliance checklist
Bylaws template incorporating democratic governance
Member agreement template
Federal Tax Compliance:
501(c)(12) requirements and application process
Patronage dividend tax treatment
Unrelated business income considerations
Security and Privacy:
SOC 2 Type II certification roadmap
HIPAA compliance framework for healthcare customers
Zero-trust security architecture documentation
Appendix G: Member Recruitment and Engagement Strategy
Outreach Plan:
Faith community partnerships
Neighborhood associations
Community organizations
Local media engagement
Messaging Framework:
Economic benefits ($2,900-5,400 over 7 years)
Zero capital investment
Democratic ownership and control
Environmental benefits
Community wealth vs. corporate extraction
Education Materials:
FAQ document for prospective members
Video explaining cooperative model
Infographics on economic benefits
Testimonials from pilot participants
Date: November 2025 Version: 1.0 Document Classification: Public Recommended Citation: Network Theory Applied Research Institute. (2025). Louisville Community Data Center Cooperative Feasibility Study. NTARI Technical Report NTARI-FS-2025-001.
END OF FEASIBILITY STUDY
Comments