Pro and Cons of a community network in Lakeland FLA: debate in editorials

An interesting debate happening in Lakeland -with commentary coming from locals and people far from the town. Here’s a run down of recent articles and editorials. It’s from Florida – but interesting to see what’s happening and sometimes more instructive when the players are far away:

From Aug 19 – Lakeland Commissioners look into broadband…

Lakeland commissioners want more information before making a decision on whether to move forward with launching a municipal-owned broadband service after reviewing a business plan provided by the city’s broadband consultant…

John Honker, CEO and president of Magellan, laid out a plan calling for Lakeland to borrow $17 million to begin building the necessary infrastructure and launch operations. The full estimate for a citywide network is $97.5 million.

“On Day 1, you won’t borrow $100 million, you will borrow as you go,” Mike Brossart, the city’s financial director, said. “You are not generating any revenue for the first 2 to 2½ years.”

If Lakeland can get 38% of city residents and 41% of businesses to sign up, Honker said it would receive approximately $9.5 million in revenue a year — $1 million less than his Aug. 5 estimate.

The city would need to get at least 27.5% of residents to sign up for service to break even

From Aug 24 – more on deciding whether to fund or not fund a network…

City leaders have to ask themselves one question on becoming a “Gig City”: What matters most when trying to determine if launching an internet service is the right move for Lakeland? …

“We would measure success by what we are able to provide through services and net as a contribution to pay off the debt and to provide revenue to the city,” Mayor Bill Mutz said.

Lakeland’s cost of building a fiber optic network capable of gigabit-speed internet can’t be stated without considering the city’s potential profit.

Magellan’s latest estimate states it would take 9-10 years for the city to begin seeing a net revenue if it chose to pay down its startup debt, or loans, as quickly as possible. Once the system is fully launched, Lakeland could make $9.5 million a year in revenue. That’s providing that 38% of residents and 41% of businesses sign up with suggested pricing for internet service starting at $20 a month.

Commissioner Justin Troller said he anticipates the city will see a higher take rate, possibly capturing 50% of the market, based on preliminary interest and community feedback.

“I don’t think it will be difficult for us to get our market share,” he said. “Our community is desperate for an alternative to the current providers.”

From Aug 27 – Editorial says broadband should be a priority…

It’s agreed that investment will need to be made, and one hopes the investment will be shouldered proportionately to the profits to be realized. As to profits, I believe our telephone company and our cable company are making far too much money, as they bombard innocent citizens with incessant direct mail and television advertising. If there is a chance of losing market share, this will ramp up exponentially.

Before I discuss the percent of households needed to buy into this program, let me comment that I was told that stock corporations have a “reasonable expectation” of profits for their investors. Funny that other investors have “risk.” I will go door-to-door to find supporters for municipal internet service, and remind the powers-that-be that affordable basic internet for seniors should be their priority.

From Aug 28 – editorial against broadband funding…

Lakeland leaders should cease potential plans to build their own broadband network and avoid being unduly influenced by Magellan Advisors, the “yes men” of the broadband study industry.

Although the plan would call for the estimated $80 million cost to be paid back by subscribers, a recent poll showed that only one-third of Lakeland internet customers are unsatisfied with their current provider. And the city is not an internet desert, as both Charter and Frontier service nearly all Lakeland residents with broadband-speed internet. Satellite providers cover anyone who doesn’t have fiber access….

Lakeland residents should insist their City Commission avoid the mistakes made by cities like Provo, Utah, and Bristol, Virginia, and not build this unnecessary network.

Johnny Kampis, Vinemont, Alabama (writes for Taxpayers Protection Alliance Foundation)

From Sep 6 – editorial supports the broadband network…

As explained by my colleagues at the Institute for Local Self-Reliance in the report “Correcting Community Fiber Fallacies,” the analysis of the “expert” quoted in this article, Christopher Yoo, contained factual errors and questionable data. Notably, Yoo misunderstood the debt structure of three cities included in his analysis, calling into serious question the accuracy and competence of his conclusions. Though Yoo admitted his mistake, he failed to correct the report and has continued to repeat his flawed findings.

Also from Sep 6 – editorial doesn’t support a community network…

Taxpayer money has been spent for expert information on the pros and cons of Lakeland’s city-run broadband system, and they should listen to the experts. Cost overruns are not uncommon; think Tigertown.

With pensions already consuming a large portion of the city budget (at present more growth, more city employees, more pensions, longer life spans, more money), it would seem unwise to proceed with any projects that could potentially become very costly.

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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