My Turn: Why PUD broadband? Let’s count the reasons
April 25, 2006
As many Truckee residents know, Truckee Donner Public Utility District is considering the deployment of a state-of-the-art broadband system in town, a matter that deserves full community discussion.
Two recent letters printed in the Sierra Sun’s editorial pages painted a very negative view of the plan and the PUD planning process. Those opinions were based on what I believe is incomplete and inaccurate information. I would like to set out in this column a framework for a thorough understanding of the broadband initiative. First it’s useful to understand how the broadband discussion began.
TDPUD is a utility district serving water and electricity to Truckee. As a utility district we have operational needs to engage in internal and external communication. Much of our water and electric operations are automated, and rely on high-tech communication devices. We need some level of advanced broadband service just to operate the utility.
That utility need began our thought process. We then became aware that the U.S. economy is becoming an information economy. The sharing of vast amounts of information is the driver of the economy. The information that needs to be shared takes the form of data and images as well as voice.
This trend was the second mover of our interest in broadband. The deployment of true broadband can make Truckee a smart community that prospers in the new information economy.
The third mover was our realization that people who live here and have vacation homes here are dissatisfied with cable television service in Truckee. Many of them are also dissatisfied with slow Internet service available here. We learned that a growing number of Truckee residents are using the Internet in new ways requiring significant bandwidth in two directions.
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If our assumptions about those trends are true, Truckee will benefit immensely by having a true state-of-the-art broadband system throughout the community. Nationwide trends tell us that cable television companies and the traditional telephone companies aren’t going to deploy broadband in small communities like Truckee. Throughout the nation small communities are taking charge of their communication needs. They’re refusing to be excluded from the benefits of participation on the information economy. And, they are deploying community-owned fiber optic systems.
So exactly what is the PUD broadband initiative? We plan to deploy an open access, fiber optic system that ultimately serves every home and business in Truckee. We want this system to be locally owned, maintained, and continually improved over time. And importantly, we intend to enter into a partnership with private sector firms to provide the actual communication services to the Truckee community.
So far this is all quite easy to think about. But when we start to think about the financing it all gets more complex. Our proposal is to use long-term debt to raise the cash to build the system. The debt needs to be repaid from revenues derived solely from subscribers to the communication services. We’re not able to use water or electric revenues to pay for communication costs, and we’re strictly prohibited from using the water and electric system to subsidize broadband. Before we enter into debt the finance world needs to see a business plan that identifies within reasonable levels of assurance that enough customers will sign up for service to create the revenue stream to pay the operating costs and the debt.
Since the system we are proposing to build can be costly and the kind of service that will be provided will be superior to anything currently offered in Truckee, the price for the service is likely to be a little higher than what people are paying now. So a question that needs to be researched and resolved is whether people in Truckee will pay a bit more for vastly improved service.
As part of our ongoing assessment, the Board of Directors will conduct another professionally competent, scientifically valid survey of our customers to determine their current use of information technology and their interest in having improved communication technology available to them.
We do not expect that everyone in Truckee will subscribe to the PUD broadband system. Our business plan projection is that if, in the first 10 years just 40 percent of the customers subscribe to the system, it will pay for itself. The trends that we see tell us that the communication world is changing and society is changing with it. Over a short period of time more and more people will come to rely more and more on high bandwidth communication in their professions and in their homes.
The board recognizes that it needs to act prudently in making this decision. Even prudent people can make a decision that turns out poorly. We realize that we need an exit strategy if the business plan doesn’t work. Our exit strategy is designed such that no costs incurred by the broadband system that exceed the broadband revenue stream can get access to revenues, cash or assets of the district’s water and electric systems.
We’ve been talking about this topic for the past several years. We’ve been delayed by lawsuits filed by Cebridge Connections. In fact, throughout the nation cable television companies are suing communities that propose deploying community-owned broadband systems. The cable television companies are losing the fight, but they’re causing delays and wasting everyone’s money.
A recent statement from the city manager of Mesquite, Nevada, closely parallels the Truckee broadband experience to date.
Tim Hacker writes, “Broadband is the latest technology and infrastructure that the residents of Mesquite and other stand-alone communities must harness if we hope to reach our potential and remain competitive with other communities. Doing nothing has gotten us to where we are at, and remaining placated with the promises of better things to come seems to have only gotten us over five years behind where this community should be at today with broadband options.”
So you now have the rest of the story ” from Ron Hemig’s viewpoint. I encourage readers to send questions or comments on this subject directly to the PUD (P.O Box 309, Truckee, CA 96160) or e-mail email@example.com.
Ron Hemig is president of the Truckee Donner Public Utility District’s
board of directors.