About 50 cities across the U.S. – from Ammon, ID, (population 14,000) to Chattanooga, TN, (12 times larger) already operate their own municipal fiber optic networks. While the concept may be premature for St Pete Beach, the idea was broached by Planning Board member Michael Lehman at a Commission meeting last fall. “I suggested the city hire a consultant to develop a master plan for funding, design and construction of transportation, storm water and utility capital improvements,” he said. “These elements have an interdependent relationship and, taken together, form the foundation of our city’s future built environment. We have the opportunity to consider these elements together in the context of best practices, to plan and design them in an integrated and collaborative fashion, and to have a planning document in place that can be leveraged in a variety of ways, not the least of which is to attract desired investment and development to the city.
“A working master plan is an excellent marketing tool for attracting investors and developers of choice — those who will play integral roles in making our comp (comprehensive) plan vision a reality. It sets expectations, establishes process, outlines available incentives for investors/developers, fosters confidence, identifies potential funding sources, and otherwise provides a road map to desired outcomes. The process of developing such a plan can identify opportunities for the city to establish additional channels of revenue.
“For instance, as we move toward placing utilities underground, we should explore the possibility of laying a city-owned fiber optic backbone that could be segmented and leased. Fiber optics is the pathway for data, software operations and entertainment media of the foreseeable future, and our homes and businesses are increasingly becoming dependent upon high-speed internet access. City-owned would allow us to create an environment of competition rather than dominance by a single supplier of internet and entertainment, and to diversify businesses on the beach to include small design and technology businesses.
“As an example, consider the west end of Corey, a full block of development potential for mixed-use that can include eight floors of live, work and play in a single large development with an active street front. City-owned would allow us to attract satellite studios or posts from local colleges and universities – creative arts, digital arts, gaming design, medical device design, etc. In addition to fiber optics, the city could demand the installation of underground smart grid technology for energy/information transfer by Duke Energy.
“Again, this is the future of energy — a decentralized rather than centralized system. As residences and commercial buildings begin to generate their own energy, here primarily through solar, and begin to demand a more market-driven method of buying and selling electricity, a smart grid allows the two-way flow of both energy and communication that the market requires.
“Revenue streams may be established by a variety of methods that are now conceptual and emerging, so the opportunity to influence the type of infrastructure that goes underground and to develop additional channels of revenue is worth pursuing.
Leesburg Fiber Network
Lehman invited Jim Lemberg, General Manager of Leesburg’s Communications Utility, to make a presentation to the Planning Board and Commission about his city’s experience with a community-owned and operated Fiber Network. His November 20 PowerPoint presentation covered: Why Consider a Municipal Fiber Network?; What Are Municipal Fiber Networks?; Ownership & Revenue Models; Statutory & Regulatory Matters; and Resources.
Why municipal fiber networks? Pent-Up Demand due to Inferior telephone, CATV, Internet or data service; Excessive telephone, CATV or Internet prices; Limited choices/competition; Smaller customer base; Infrastructure isolation.
What do they do? Technologically, they…Deliver very high-speed communications … Provide a reasonable future-proofing … Stimulate incumbents to better service. Economically, they… Provide an incremental revenue stream; Stimulate competitive environment; Attract new businesses & residents.
Where do they go? Homes & businesses. What do they carry? Voice, Video, Internet, Site-to Site Data, Traffic. Connections between municipality’s sites for Sharing IT resources, VoIP telephony, Distributing Internet. Connections between school sites for Sharing IT resources, VoIP telephony, Distributing Internet, Online testing & other FL DOE requirements. Connections to businesses that Transfer large data files, Enable VoIP telephony, Deliver Internet connections, Terminate data circuits from other service providers, Connect cell towers.
How are they built-out? There are alternative ways…
1.All At Once: All areas, All services.
2. In Phases: All areas, each phase adding a service;
3. All services, each phase adding an area;
4.Mixture of each in each phase.
5.Pilot: Followed by phases; Followed by full build-out.
Ownership Models
Ownership Operation
Municipality–Municipality as service provider*
Municipality–Service provider leases network
Municipality–Municipality as carrier’s carrier
Partnership–Municipality
Partnership–Service provider partner
*Maximum Initial capital, Operational resources, Operational expenses, Revenue stream
Lemberg explained for Paradise News, “The City of Leesburg currently owns and operates a fiber optic network that extends throughout the major centers of population in Lake County. The project began back in the 1980s when the City’s electric utility deployed a small amount of fiber to interconnect several of its substations. The network experienced two major growth spurts, the first driven by the local hospital’s desire to connect its Leesburg campus to its site in The Villages, and the second driven by an opportunity to begin providing service to many of the public schools in Lake County. Those two expansions came at a combined cost of about $1.5 million. Today the network serves governmental and educational sites, health services providers and general commercial businesses. Revenues from services provided over the network during the City’s 2012-13 fiscal year are projected to be slightly under $2 million.”
