By Mark Wineka
mwineka@salisburypost.com
Salisbury city officials said Monday a published John Locke Foundation report critical of its efforts to establish a fiber-optic cable utility is mostly opinion, not research.
“And not even informed opinion,” said Doug Paris, assistant to the city manager.
The Salisbury officials took issue point by point with the conservative think tank’s “regional brief,” titled “Salisbury’s Fiber-Optic System: Another Corporate Welfare Project Paid for by Average Taxpayers.”
City Manager David Treme said the foundation started out with a premise ó probably that government should not be involved in the cable business ó then tried to support it.
But Treme said the foundation apparently doesn’t understand the issue, and though the position paper is written as research or analysis, it failed to include Salisbury’s side for a balanced picture.
The foundation made no calls to him, the mayor or the city’s broadband director, Treme said.
“They have one point of view, and they supported it with their own information,” he said.
The John Locke Foundation paper claims Salisbury is being overly optimistic by expecting a 28 percent take rate for its Internet, television and telephone offerings. Salisbury hopes to launch its new utility next year.
Paris and Broadband Services Director Mike Crowell said the city’s surveys of citizens and businesses during the investigation process showed a high demand for Internet speeds at or above 10 megabits per second.
Nationwide, the Fiber to the Home Council says, the “take rates” for retail municipal systems after one to four years of operation average 54 percent.
“That says to me there is a demand for this,” Crowell said.
The city of Wilson launched its Greenlight fiber-optic utility last year and has signed up 2,746 residences and businesses so far.
Wilson officials say they need to sign about 6,000 customers within their first three years to be able to pay off their $28 million in debt in 12 years.
The Locke Foundation report suggests that Salisbury taxpayers would see a 9.5 cents-per-$100 valuation tax increase if the city would not reach the 28 percent penetration mark.
But Treme emphasized that the 9.5-cent-per-$100 figure was if Salisbury’s cable utility had no customers at all.
The city officials say they have a business model that will make the cable utility self-sustaining through its subscribers and able to pay off its bonded debt.
“With 28 percent penetration, we can make this work,” Treme said.
Treme thinks that goal will be accessible because people want better options and that the utility will belong to the citizens.
It will be their fiber network, he said, and any profits will go back into improving it and their quality of life.
“We’re providing infrastructure for our community,” Treme said. “That’s what we do.”
The John Locke Foundation also questioned the city’s eagerness to embrace fiber-optic cable technology over the mobility of wireless. It cited WiMax (Worldwide Interoperability for Microwave Access) as offering speeds up to 10 mbps and covering distances of 30 miles.
But Crowell said wireless technology will not be a substitute for fiber to the home, only a complement. The Locke Foundation report fails to mention wireless technology’s difficulty in providing quality, uninterrupted video and voice services, he said.
Crowell added that WiMax’s coverage is wildly overstated when it has to deal with obstacles such as trees, hills and valleys. One WiMax tower, while it might be good for flat terrain in Arizona, would never cover Salisbury’s 20 square miles, he said as an example.
Crowell said it would take 15 to 20 towers, and the bandwidth being provided would be shared bandwidth.
“It just won’t work,” Crowell said. “It is very distance sensitive.”
Paris said the proper way to look at fiber-optic cable is as the infrastructure, not the technology.
Wireless technology is something that sits on top of that infrastructure, but the city still needs that fiber-optic spine to be in place first, Paris said.
“It’s all riding on that fiber,” Crowell added.
Treme said the fiber-optic component allows for “scalable technology,” allowing cities to change what’s on top and what’s at the end of its system as demands change through the years.
WiMax could be placed on top of the fiber-optic infrastructure, “and that’s our plan,” Treme said.
The Salisbury officials also cited Fiber to the Home Council reports showing video quality is better with fiber-optic cable and said the foundation report contradicted itself when talking about pricing.
The report says “a great number of Salisbury’s residential customers would not be able to afford speeds greater than 10 mbps due to high costs,” but Crowell noted that Wilson’s basic Internet charge for 10 mbps is $34.95, compared to Time Warner’s $46.95.
The municipal broadband in Lafayette, La., charges $28.95 for 10 mbps, Crowell said. He also noted that Wilson’s entry into the cable business has been good for Time Warner Cable customers in that area because Time Warner has not raised its rates in Wilson for two years.
The Salisbury group also took issue with a section of the report suggesting that Salisbury, with a lower median income than the state as a whole, could not meet its subscriber goals because fewer homes have computers.
Paris and Mayor Susan Kluttz said they found the inference insulting.
“We have a pretty sophisticated city for our size,” Kluttz said.
The John Locke Foundation brief mentions Provo, Utah; Ashland, Ore.; and Lebanon, Ohio, as examples of where municipal broadband failed.
But Crowell said the model in Provo was a wholesale operation, not retail, because of an industry-induced state law that didn’t allow cities to be in the retail business.
Ashland’s system was built as a hybrid fiber-coaxial network, which is not the model Salisbury will install. Even with some early missteps, Crowell said, Ashland has turned its cable utility into a profitable operation.
Crowell said he could not find information on Lebanon’s efforts, which started in 1999, but again that system was not fiber to the home, he said.
Kluttz said the fiber-optic utility will be important for the city’s economic development. The city is committed to it, citizens have asked for it, and officials will keep fighting for it, she said.
The mayor added there’s more to the fiber-optic project than providing more speed and capacity for internet users.
It can lead to advantages for schools, industrial recruitment, public safety, businesses, community organizations and will provide more personalized service to neighborhoods, she said.