The city of Lakeland is about to take a deep dive into whether it will be financially feasible to set up a utility providing high-speed Internet service to residents and businesses.
City commissioners today gave their staff the go-ahead to recruit a consultant to develop an “investor-grade” business plan that will help determine whether the city can expand its 330 miles of fiber optic cable into a viable broadband service.
Commissioners also decided to let a variety of consultants submit proposals, not just Magellan Advisors, the organization that worked with the city in 2015 and 2016 on a strategic plan for city broadband.
It will probably be the end of October before a consultant is selected, city Chief Information Officer Terry Brigman said. Before that, the city’s broadband leadership team will need to define the scope of work, develop a request for proposal document and determine how to score the proposals.
While costs will not be clear until the proposals are submitted, commissioners set aside $200,000 in the 2019 fiscal year budget for the business plan.
Commissioners were unanimous in agreeing to proceed with a business plan, but their comments about the prospect of a new city utility ranged from enthusiastic to guarded.
Justin Troller, who has been speaking to groups to rally support for broadband, thanked his fellow commissioners on Facebook soon after the vote and said, “It’s time for our current and already-paid-for fiber network to work for ALL Lakelanders. Thank you to everyone that communicated their thoughts and opinions on this issue. I ask that you continue to stay engaged.”
Stephanie Madden spoke passionately about the need for the city to extend its fiber network to prepare for the increased connectivity demands of upcoming driverless cars and “the Internet of things.”
“It’s important to think of it as infrastructure rather than just Internet service,” she said. She discounted claims that upcoming 5G wireless speeds would supersede the need for wired connections, noting companies like AT&T are “planting fiber as fast as they can.”
As she often does, she used personal examples, saying that there are already connection hiccups at her house when her sons are gaming, somebody is streaming Netflix and she is on a business webinar. “I feel I need (higher speeds) at home like I need a refrigerator.”
Mayor Bill Mutz cautioned that city leaders need to remain aware of the risks involved in starting a major venture.
“We need to do a business plan because we’re talking about feasibility, not desire,” he said, noting that nearly everybody wants faster Internet, but they may not want to pay the costs. “The reason to spend $150,000 for a business plan is to see … if it’s feasible and if we can have a model that can outlast technology.”
The $49,000 strategic plan from Magellan developed a few years ago resulted in several city initiatives, according to Brigman. The city:
- Continues expanding its SurfLakeland wifi network into non-profit agencies serving communities where few people have broadband connections.
- Worked with Lakeland Vision to place fiber connections in Lakeland public schools.
In some ways, today’s action ratifies one of the last votes of the previous commission, which decided last December to move toward studying a municipal utility after experiencing difficulties finding a private-sector company to partner with.
Efforts to find a private partner started after commissioners in 2016 toyed with the idea of conducting a pilot program to test municipal broadband service in a few portions of the city, but they backed away after the test area expanded, costs escalated and worries about risk surfaced.
The new business plan envisioned by city staff would address capital requirements, costs, pricing assumptions, marketing, sales, customer service, staffing, network architecture, implementation plan, pro forma financial statements and an operating plan, according to a report Brigman presented to commissioners today.
Magellan’s 2016 report estimated costs for a full business and residential service at $70 million or more to roll out in city limits and at least $98 million to cover the entire Lakeland Electric service area.
Assuming 45 percent of residents and businesses enrolled, it would take five to seven years to start making money, according to the Magellan analysis.
Commissioners and their staff agreed today that conditions have changed enough since 2016 that market and financial assumptions will need to be recalculated for the upcoming business plan.
City officials said today they don’t have an estimate of how long it will take to complete the business plan.
Commissioners said today they don’t plan to pursue providing cable or landline services since those markets are rapidly declining.
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