Longmont, Colorado, will move ahead with plans to offer fiber connectivity to the entire community. After presenting this business plan to the City Council, members voted unanimously on May 14th to support the measure. Scott Rochat from the Times-Call attended the meeting.
Residents stepped forward to express their opinions and all but one urged the council to "get it done."
The plan projects a four-tier price structure. For residential rates, that's proposed to range from $39.95 a month for 10 megabit-per-second upload and download, to $99.95 for 100 mbps.
The study estimates that 35 percent of homes would choose to get their Internet service from the city, still leaving plenty of the field for the existing providers.
"Competition is good," Councilman Alex Sammoury said. "Just because we're a government entity doesn't mean the free market doesn't apply to us. If someone can do it better, more power to them."
The plan proposes to have the city provide Internet directly and work with a private partner for phone service.
Video service would not be provided, Roiniotis and the Uptown consultants said, because Internet video has eroded the market for traditional television.
Vince Jordan, LPC Manager, began the presentation and stressed economic development, education, and lifestyle.
Representatives from Uptown Services reviewed recommendations and the business plan. They answered about 3 hours of questions from council members, including skeptical members who want to avoid becoming the next Provo, Utah. Neil Shaw and Dave Stockton from Uptown Services provided some perspective between the two communities. They pointed out the large number of successful networks in states across the country.
Longmont had been prepared to incrementally expand the network using the cash on hand from the many years of dark fiber leasing. Such an expansion could be done without borrowing but would take a long time (more than ten years, likely) to get to everyone. This is the approach Danville, Virginia, has been using.
Instead, Longmont is now developing a plan to finance the rollout of the network to everyone over a few years, estimated to cost $41 million. A future discussion will examine whatever financing strategy is recommended and approve it before it can move forward.
To view the discussion, zoom ahead to about 14 minutes in to the video below.
In January, Longmont Power and Communications (LPC) announced they would begin connecting businesses located within 500 feet of the existing network. As we reported, local businesses were chomping at the bit to get hooked up and enjoy the high-speed next generation network. Even without efforts at marketing or advertising, more businesses have added themselves to the queue. LPC will present the formal business plan for expanding the network to the City Council on May 14th. Tony Kindelspire recently reported on the race to get on LPC's network in the Longmont Times-Call:
"We are bringing to council a business plan to build out all of Longmont," [Vince] Jordan, [Broadband Services Manager], said. "It's the whole enchilada."
The fact that there has so far been only limited rollout is due to economics. Currently, the installations are being paid for from a reserve fund that Longmont Power has built up over the years leasing portions of its fiber-optic loop to entities such as Longmont United Hospital and a third-party provider that services the school district. Those leases bring in about $250,000 annually, Jordan said.
For 2013, the Longmont City Council authorized LPC to use $375,000 of that reserve fund to begin connecting businesses and residents to the loop.
This model works, but does not connect everyone fast enough for their liking:
To expedite the build-out, extra up-front dollars will have to be allocated, but where those dollars will come from is yet to be determined, Jordan said, adding that ultimately, the decision will lie with City Council.
Right now, Longmont will cover the initial cost of connecting subscribers except in cases of extraordinarily high cost cases. If it would cost $10,000 to install but the payback to the utility in 2.5 years is only $6,000, a customer would have to cover the $4,000 difference presently. While there are over 1,300 businesses with in 500 feet of the network, connection costs vary depending on proximity to roads, structures, and geography.
Jordan notes LPC's first priority is to boost economic development:
"We're really focused on economic development, so the ones that will put the most dollars (they save on broadband costs) back into their business, those are the ones we're working with first."
Businesses and organizations that are on the network appreciate fast symmetrical service, affordability, and the fact that they get service from the city rather than a commercial provider:
"I emailed Vince asking when I could get on," said Michael Jurey, network/telecommunication specialist for Longmont Clinic. "Luckily, the loop ran right by Longmont Clinic. On our side of the street no less."
Jurey said the city's network is three times faster than the speeds the clinic got before at a cost savings of $1,600 a month.
"We use it for two reasons," said one of the other three owners [of the Pumphouse, a restaurant and brewpub in Longmont], Dave D'Epagnier. "No. 1 is our business functions -- we process credit cards with it ... just normal day-to-day business activities. Plus, it's a big place, and we could have 50 customers that are using the broadband all at once."
The other thing that attracted him and the other owners was that the business was finally able to tap into the city-owned network after so many years of having to buy high-speed service from a commercial provider. And that is all thanks to the voters, D'Epagnier said.
According to a Scott Rochat article in the Times-Call, the business plan for a FTTH network to anyone in town is possible within three years with a $41 million investment. That plan eliminates the usual $500 - $15,000 hook-up fee:
"We have to be competitive," said Tom Roiniotis, director of LPC. "None of the incumbents charge an install fee, so we won't as well."
Uptown Services prepared the business plan and included residential fees from $39.95 for 10 Mbps to $99.95 for 100 Mbps for Internet. Residential Internet would be symmetrical. Business rates would range from $49.95 for 20 Mbps/5 Mbps to $499.95 for 250 Mbps symmetrical.