He emphasized, “Our network serves hospitals, schools and businesses but does not serve residential customers. We also did not build the network out in one fell swoop, nor even according to any overall plan. It all happened in response to unforeseen and specific opportunities. In those regards, the Leesburg experience may differ from St Pete Beach’s contemplations. Although our fiber only serves governmental, educational and commercial customers, Leesburg’s stated population is around 20,000 and Lake County’s around 300,000.”
City & Commission Comments
Former Mayor and SPB Planning Board Chairman Ward Friszolowski told Paradise News, “Our Planning Board is always looking at what is in the best interest of the long term future of our city. This issue brought to our attention by fellow member Michael Lehman is an interesting concept but requires a lot of research and study before implementation. Questions such as: Is there market demand? What is the cost for capital improvements, staff, and maintenance? What would you charge customers for service? What is the ‘capture rate’ expected to get customers to switch from their current private provider to this new system? Essentially, the answers will determine if it is financially feasible to move forward. The future is definitely moving towards better connectivity. People expect it in both their personal and business lives. Young professionals and our tourists expect good connectivity. Is it good to go with fiber? How about the future of wireless or cloud computing? What is better, faster, more reliable, and most economical? There are a lot of questions and all these things need to be considered.”
City Manager Mike Bonfield observed, “Getting involved in any utility provided by the private sector requires considerable study and analysis in order to fully protect the taxpayers. I am not familiar with any communities in our area taking on such an endeavor and need to do further research before commenting. We recently signed a $22,500 interlocal agreement with the Tampa Bay Regional Plan Commission (TBRPC) for consultation on a Redevelopment Plan for Corey Avenue and the one-way loop. Infrastructure needs such as a future Fiber Network may be part of general discussions. I appreciate Planning Board Member Michael Lehman bringing this subject forward and look forward to learning more as discussions progress.”
Mayor Steve McFarlin commented, “Certainly I found Mr. Lemberg’s presentation interesting as I would any future municipal issue. Did I find it compelling enough to truly consider for St. Pete Beach in the near future? Not at all.
As Mayor, I feel obligated to first address the major concerns we are currently facing. The severity of these issues — long term pension debt and dated infrastructure — is at a truly alarming level. Programs like the recent consolidation of our Police services with the hopes of saving millions and reducing taxpayer liability should be the ongoing strategy of this municipality for the immediate future. I would support the possible incorporation of fiber technology with our infrastructure redevelopment if deemed prudent, but not based off of anticipating our own network. I totally agree that competition is needed in our technology services and will do anything possible to accommodate newcomers. But until the majors declare us a viable market, I am certainly not willing to put our taxpayers at risk to prove we know better. My thanks to Board Member Lehman in bringing this forward.”
District 2 Commissioner Jim Parent noted, “In addition to watching the presentation by Jim Lemberg to our SPB Planning Board I also met with him for more than an hour beforehand. While extremely interesting, a couple of take-a-ways for me were that a municipal fiber optic infrastructure must be examined in the context of our City’s overall economic development strategy that is still in development. Our ‘industry’ is tourism and not the Construction Products, Printing and Publishing, Plastics, Fabricated Metal Products, Machinery and Computer Equipment, Electronics, Transportation Equipment & Manufacturing, Laser & Robotic Technology that Leesburg considers its target industries.
“Leesburg, which has its own electric utility, jump-started the initial massive capital cost to create the backbone of their fiber optic network as part of the control communications between power facilities. We have no already existing structural need and without a partner would probably be committing millions of dollars to start up a system for its own sake. I’m not sure what the payback could be and to me, the big profits are in the production of content and not the container it is in. We need an economic development plan first, and then we need to make sure we spend the taxpayer’s money in the wisest ways possible that benefits our community the most. I’m not saying this is not a good thing but so are roads and redevelopment.”
Lehman summed up the Fiber Network concept, noting, “This is a lot to think about. I don’t expect, or really want, anyone to take this concept and run with it. I do hope this generates a bigger conversation about how we approach these systems. There is certainly more than one way to do this, but what I believe is most important is that any process we choose be collaborative and committed to an approach that integrates the design of our transportation, storm water and utilities systems. Doing so will give us a platform for services and economic development that is smart, works effectively, is aesthetically pleasing and costs as little as possible. Exciting, too, is the opportunity for the city to establish new channels of revenue.
[Steve Traiman is President of Creative Copy by Steve Traiman in St. Pete Beach, offering freelance business writing services. He can be reached via email at straiman@mindspring.com.]
Story by Steve Traiman
Date: January 2013