Long term forecast starting to become clearer with Broadband project

By Kelly Terpstra, kterpstra@charlescitypress.com

The Charles City Council gave its stamp of approval, so what’s next for the $15 million fiber-to-the-home broadband Internet project in Charles City?

City Administrator Steve Diers said there is a possibility that a resolution will be brought before the City Council on Monday, Dec. 2, to create a board of trustees to oversee operation of the broadband utility.

“We crossed a major milestone this last week. Now all efforts go toward getting this thing up and running,” said Diers.

He said there will be five members appointed on the board who will serve six-year terms.

“They’ll stagger them, initially,” said Diers. “Almost each year you’re appointing somebody.”

Diers said the Broadband Commission will remain intact and still serve a purpose even after the creation of the board of trustees.

The telecom’s nerve center or data location still needs to be purchased. That’s been an ongoing process.

“We don’t have a specific budget, we’re just trying to find a location that works best,” said Diers.

Shortly after the council voted on moving forward with the broadband project, the council members went into a closed session to discuss purchase of property dealing with the location of the broadband’s utility.

The council came out of closed session last Monday and council member Keith Starr made a motion to not purchase the subject property, which the council passed 5-0.

At a prior Broadband Commission meeting it was revealed that the commission is recommending the city purchase 800 N. Main St., the Unggoy Broadband building, to house the telecom’s data center.

A $2,000 option to purchase has been offered to give the city time to buy the building.

“We’re looking at several different properties, I guess,” Diers said.

He said he anticipates construction to take 18 months to completely build out and reach all premises that sign up for the service. Diers said the broadband utility – which does not have a name yet – could be offering up service a year from now. Service outside the city limits will not be available.

“If we have a gentle winter, we could start putting fiber in the ground in April. Who knows? It could happen faster. It could take a little bit longer. Every time they’re digging holes in the ground, you never know what’s going to happen,” said Diers.

The breakdown on estimated cost of the venture sees $13 million being spent on building the infrastructure to allow customers to access the high-speed fiber that will offer internet, video and/or phone to anyone within the city limits who is interested. There is an added $2 million on to the price tag as the city will have to borrow money up front to start operations.

“It’s going to take us to year four, we think, to be cash positive. We’re going to need that operating capital,” said Diers.

The city is seeking to use revenue bonds to help get the project off the ground, which means it plans on using no tax dollars to fund the telecom.

“We’re not looking at using a general obligation type of borrow or loan to do this,” Diers said. “That type of requirement isn’t a necessity as maybe it has been in the past. If you can do this all through a revenue-type bond, rather than taxation, that’s how it would prefer to be done.”

Diers said the board of trustees needs to be in place before any bonds are issued. He also said until the project is bid out, he can’t rule out any potential funding that may need to take place by the city.

He said the bond underwriters who have been talking to the banks say there doesn’t appear to be a requirement for some type of security from the city, but it would be “premature” to definitely say that’s not going to be required.

Charles City will be part of multi-community redundant loop that will stretch fiber to an area near Mason City that will hook up with Cedar Falls, Waverly and New Hampton. The line will move in two different directions east and west, which can alleviate down times when service is interrupted.

“So if one way gets cut, you still have the other direction,” said Diers. “That’s the general concept, we just don’t have one main line coming into town.”

Negotiations are ongoing in sharing fiber with New Hampton to cut costs and there are possible other partnering opportunities down the road, according to Diers.

Cedar Falls Utility would provide the video/TV service, while ImOn, based out of Cedar Rapids, would be contracted for phone. Diers said partnering with these companies could save Charles City several millions of dollars in the long-term.

“We’re not putting in a video head. We’re buying into Cedar Falls and the one they already have. The capacity there is huge,” said Diers. “The same thing works with the telephone exchange.”

Residents and businesses will have the option of purchasing any or all of the services, and people who aren’t using the service will not be subsidizing those who are, according to revenue projections.

One of the focuses of the system has been on high-speed, reliable internet access.

“That’s the neat thing about the fiber technology is that one strand of fiber – they continually find ways to get more speed out of that one strand using different angles of light beyond my comprehension,” said Diers.

He also said that the fiber architecture could support additional services in years to come, such as educational access by local school districts, smart grid access for utilities, sensor networks for city utilities, remote health care and support for 5G cellular service.

“There’s so many things that you can’t even put your fingers on all of it. It’s really kind of a discussion of the Internet of Things,” Diers said.

Iowa Association of Municipal Utilities said 76 communities have passed referendums creating municipal telecommunication utilities, but only 25 of those cities actively operate networks.

Communities in Iowa that have established or are looking into establishing a municipal broadband utility are: Charles City, Waterloo, Decorah, Vinton, New Hampton, Osage, Cedar Falls, Indianola, Waverly, Spencer, Muscatine, Bellevue, Coon Rapids, Lenox, Pella, Adair, Independence and Fort Dodge.

“We’re at a point where we’ve fully reviewed this as much as it can,” Diers said. “Ultimately it will be up to the people to use the product, but we think they’re going to want to.”