Charles City telecom utility board sets up presentations by possible broadband partners

By Bob Steenson, bsteenson@charlescitypress.com

The top priorities for a fiber broadband partnership, according to members of the Charles City Telecommunications Utility Board of Trustees, include the speed to get the system built community-wide, the financial aspects and level of investment by the partner and by the utility, and the ability to control customer service.

Several other items were also rated at the top of the list as the trustees went through 21 potential priorities in a grid that will be used to evaluate at least three possible partners for a city fiber-to-the-premises network.

Charles City Mayor Dean Andrews, who is not a member of the board of trustees but often attends their meetings, said he agrees with placing customer service among the highest priorities.

“All these things are important, … but when we started this whole thing that was the No. 1 criteria that you started with,” Andrews said. “It doesn’t mean that you have to have total control, but I think you definitely want to express your opinion on customer service expectations. That’s where this whole thing started three years ago.”

The board received six responses to its request for information from businesses that would like to help Charles City establish the fiber network and provide services to residential and business customers. The board has preliminarily decided to have three of them present more in-depth presentations.

Times have been set for the week after next to listen to and ask questions of:

• A partnership between CL Tel of Clear Lake and Premier Communications of Sioux Center, to be presented at 4 p.m. Tuesday, April 6.
• Omni-Tel of Nora Springs, 4 p.m. Thursday, April 8.
• Router12 of Mason City, 5 p.m. Thursday, April 8.

Telecom board meetings are currently being held by Zoom teleconference, and are public meetings.

Representatives of each of those four companies were attending the telecom board meeting Tuesday afternoon, and made a short introduction. The representatives each emphasized their company’s commitment to customer service and the experience they could bring to a partnership.

Curtis Dean, president of SmartSource Consulting of Grimes, one of the city utility’s consultants, said that one of the other proposals — from Mediacom — would involve that company negotiating with the City Council, not the telecom board.

Mediacom’s proposal is to upgrade its current system in Charles City to complete fiber to the premises, in return for the city giving it $2 million to $2½ million through a variety of possible incentives.

But those incentives — listed by Mediacom as possibly including permit fee waivers or rebates, sales tax relief or rebates, cable franchise fee rebates, fiber lease payments by the city, contribution of capital from the city, or contribution of city-owned assets — aren’t within the telecom’s ability to award, Dean said.

City Administrator Steve Diers had said previously that the Mediacom proposal did not sound like a partnership with the city telecom utility, and Mediacom would continue acting independently as a private company, but with an upgraded network.

The partnership being sought by the telecom utility would involve using revenue to repay whatever borrowed financing the telecom needs for its share of the network, either through revenue sharing with the partner, a leasing arrangement or some other arrangement that provides revenue to the telecom.

Efforts last fall to finance the up to $22 million needed for the city utility to build and support the system entirely on its own were unsuccessful, which has left the board of trustees looking for options and potential partners.

Curtis said two other proposals that were received were essentially offers to do another market study and an offer to sell the system equipment to use on the network, not offers to partner with the utility to offer services.

In discussing the grid that was presented by Dean and by consultant Todd Kielkopf of Kielkopf Advisory Services of Des Moines, the telecom trustees rated the 21 potential priority points as either very important, somewhat important or not important.

The board ended up rating nine of the items as very important, 10 as somewhat important and 2 as unimportant, although some of those ratings could change depending on what kind of partnership was being proposed.

For example, the board members placed a high priority on being able to receive local network programming from Iowa stations such as KWWL in Waterloo, but Dean and Kielkopf said there is a possibility the partner that Charles City Fiber picks won’t offer a typical cable TV package as part of its services, since so many people are switching to cloud-based video services.

Examples of that type of service that provides a wide range of channels similar to conventional cable TV include streaming services such as YouTube TV, Hulu, Sling and many others, or through a device such as Roku, Amazon Fire TV, Apple TV or Google Chromecast.

The grid items that the telecom board rated as highest priority are:

• Speed to market ‐ ubiquitous availability.
• Speed to market ‐ first customers up.
• Proposed lease or debt terms of private investment.
• Levels of investment by the utility.
• Financial viability to support Charles City Fiber debt and upgrades as a lessee.
• Perceived level of risk sharing.
• Degree of city setting customer service expectations.
• Transport redundancy ability and reliability expectations.
• Proposed symmetrical internet speeds (the ability to offer upload speeds as high as download speeds).
• Local programming ability/interest.

These items were rated as somewhat important, with many members saying they could be the tie-breaker if there were two similarly regarded proposals:

• Public partnership experience.
• Level of control of future system investments/buyout.
• Degree of exclusivity required.
• Need for customer to enter contracts instead of paying month to month.
• Level of proposed municipal control over rates.
• Current pricing relative to the market.
• Interest in investing in community projects.
• Public‐sector use ability.
• TV channel packages including the availability of regional sports, and the look and feel of the service operating system.
• Local marketing and branding considerations.

Future retail choice ability was the only potential priority the board rated as unimportant, other than local programming and TV channel packages if there is no video service component.

Kielkopf told the board members that there will need to be some give-and-take when dealing with prospective partners.

“I’d like to reiterate that the reason you go through this exercise is to understand the totality of what we’re trying to accomplish and so the public gets to understanding this is the alternative to a full municipal,” he said.

“If you have a full municipal you have control over all these things. If you don’t, then there are trade-offs that occur, especially over time,” he said.

Kielkopf suggested the next step, after hearing the three groups presentations, would be for the trustees to begin discussing the choices and options, likely in closed session.

Trustee board Chairperson Cheryl Erb said representatives of the board need to discuss with the city attorney whether it is allowed under Iowa code to close meetings to the public for that reason.