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City taking leap into future with fiber-optic cable

By Mark Wineka
Salisbury Post
Salisbury city officials are comparing it to the coming of the railroad in the 19th century.
They are going into the cable business.
“I’m really gung-ho,” Mayor Pro Tem Paul Woodson said.
Fresh off a field trip Monday to Wilson to see that city’s progress, Salisbury City Council voted 5-0 Tuesday to establish a fiber-optic cable utility from scratch and extend “fiber to the home” within the next three years.
The city decision will put the municipality in direct competition with incumbent providers such as Time Warner Cable and AT&T in offering video, Internet and telephone services.
Salisbury’s start-up costs will be about $30 million, to be paid through the issue of revenue bonds later this year and next year. Initially, the system will require about a 10,000-square-foot operations center and a dozen full-time employees.
City officials have run a business model calculated on taking a minimum of 28 percent of customers now being served by other providers.
“We will far exceed” the 28 percent take rate, Councilman Mark Lewis predicted.
The same city business model says the system could be in the black by its fourth year and would essentially make $1.25 in revenue to cover every $1 in debt.
The city leaders say no tax dollars would go toward the new utility, which would be set up much like the water-sewer utility as an enterprise fund. They think Salisbury’s entry into the market will lead to lower rates for all cable customers because of the competition.
City leaders also trumpet the importance of providing the increased bandwidth through fiber-optic cable and what it will mean for receiving and sending information, speed and capacity.
Councilman Bill Burgin said it’s all about timing and what industry experts describe as going the last mile in taking fiber-optic cable all the way to homes, businesses and institutions.
In many cases, incumbent providers have major trunk lines of fiber-optic cable, but the wiring that goes out from those lines toward homes and businesses is copper cable that doesn’t have the same speed or capacity that many people already want or will be looking for in the near future.
City officials fear Salisbury, as a smaller community, could be left years behind if it depends on the private sector to invest what’s needed in getting fiber optic cable to homes.
Burgin said fiber optic cable’s capabilities will be important to Salisbury citizens and attractive to people coming here to work at the N.C. Research Campus in Kannapolis.
“The timing’s right, the timing’s good,” Burgin said. “… It is a huge step.”
The city officials also like the prospect of citizens deciding on what programming they want and the local customer service that it would be able to provide.
Wilson, a city of just under 50,000 population, has embarked on a $28 million effort to establish a fiber-optic cable utility, which it has named “Greenlight.” The system is only months away from a launch.
Four of the five council members took Monday’s field trip to look at Wilson’s infrastructure and ask Wilson officials, including City Manager Grant Goings, about their process, the goals set and the challenges they have faced.
“I think we all satisfied ourselves,” that the goals Salisbury has set for a fiber-optic system are realistic, Burgin said. He agreed with Goings who warned that if Salisbury waited to be totally comfortable, it will be too late.
Burgin said he also had confidence in Salisbury’s staff to put together the project, that no tax dollars would be obligated, and that citizens should hold council accountable to that promise.
Kennedy said he learned from the Wilson visit that the incumbent providers in that area have offered customers lower rates. He also expressed confidence that city employees could provide the customer service needed for a local system.
Getting into the cable business is a bold move, Kennedy added, but the city has to “get on board the super information highway.”
Woodson said he was impressed with what’s happening in Wilson. It was time, he said, for Salisbury to step out and go with something that could really move the city forward.
Lewis said it was interesting that Wilson officials, for now, are hardly spending any money on marketing Greenlight because they have been overwhelmed by the response. He also liked the way Wilson is going neighborhood by neighborhood in installing the fiber-optic system and signing people up for the service.
Mayor Susan Kluttz could not make Monday’s field trip because she stayed behind for a luncheon farewell for the U.S. Army Reserve’s 846th Transportation Co., which is being redeployed for a year’s stay in southwest Asia.
But Kluttz said the fiber-optic utility will be “a wonderful opportunity” that will benefit Salisburians. She acknowledged the frustration council members have had in the past when they have had to automatically pass along increases for Time Warner Cable.
The council has been looking at providing “fiber to the home” for the past two years.

Contact Mark Wineka at 704-797-4263 or mwineka@salisburypost.com.

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