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Cost too high for broadband

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By Katy Korkos

“I’m a true believer that broadband should be accessible to everyone,” Utilities Manager Robert Monday said to the Utilities Board on Wednesday. “But I would have to recommend that Utilities do not develop a broadband organization. I can’t figure out any way to make it pay.”However, he added, “If somebody else built it, and we did the operations only, that could make it work.”Monday outlined the results of his feasibility study to the full five-member utilities board, and to County Administrator Max Baker and Councilor Robert Gibson, also in attendance.Monday had prepared a cost analysis for fiber optic cable to be installed throughout the county, to the curb of each residence.According to the study, the cost of installing fiber for both White Rock and the townsite would be $23,319,349. Projected revenues after the entire network is installed were estimated using both a low and a high “take rate” (number of subscribers) of 15 percent and 60 percent, and projected costs to customers of both low and high charges of $15 and $25.The best projection shows the utilities department receiving $2,220,660 in the year 2020.Monday also projected the 10-year profit or loss on broadband service, figuring in both operational costs and debt service, and those calculations show a loss of $21,365,202 in the worst-case scenario.Monday’s best-case scenario, where the utilities department does not pay for building the system, and only delivers the service and pays operational costs, shows a profit of $812,406 over the same 10-year period.“My recommendation is that the county do this – I just can’t figure out any way for utilities to make it break even,” Monday said.Gibson asked whether Monday had looked at other ways to recoup costs, such as leasing the network to commercial companies.“I didn’t, because I don’t believe they would partner with us,” Monday said. “They won’t even partner with us in our conduits. There’s no incentive for them to do that.”Monday’s recommendation for staff stated that “because law doesn’t allow for long-range funding commitments from the general fund, the only way that subsidies from that quarter could be supplied to the Department of Public Utilities is for a massive infusion of money up front with bond repayment guaranteed by gross receipts taxes. That would be very risky for the county as it is very doubtful that payments could be offset by revenue from wideband service.”“If this were feasible, there would be commercial companies out there doing it,” Ortega said.Ralph Phelps will replace Ortega as chair for the remaining 2008 meetings.Phelps was elected chair by acclamation, and Thurman Talley will serve as vice chair.The Utilities Board meets at 5:30 p.m. the third Wednesday of each month in the conference room in the County Annex, 901 Trinity.