We have watched the City Council study session on fiber optic to the home and have done some research and thought additional information might be useful for public consideration. Again, we will follow the question and answer format.
The market research indicated that 34.7% of those polled definitely would or probably would sign up for the fiber optic service. Does that mean it would be success? It depends. It is unclear, particularly looking at the open-ended responses, as to why people would sign up. Some of them may think that the $60 cost would replace their entire cable bill. Of course, that would not be the case.
Exactly what is the financial risk to the City? The answer, once again, is “it depends” because it depends on just how many households sign up. A 35% sign up rate would be about 5,950 subscribers. If only, 30% sign up, then the City must cover the shortfall in payments. At a sign-up rate of 30%, that translates to over $300,000 per year from the City to “subsidize” the fiber optic network.
Couldn’t the City just charge more to cover the cost? Yes, it could. The cost would go to about $65 per month for the City to break even if 30% signed up. If only 20% signed up the cost would go to about $85 per month for Internet service only; no TV, phone or security would be included.
How would the network be built? The City would sign a lease with an outside firm that would build and operate the system. It is estimated there would be about 150 miles of fiber optic installed with about 60% underground.
How does it get to my house? Attached to the fiber optic network would be “pedestals” each serving up to 8 houses. The pedestal would be in the “right of way” not on your property. A trench would then be dug from the pedestal to your property and through your property to the point where it enters your house. The fiber optic cable would be installed in the trench. Once inside the house a wireless (and wired modem/router) would be attached to the cable to transmit throughout your house.
What will come over the fiber optic network to my house? Nothing! You will have access to the Internet so you can get email and browse the web. That is it. If you want anything else, you will need to sign up for it and pay for whatever you sign up for.
What about television? Various television options have been discussed. There is Apple TV for example. But Apple TV gives you access to television that has already been broadcast and is available on the web. There has been talk about Yandoo. Yandoo is a substitute for your cable company and charges the same amount in general. Depending on what programming options you purchase, charges could be $150 per month or more. However, you do get live TV from Yandoo.
What about telephone? There are VoIP (Voice over Internet Protocol) providers that allow you to keep your current number and receive and make calls over the Internet. Cost depends on which service you choose.
What cities have done this? There was a lot of talk about Sandy where there is about a 60% sign up. When Sandy started, there was NO cable service in Sandy. Beaverton and Hillsboro have both looked at a fiber optic network and decided against it because of expense. Sherwood built a fiber optic network and it has cost the city a great deal of money (totaling in the millions), as the sign up goal for residences was not achieved.
But how can we get fast Internet if we do not do this? Cable companies like Comcast/Xfinity that have a network that allows on-demand service are adopting a new type of transmission called DOCSIS 3.1 that brings high speed (perhaps up to 2 gigabytes) over existing cable. Comcast has already installed DOCSIS 3.1 in two cities and says it will roll out to all their customers by 2018. DOCSIS 3.1 provides speed and bandwidth greater than current cable service. The City Council has not asked Comcast to meet with the Council and discuss their plans.
We need fast Internet don’t we? Again, it depends. Very few things we do today on the Internet need gigabyte service. Only very large files or games need that speed. Most homes will be just fine with speed of 500 mbps and more bandwidth.
What is LOCAL’s position on this? Each of you has to make up your own mind whether you want the City to provide fiber optic service and if it becomes available whether you will subscribe. However, here are some things you might consider:
• Is it right for other taxpayers to “subsidize” Internet for users if less than 35% sign up? We think that is an issue of fiscal responsibility. Internet is not like water (which the City does provide as a necessity). There are alternatives to current cable providers (such as satellite); should people make their own decision on what alternative is best for them and then pay for it themselves?
• Our City’s budget does not have a surplus and there are increases coming in PERS. Where will the City get the money to pay for any sign up shortfall for the next 30 years?
• The company that will do this for the City has never done this before; however, the contractor they will use has. Is that too risky?
• Do you want the right of way and your yard trenched to get this service?
• Are you really going to save any money in total?
• Do you really hate your current provider’s offerings (such as the channels they offer) enough to change providers? The market research said customer service was a problem but is your actual cable a problem?
• Do you really think that the price of any service will stay the same for 30 years?
• Do you think it will be a hassle to switch from your current provider and get the new one set up?
• What guarantee is there that fiber optic will not be an obsolete technology in the future?
• Should the City be competing with private, tax-paying enterprise to provide such services that are otherwise already available or will be in the foreseeable future?
The LOCAL Board