Up Sucker Creek

Up Sucker Creek
Photo Courtesy of the Lake Oswego Library

Saturday, January 30, 2016

Dark webs and shiny objects

Just curious.  
Do you have a 30-year contract with Comcast?  

Heard on the street:  "I'm all in favor of private enterprise, but even if I can afford it, I hate feeling like I'm getting gouged every time I open my Comcast bill."

Subtext:  I want the government to make me feel better.  We can do a better job as a city, it will be cheaper, and I won't have to pay money to Comcast every month.   It isn't hubris if you're right.  We're smart, and we can do a better job than the private market any day.  Especially Comcast!

Sub-Subtext:   If I convince myself public internet isn't a market commodity and it's a "utility" instead, I feel better that what I want is good for everyone else too.

Not a problem:  
  • The city won't actually own the internet service, they will lease it for 30 years.    
  • The system will be funded with Revenue Bonds that don't require a public vote.  The creation of a new utility with a dedicated revenue stream is a City Council-only decision.
  • There will be a minimum amount the City will owe Symetrical Networks / Sunstone Business Finance each month.  If the number of users falls below the number needed to pay the bill, taxpayers will take the hit, and users may see their rates go up to boot.  (This endeavor is not risk-free.)  
  • If new technology comes along in a decade or two or three that does not fit the fiber wire model, how will customers respond?  If price is the concern,  existing services will compete on price.  Thirty years ago we were all using dial-up modems - who has a crystal ball?    
  • For much (all?) of the city the new fiber service will go overhead on existing or new utility poles, even though city code require all utilities be placed underground.  The shiny new service will be no more secure than what we have today., and may be even more unsightly and vulnerable to outages.   
On Tuesday night, the City Council voted 6-to-1
to go forward with a plan to install a municipal

broadband network in LO.  Acting as a fiduciary for the taxpayers, Jeff Gudman voted no.  The other six members of the Council seem to be blinded by shiny objects, so another public utility is now in the works.

Food for thought:  If internet service is a necessity like electricity and natural gas, perhaps the issue of monopoly pricing could be solved through a Public Utility Commission regulatory system that verifies the need for price increases, and limits increases so prices remain affordable.  Small, isolated towns may still need to go it alone, just as they do now with other utilities.

Internet Speed: How Fast is Fast Enough?

Oregonlive, April 1, 2015 By Mike Rogoway
Google who?  Oregon cities want their own fiber networks

In Oregon, municipal telecom has a troubled history dating to Ashland's difficult foray into the market in the late 1990s. The Ashland Fiber Network didn't come close to covering the city's costs and was undercut by Charter Communications' cable TV business. The service still operates but it has split off its TV service.

Sherwood tried a municipal fiber network several years later, but it also generated significant losses.

Sandy issued a $7 million, 20-year bond to bury 43 miles of fiber connecting 3,500 homes in the city, 20 miles southeast of downtown Portland. It began offering Internet service last October.

USC NOTE:  Sandy's population of 10,000 people and it's more isolated location made it unattractive for large Internet companies to service.  Urban communities have multiple choices for Internet service.  

In the Portland area, Comcast, Frontier and CenturyLink have all boosted their Internet speeds in the past year and would surely fight to hold their markets. On Friday, Comcast said it plans to eventually upgrade nearly its entire service territory to gigabit service - and bring 2 gigs to many customers.

Smaller cities, though, think they might be able to recruit a private company to build and operate a local network that would be much less costly than building out a big urban footprint. Hillsboro will pay a Colorado company, Uptown Services, $44,000 to study its options.

USC NOTE:  To our knowledge, Lake Oswego did not engage a consultant to guage the feasibility and generate options for municipal broadband which is typically a first, crucial step to this size endeavor.  


  1. At this time, the provider will finance the project using TPG, a Texas firm. No revenue bonds are anticipated.
    If only 30% sign up, it will cost the City about $350,000 per year or $10.4 million over the 30 year lease term. Very risky given the other cost increases the City is facing.

  2. 16,500 residential units said the city
    16,500 x 30% = 4,950
    4,950 x $34 per month fee to Symmetrical Networks = $2,019,600
    $2,019,600 x 30 years = $60,588,000 the city is on the hook for, not $10.4m