If LPC wants to pursue a triple play offering, Uptown estimates it would cost another $6 million. At this point, LPC does not consider triple play a good investment:
"The young generation that's active now, they don't watch TV in the conventional way," Jordan said. At a recent presentation, he said, when he asked a college student how often he watched traditional scheduled TV programming, the response was "Never."
According to a survey conducted for the business plan, about 68 percent of respondents said they would either definitely or probably switch to the city for Internet service if it were cheaper than existing services. Only about 20 percent said they had a "triple play" or wanted it.
Uptown's estimates were based on a take rate of 35% and the business plan estimates a broadband utility to be in the black within four years and to pay for itself in ten years.
Possible funding mechanisms include:
Certificates of participation, using city property as collateral
A bond issue backed by sales tax
A bond issue backed by electrical revenue
If the city council considers the plan favorable, it will go to the city finance department for more detailed review.
Here is a quick video from LPC, as technicians install connections at the Pumphouse:
We talked with Vince Jordan, LPC's Telecom Manager, who told us the expansion is part of their original business plan. Local establishments are ready to sign up with LPC. Twenty businesses put themselves in the queue within the past month. In addition to industrial and manufacturing companies, healthcare clinics, service industries, and entrepreneurs are waiting to get hooked up. Vince tells us several companies are looking to build data centers now that they will be able to get the bandwidth they need from LPC.
Vince credits LPC's ability to offer great local customer service as another driving factor for the early sign-ups. LPC is developing a fiber hood campaign to determine the locations for the first set of FTTH connections. The campaign, similar to that used by other communities and more recently by Google, will look at residential areas that are located near existing fiber and conduit. Surveys and early sign ups will identify seven fiber hoods.
Longmont's ordinance [PDF] requires customers to cover the cost of running fiber to their homes or businesses. Even though connecting can be pricey, Vince tells us potential customers call him regularly asking when they will be able to get fiber to their homes or establishments.
Many residential inquiries involve home based businesses, but not all. He relays the story of one retired gentleman who is so fed up with sorry service from the incumbents, he is willing to pay anything up to $10,000 to get LPC fiber to his home. We have encountered many instances of crappy customer service from the big boys, leaving us to suspect others share that sentiment.
The Longmont approach of having new subscribers pay for the connection dramatically reduces risk for the utility and should decrease the amount of time needed to break even on any investments. However, it may result in lower take rates than community owned networks that swallow those connection costs, amortizing the investment over a period of years. We are curious to see what lessons we can learn from this approach.
In our recent podcast interview with Vince Jordan of Longmont Power and Communications (LPC), we shared the story of Colorado's newest community network. Vince told the story of the community's struggle to overcome a massive misinformation campaign by Comcast and progress since. LPC is proving itself to be innovative, creative, and centered on community - all attributes that should drive their success.
We asked what future plans may be in the works for the expanding the network or the different potential services coming to residents and businesses, wondering if triple-play services may be offered. Vince noted that in LPC's current online survey, video and voice are two products that have sparked the public's interest. Because video can be one of the most expensive and least profitable ventures, LPC is once again approaching the community desires creatively.
LPC is looking into options for video and voice services that are accessible with a blazing broadband connection and plan to create a clearinghouse for customers on their website. Direct links and information on Hulu, Netflix, Roku, Skype, and other video and voice applications will all be in one place. The idea is to empower customers so they can use their inexpensive LPC Internet connection to stream video and voice. LPC is also exploring the possibility of establishing relationships with video and voice providers and providing access to serve the community.
The project is expected to go live in late October. LPC continues to research options for their customers but the idea has been received with positive community input. As we continue to monitor the evolving business models of community networks, we'll keep an eye on Longmont.
The tenth episode of the Community Broadband Bits podcast features Vince Jordan, Telecom Manager for Longmont Power and Communication in Colorado. We have long followed the trials and tribulations of this community as they fought through two referenda against Comcast's deep pockets. Now they are expanding their network to connect businesses and residents.
You can learn more about Longmont's approach on its website for the project. Our interview discusses some of the history behind the network, reflections on referenda, and the interesting approach Longmont has taken to avoid getting involved in the cable television business while still making sure everyone can view the content they want.
We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address.
This show is 25 minutes long and can be played below on this page or subscribe via iTunes or via the tool of your choice using this feed. Search for us in iTunes and leave a positive comment!
Over the past few years, we provided continuing coverage as Longmont, Colorado, considered, and eventually approved, a referendum (two actually) to authorize the municipality to offer broadband services to local businesses and residents. The City installed the fiber as part of its electricity utility infrastructure long ago but Qwest then pushed a law through the state legislature limiting how it could be used. After two referendums and an expensive Comcast astroturf campaign, the residents supported Ballot Measure 2A in November, 2011. The City can now use the fiber network to spur economic development.
