David Rodeback's Blog

Thursday, August 3, 2006

American Fork Municipal Broadband: Update

Here I fill in a few details -- nothing earth-shaking -- and ask a question I haven't heard anyone ask yet. (That might mean it's a dumb question. You decide.)

I've been keeping my ear to the ground for developments concerning AFCNet, American Fork's municipal broadband system. (That's the fast, reliable, affordable Internet connection I enjoy so much, in case you're new to the blog.) At last report, the City had received and was considering several proposals, in response to the RFP (Request for Proposals) it issued earlier this summer. Here are some notes on the proposals, some clues to official attitudes about the system, and a fairly significant question for the immediate future.

Proposals

We now know that the City received six proposals in all; Councilman Dale Gunther supplied this number in one of last week's town meetings on the budget and the property tax increase. City officials are currently unwilling to identify the potential buyers on the record or give details of their proposals for the record. This is reasonable; the proposals contain sensitive corporate information.

Sources indicate that none of the six potential buyers answered the RFP completely. (I am not a seasoned writer or reader of RFPs, so I may not be a good judge, but when every response is incomplete, one begins to wonder if the RFP itself was not well written.) City officials, some elected and some otherwise, have met with each of the potential buyers, seeking more information and clarification. The last such meetings were held earlier this week.

At least one prospect has actual corporate experience providing municipal broadband. This specific, relevant experience may prove decisive, as it did in the selection of MGB+A for the parks project a few years ago. The results in that case were excellent, to my mind.

Official Attitudes

Having heard a report from last Wednesday's town meeting on the budget that Mayor Thompson had seemed eager simply to divest the City of the broadband system with all possible speed, I prepared a question for the following evening's meeting. I asked if he accepts the research indicating that there is a substantial economic growth advantage for cities with municipal broadband. He didn't actually answer my question, but he did say, "We think we have a responsibility to assure that, if someone comes through with an acceptable bid, [they will provide an enhanced level of service]."

I probably should have followed up with a question designed to determine whether he and other officials are aware that the lion's share of the benefits come from municipal broadband, not simply from having commercially-provided broadband available in a municipality. But I didn't think of that at the time.

I'm not very good at predicting the future. But my hopes for not being relegated to ComCast or Qwest DSL by this time next year (or the next) are pinned on two current impressions. First, some of the decision makers seem committed to municipal broadband for the sake of its economic and quality-of-life benefits, and I hope their influence will be sufficient to insure that the system is sold, if it is sold at all, to a company which is seriously committed to making (keeping) it fast, affordable, reliable, and citywide for the foreseeable future. Second, other decision makers seem firmly committed to selling the system, but only for a good price. I hope this concern for a buyer's ability to pay will be sufficient to insure that the buyer, if there is one, is capable of maintaining, expanding, and improving the system.

Between those two interests, I hope we'll be okay in the long run. Failure comes at a stiff price: It means not only higher broadband prices for everyone, including ComCast and Qwest DSL customers (to name two companies which would promptly raise their prices if their major competition disappeared). It would also seriously compromise American Fork's ability to compete economically in the long term, both globally and on the Wasatch Front.

A Good Question

This is not that good question, but one is tempted to ask, What is the City's plan in case they don't sell the system in the immediate future? They've run some fairly careful financial numbers on that scenario and have made no secret of the basic result. To do what needs to be done with the system, to get it breaking even, would require an additional investment of several million dollars over the next five years, most of that near the beginning of that period. I'm fairly certain the City is unwilling to put up that much more money -- in the political vernacular they are "unable" to do so -- in the context of an already substantial tax increase and a looming water bond, which goes to a public vote in November. I understand this, and I acknowledge that it is a reasonable position -- even if I would still like some hard data (which doesn't currently exist) on whether City residents and businesses would value the system sufficiently, and in sufficient numbers, to justify those millions.

Here is today's good question: What is the City's plan for the system if they do sell it? Finalizing the sale is likely to take several months, after all, and the deal won't really be done until it's done. It could still collapse at any point. Which of these, if any, will the City do in the interim?

• Remove the bureaucratic obstacles to extending service to businesses, and establish a price schedule for commercial service;
• Stop charging ISPs or their customers for drops (connections to homes), which has dried up the residential market;
• Effectively address the problem of some ISPs being behind in their payments to the City;
• Staff the system at a sufficient level to provide the support to ISPs that their contracts require, if only for a few months;
• Address reliability and performance issues which apparently exist in some parts of the city (but not mine, where the system is simply great).

Taking these steps while preparing an ultimately successful sale would help City residents and businesses. It would improve the system and its financial performance in the interim and would give the new operator a bit of a head start when the deal is done. Equally important, it would hedge the City's bets, in a sense, in case the deal ultimately collapses and another buyer must be courted. With some serious attention, the system would actually be worth more then than it is now, and be less of a drain on the City coffers.

Where would the money come from to do this? Where does it always come from? But at least two of the five items on my list should bring in more money than they cost; maybe the surplus from those would be enough to fund one or two of the others.

David Rodeback comments (8/4/2006):

"Pie in the sky." "Wishful thinking." So far these are the responses offline to my suggestion that the City might want to improve the system even as sale negotiations proceed. Perhaps it's true, but I'd like to keep hoping for a while anyway.

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