Study supports Public Utility District telecommunications venture
The question of whether or not the Truckee-Donner Public Utility District will enter into the telecommunications business is still unanswered.
However, one Indiana-based company thinks the PUD’s plans to build a fiber-optic infrastructure is not only strong, but strong enough for them to tentatively agree to purchase the system should the PUD ever want an out.
That company, Vectren Communication Services (VCS), was hired to conduct a validation study of the TDPUD’s telecommunications plan as well as offer advice and direction in execution of that plan.
Part of their response included the recommendation that the plan include local telephone services in addition to a platform for numerous Internet Service Providers, cable television and point-to-point data services, which are already part of the business plan.
Telephone services would be established through a partnership with a competitive local exchange carrier. The PUD would provide the infrastructure necessary for the partner to provide the service to the customer.
“We wouldn’t be a telephone company,” TDPUD Telecommunications Director Alan Harry said. “This is what’s happening across the country. When organizations build full-service networks they either partner up to provide or provide themselves a full range of services. We have reported to the board in the past that phone service was a possibility.”
VCS and its insurance company, AON Risk Services, has given a preliminary agreement to underwrite the project’s capital expenses. This strategy allows for the Truckee-Donner PUD to issue a certain amount of bond money with the guarantee of bond repayment if the PUD decides to exit the telecommunications business within five years.
“Right now we’re dealing with a proposal from Vectren that can be modified prior to its final review by the board. It shows the district can enter into providing a full range of broadband services to Truckee,” Harry said.
Vectren is proposing a partnership with PUD for construction of a full-service network with a price tag of approximately $14 million, Harry said.
“If Truckee-Donner PUD decided they wanted to exit the business, the insurance company would pay off the debt,” TDPUD General Manager Peter Holzmeister explained. “Vectren is willing to invest its own money into the capital investment … That way, we believe that there is no risk to the Truckee community.”
PUD staff and board members held a special meeting last night to discuss Vectren’s validation survey results in detail and answer all questions.
In order for the PUD to enter into the telecommunications business, it must receive permission from the Local Area Formation Commission (LAFCo.) a government agency that grants special districts latent power to offer new services. LAFCo. is still looking at the PUD application, but has not yet agendized the item.
“They have never dealt with telecommunications issues before,” Holzmeister said. “They want insurance the Truckee community would not be left with a debt if the system failed.”
He said staff will ask board members to approve sending the validation survey to LAFCo.
“I think we can go back to LAFCo. and fill in the picture for them and make them feel more comfortable about it,” he said.
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