Longmont Power and Communications (LPC) recently held two meetings to field responses from the residents and local businesses. Results of the meetings, and an online survey, keep the community informed and will help decide several key elements to the roll-out plan. Scott Rochat of the TimesCall.com, reported on the July 16th meeting, focused on resident reaction. Longmont has some distinct advantages, that Jordan shared:
"We are unique in what we already have in place and what we can do with what we have in place," [Vince] Jordan, [LPC Telecom Manager] told a crowd of 43 at the Longmont Civic Center on Monday.
What's in place is an 18-mile fiber-optic loop that the city can now offer services on, thanks to a 2011 ballot issue. About 1,280 businesses sit within 500 feet of the fiber network; at least 1,100 homes already have the conduit and junction box that would let them join.
The meeting and the survey indicate a strong desire have the network up and functioning ASAP. From the article:
An online survey at ci.longmont.co.us/lpc/tc/index.htm (which so far has gotten about 152 responses) found that given the choice, 63 percent wanted citywide service "immediately," while 21 percent said they'd settle for whenever the city could get it done.
The proportions were similar at Monday's meeting: 57 percent for immediately, 17 percent for whenever it could be done, and another 17 percent for a two-year timespan.
"My feeling is, get it done, whatever it takes," said one man who voted for "whenever it can be done."
We spoke with Jordan, who mentioned a similar enthusiasm from the business community. On Friday, July 20th, LPC held a meeting to hear comments from potential business customers. Jordan said talks with local business leaders continue to uncover "more need, desire, and want for higher and higher broadband in the commercial sector." Tony Kindelspire of the TimesCall.com covered the meeting (reprinted here on TMCNet.com):
Nearly 1,300 Longmont businesses are within 500 feet of the city's existing fiber-optic lines, and they likely would be some of the first customers to lease that fiber, once Longmont Power & Communications gets the go-ahead from the City Council to begin leasing it.
The plan, currently being developed, should be presented to the City Council in August.
Jordan let us know that residents and businesses can take the online survey until August 10th, at which time the results will be tallied and posted online. Interim results will be posted within the next day or two.
"This is an exciting time," said Jordan, "Folks are very keen to move as quickly as the City can move."
If your community considers building its own broadband network, don't be surprised to see ads like these two from the recent Longmont referendum in Colorado.
When Chattanooga was starting to build its network, Comcast bought 2600 ads, similar in substance to these, to scare people into opposing the project. Fortunately, the tactic backfired due to the Chattanooga utility's excellent reputation in the community.
Any hint that the Comcast-funded effort in Longmont to oppose authorizing the City to provide broadband services was anything but an astroturf campaign of lies has evaporated in the wake of its overwhelming defeat.
If there had been a shred of local legitimacy among the "Look Before We Leap" group that was run by Denver-based strategists, it probably would have kept its website up for longer than a few days after the election. If I were them, I would want to keep a record for the future.
But they don't. Because they were just a bunch of paid public relations people working a job. They didn't oppose Longmont's initiative, they didn't know anything about it. They were collecting a paycheck. And this is what they left behind:
This time, lobbyists for the telecommunications industry spent even more than they did last time -- about $300,000 -- in trying to convince residents that the city having control over its own property was somehow "risky." Obviously, the lobbyists, including the euphemistically monikered Americans for Prosperity, were only concerned about the welfare of Longmont residents and the health of the local economy. They spent so much money to show just how concerned they were.
But the majority of the voters weren't buying what they were selling. People had the audacity to think for themselves and make up their own minds.
Personally, I would thank the anti-2A folks for pouring so much money into the local economy, except most of its spending was elsewhere. They did pop for a few ads in this newspaper, though, so for that they have my gratitude.
The author, Tony Kindelspire, goes on to note just how amazing it was to see everyone unified on an issue.
Many people who you would typically expect to find defending corporate rights above all else, and criticizing the inefficiency of government, were quite vocal in support of 2A.
As they should have been. Ask a local businessperson how Longmont having its own electric utility is working out for them. We have some of the cheapest rates in the country.
It takes leadership to stand up against big business lobbyists to act on behalf of what you think is right, not what's going to raise you the most amount of campaign cash the next time around. How very, very refreshing it was to see, and I hope it's a lesson that spreads far and wide.
I hate quoting so liberally from an article, but I want to make sure these important words are remembered. I hope the City takes seriously its responsibility to continue involving the public in important decisions about the digital future as it moves forward with the freedom to invest in infrastructure that every community should have regardless of how much money incumbent lobbyists pour into legislatures around the nation.
And I cannot help but remind my readers that this referendum would have failed by Minnesota standards, which requires a 65% supermajority. That is an incredibly tough ask when a major player like Comcast can get 40% of the population to vote for its position by spending a mere $300,000 while having zero support in the community.
Municipal broadband has been a success for those communities that have begun offering service. It is no surprise. Historically, local government has always corrected market failure by providing essential services. The driving force for efficiency in these networks is not profit maximization, but public service. The money saved through cost reductions stays in the community. Public networks have increased broadband competition, not reduced it, and they have resulted in lower prices. The propaganda maligning municipal systems is nothing more than industry-sponsored folklore.