New Estimate Takes $30M Off City Broadband Cost

fiber opticsThe release of estimated costs to build a city-owned internet service utility brought millions of dollars of good news for Commissioner Justin Troller and other “gigabit city” advocates Friday.

The new $80 million estimate to build a network that covers the area within the city limits cuts $30 million from a 2016 ballpark estimate prepared by Magellan Advisors, the city’s broadband consultant. The Colorado-based company was hired by the city this year to create a business plan for a proposed retail internet service.

“I’m excited about the figures,” Troller said at the broadband committee meeting Friday. “I think the original $110 million was manageable, I think this is more manageable.”

Unlike the 2016 report, which was broader and shallower in scale, the new figures are based on specific data about the city’s geography, assets and demography. The full report is due Aug. 5. 

Other estimates also moved downward. 

The estimated cost to build a network that covers the entire Lakeland Electric service territory — which includes rural areas in the county outside city limits — also saw a notable dip compared to the looser 2016 numbers, shifting the bottom line from $220 million – $270 million to $217 million.

These new estimates also include a 15% increase to account for uncertainty, Magellan CEO John Honker said.

At the broadband committee’s request, the company will also prepare a version of the estimates that forgoes expensive fiber optics installations for rural customers and instead offers high-speed wireless services. 

Though slower than fiber optics, wireless connections cut the investment cost per customer by about 40 percent, Honker said, and could be a notable improvement to services currently offered to those residents by private companies.

Lakeland’s current infrastructure, including more than 330 miles of fiber optics “backbone,” gives the city options if it decides to create the new utility. 

“It’s already in the ground, it’s on the poles, it’s ready to use,” Honker said. “It actually enables the fiberhood model because now you can consider where you’re going to build much more easily.”

Building a network based on “fiberhoods” was a system used by Google Fiber and several smaller providers throughout the country. The idea is that neighborhoods will only be connected if a certain percentage of residents — say 40% — agrees to join the new service when it is created. 

This guarantees a revenue stream, Honker said, but it also telegraphs to incumbent providers like Spectrum and Frontier the city’s intentions. 

Troller said he prefers skipping the fiberhood promises instead building out the network, which Magellan expects would take between two and five years.

Other things have changed since 2016. 

Then, Magellan seemed to recommend against the city getting into the “cable” television business, which is a shrinking market as internet-based providers like Netflix, Hulu and Amazon rise. 
>Now, providing paid TV as part of a “triple play” package of internet, television and telephone, is much easier and can be contracted on a per-user basis, Honker said, and its inclusion could  help sway customers over to the Lakeland internet service.

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