Posted on

Telecom Utility Board expects business plan in mid-March

By Kelly Terpstra, kterpstra@charlescitypress.com

One must crawl before attempting to walk.

The Charles City Telecommunications Utility Board is getting ready to make that first step.

At a board of trustees meeting on Tuesday, those in attendance learned that the long-awaited reveal of the final business plan for the $15 million fiber-to-the-home broadband internet project is drawing near.

Erik Lampland, with Lookout Point Communications, said that business plan could be finalized by mid-March and bid specifications to lay down the outside plant fiber could go out to contractors in April.

Lampland said bids could be received back as soon as the middle of May or Memorial Day and the utility board could  approve a contract sometime in June.

Lampland has said at a prior meeting that the outside plant broadband construction comprises 70 to 80 percent of the project’s overall cost.

“The real lead factor is the outside plant timing,” he said.

The plan, once reviewed by hired consultants and potential financing backers, will then allow the board to make one of the project’s most important decisions – hiring a general manager to oversee the entire operation.

Curtis Dean, one of those paid consultants, cut to the chase on Tuesday afternoon.

“The only person you’re going to hire is the general manager. The general manager is going to hire everybody else,” said Dean.

“You hire a manager to be your eyes and ears and the role of a utility board is to set governance – not to perform actions. Sometimes there are actions involved, but you hire a manager to execute your policies, your procedures, your philosophy and you don’t want board members as individuals working outside those boundaries.”

The board was focused on procedural rules and employee structures in a meeting Tuesday afternoon that made a decent amount of headway. Dean has helped several communities in Iowa start telecoms such as Indianola and Pella.

Charles City would be just the second municipal broadband telecom in Iowa that would not have the backing of its own electric utility to fund the operation. Dean said the other community is Reinbeck, south of Charles City in Grundy County. That town formed its own telecom utility in June 2000.

Once hired, the general manager will employ a manager of technology and technical architect, according to Lampland. There will also be a customer service team consisting of a supervisor, two staff members and a salesperson.

“A lot of this hiring isn’t going to take place until we’re certain that we’re funded,” said City Attorney Brad Sloter.

Once the final financial numbers have been reviewed, Dean said, a flexible rate structure providing costs for options of video (TV), phone and internet can be set by the board.

“In the end, you can set whatever rate you want, but if nobody will buy the debt based on that rate, you don’t have a project. That’s really kind of where you’re at right now,” said Dean.

The board of trustees will have oversight of the broadband operation and be responsible for the possible issuing of revenue bonds that could help pay for the project.

The cost incurred into the third year of the project lists capital expenditures of $13.2 million and a bond requirement of $12 million. The cost of the project would be recouped through subscriber fees.

Discussion about user rates could come as soon as a meeting on Tuesday, March 31. Board members indicated that discussion would likely be closed to the public.

“I don’t think you have enough information to have a detailed and intelligent discussion on user rates,” Dean said. “I think you can be and should be thinking about rate philosophies and about how you want to structure your products and services. Because in the end the business plan and the financing that pays that business plan is really going to be the final judge and jury about what your user rates can be.”

The board approved a $1 million loan agreement from the city to help fund the initial startup costs.

The board voted last month to purchase property at 813 N. Main St. for $190,000 to use as the location of the data center and head-end for the municipal utility. The purchase of the property, which used to house the City Tap, can be closed on or before April 1 after approval of the loan agreement.

Diers said the broadband utility – which does not have a name yet – could be offering service to some locations a year from now, but that it will take 18 month to reach all potential service locations within the city limits.

Social Share

LATEST NEWS