Correction to recent editorial on Minnesota community networks in Rochester, Monticello and Moorhead

The Post Bulletin recently ran an editorial on community networks from Brent Christensen, executive director of the Minnesota Telecom Alliance (MTA). I’ve learned there’s a correction to that article. Here are snippets from the original…

After recently reading about some Rochester City Council members who want the city to build a broadband network, I offer some advice: Be very careful and know what you are getting into. …

Rochester Public Utilities has successfully operated a city-owned power system, as well as sewer and gas. None of those have a competitive alternative. The claims in the Post-Bulletin by proponents that a city network can have a positive cash flow in four years are unrealistic. Pricing will have to be linked to cost to build and maintain a network (backbone costs, central office equipment costs, video content, labor and on and on). Costs for service will not be determined by a study conducted by an equipment vendor that has not yet been made public.

The city council should look no further than Monticello, Minn., as an example of the extreme risk the city would be taking. Monticello, after passing a referendum with an impressive 74 percent of the vote a decade ago, began construction of a fiber network that cost $26 million. The network was plagued with construction delays and, while many voted for the referendum, when it came time to select a provider, few chose the government network. The city ultimately sold it for pennies on the dollar, with taxpayers taking a significant loss. Bond holders lost more than 80 percent of their investment.

Similarly, the municipal electric utility in Moorhead built a broadband network that lost more than $1 million before being sold to a private company for a significant loss. Imagine if Rochester’s network fails to break even? Will RPUs electric ratepayers be asked to make up the difference or just those who sign up for the service?

I hadn’t heard about Monticello selling, so I asked Brent and learned there was a hiccup in the article. Brent noted…

I don’t exactly know when/how that happened, but that sentence was actually supposed to be in the next paragraph about Moorhead. They sold their broadband network for pennies on the dollar, not Monticello. It has been a crazy busy week, and I haven’t had a chance to track down what happened yet, but you are quite correct, they haven’t sold yet.

This entry was posted in Community Networks, MN by Ann Treacy. Bookmark the permalink.

About Ann Treacy

I have a Master’s Degree in Library and Information Science. I have been interested or involved in providing access to information through the Internet since 1994, when I worked for Minnesota’s first Internet service provider. I am pleased to be a part of the Blandin on Broadband Team. I also work with MN Coalition on Government Information, Minnesota Rural Partners, and the American Society for Information Science and Technology.

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