High-speed broadband network could be a cash cow for Edmonds

EDMONDS — In Europe and elsewhere in the world, publicly owned fiber-optic broadband networks provide fast access to the Internet, fueling economic growth.

The concept is simple. The municipality owns the fiber-optics, the same way it owns roads and sewer lines.

Then, Internet service providers pay to use the ultrahigh-speed network, the same as a driver might pay to use a toll bridge.

Edmonds is one of several cities in the United States trying to play catch-up to the rest of the world by lighting up its own fiber-optic network, said Steve Stroh, a Seattle-area freelance writer on broadband issues.

Edmonds wants to use the same business plan that has been so successful in other countries.

However, municipal broadband networks in this country have seen mixed results, often facing financial hardship and legal challenges from cable, phone and Internet service providers, Stroh said.

“This is the space race of this decade, and the U.S. is just missing in action,” Stroh said.

The good news in Edmonds is this: by studying what’s happened to municipal broadband networks in other places, city planners believe their plan has the best chance to be successful.

“Not only is it workable, but it has wild possibilities for new revenue for our city and cheaper rates for our citizens,” said City Councilwoman Mauri Moore, a longtime proponent of the city’s broadband initiative.

By only providing the infrastructure of a fiber-optic network, the city wouldn’t be competing for customers with other companies, Moore said. Instead, the city would be encouraging competition by allowing smaller companies to use the infrastructure to compete with the large companies, she said.

Some cities have tried to compete with existing companies by providing digital services, but with mixed results.

In Ashland, Ore. — one of the first cities in the country to light up a municipal broadband network — the city racked up $4 million in debt from 2000 through 2006 trying to compete with the incumbent cable television provider, said Joe Franell, Ashland’s director of information technology.

This year, Ashland officials decided to stop providing cable services. Instead, the city started using the same business model Edmonds plans to use, providing only the fiber-optic infrastructure.

Since then, the city’s network has generated more than $350,000 in revenue, Franell said.

The city’s biggest mistake was focusing too much on creating cheaper services and not enough on the other benefits of having an open fiber-optic network, he said.

“It should never be about price, it should always be about quality and service to the community,” Franell said.

Another well-known municipal broadband network is called the Utah Telecommunication Open Infrastructure Agency, also referred to as UTOPIA. The network spans 11 cities and will soon have the potential to connect to more than 55,000 homes, said Roger Black, UTOPIA’s former chief operating officer, who now serves the agency as a consultant.

The existing Internet company that served the UTOPIA region almost succeeded in derailing the entire project. The company, AT&T Broadband, tried to get a state law passed to prohibit governments from providing Internet services.

Lawmakers in Utah ended up passing a law that restricted how municipalities could provide services. However, the law did not prohibit municipal governments from operating open broadband networks, Black said.

In 2004, the UTOPIA project survived another challenge in the Legislature — this time when Qwest sought to have a law passed restricting open networks — before the network opened to users in early 2005.

The major service providers have a long history of trying to thwart municipal broadband projects, Black said.

In the past, the big companies have argued that government has no place in the Internet business, and that it’s unfair for government to compete with businesses it regulates. The companies say public broadband is seldom successful financially, and customers already have plenty of choices for high-speed Internet, Black said.

Verizon is in the midst of building a nationwide fiber-optic network that would run through Snohomish and King counties. The company doesn’t plan to file a lawsuit to try to stop Edmonds’ project, Verizon spokesman Kevin Laverty said.

“It really is up to the taxpayers if they feel the money the cities need to operate and provide services is best spent on something like a fiber-optic network,” he said.

The economic benefits of a fiber-optic network are already showing in Ashland. The city of about 10,000 homes has increased its number of active business licenses by 571 since the broadband project was started in 1997 — an unprecedented spike in business for the city, Franell said.

Black points out that the goal of publicly owned networks is to recover costs and improve services, not make a profit. Even UTOPIA started in red ink, but the project’s budget is now where planners predicted it would be, Black said.

“(Our member cities) decided their economic futures were ultimately dependent on whether they could provide fiber connections to businesses,” Black said. “Our cities, as part of their due diligence, concluded that if they are going to be big players, this has to be required infrastructure they’d have to have.”

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