City expects Fibrant to make money by 2014
Published 12:00 am Thursday, June 9, 2011
By Emily Ford
SALISBURY — The city has completed an updated business model for Fibrant that shows the new broadband utility making money by 2014.
According to the plan, Fibrant will lose money until 2013, then become cash-flow positive in 2014, making $57,531 in its fourth year of operation.
The council will discuss the Fibrant business model during a budget workshop from 10 a.m. to 1 p.m. today at City Hall, 217 S. Main St. The meeting is open to the public and will resume at 10 a.m. Friday if needed.
In addition to Fibrant, the council will discuss increasing the property tax rate, cutting services and other measures to fill a $2.7 million budget hole. City property values fell after a recent Rowan County revaluation process.
Fibrant competes with private companies to provide phone, Internet and cable TV service. The business model has Fibrant making $350,951 in 2015, the last year listed in the five-year plan.
Initial revenue losses in the first three years of operation include a loss of $1.2 million this year, $3.6 million in 2012 and $2.6 million in 2013.
Rates are not scheduled to increase until 2013.
The plan includes about 900 subscribers in 2011, which Fibrant already has achieved. By 2015, Fibrant should have roughly 4,800 subscribers, according to the model.
The city launched Fibrant in November 2011 after private companies wouldn’t provide a fiber-to-the-home broadband network, which the city said is crucial for public safety, education and economic development.
Fibrant operated for seven months without an updated business plan. Although the city in 2008 and 2009 made detailed projections about Fibrant, those numbers became obsolete when the utility launched later than expected, John Sofley, the city’s finance director and new assistant city manager, told the Post.
City Council members in May requested more information about Fibrant, including an updated business plan and quarterly financial reports.
Sofley said he hand-delivered the new business model to council members Friday. He said he did not provide a copy to the Post at the time because he thought the Post had asked for the plan via email.
The Post had asked Sofley to provide the plan as soon as it was ready and did not specify which form.
Sofley gave the business model to the Post Tuesday.
The Post first requested updated Fibrant subscriber and revenue projections in April.
The city issued $33.56 million in bonds in 2008 to build Fibrant.
Contact reporter Emily Ford at 704-797-4264.
If you would like to comment on this on-going news story, visit our forums. Just click here.