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Should LO create its own Internet service network?

City doesn't have to wait for Google Fiber to make up its mind, council told

The City of Lake Oswego came one step closer to establishing a new city utility this week when the City Council agreed to further explore creating a municipally owned, fiber-based Internet service network.

Councilors seemed ambivalent about the decision Tuesday night, with Councilor Jeff Gudman calling it a “back-door” move by the city into the utility business and Councilor Jackie Manz questioning whether significant community demand even existed for the service.

But City Manager Scott Lazenby told the council such a utility would offer gigabit-speed service to Lake Oswego customers at an estimated rate of between $45 and $60 a month, compared to Google Fiber’s $70 — assuming Google Fiber actually makes the decision to offer service here.

Although Lake Oswego was identified in 2014 as a potential “fiberhood” — an area that could receive Google Fiber’s high-speed Internet service, which can be up to 100 times faster than current broadband — the timeline has been vague. In March, Lazenby suggested to the council that the city didn’t have to wait for Google to make up its mind; instead, the city could build out a fiber-optic infrastructure through a public-private partnership, ultimately creating a city-owned utility.

A similar program was introduced in Sandy while Lazenby was city manager there.

The push has continued, with the City Council holding a special study session last week to query Christopher Mitchell, the director of Community Broadband Initiative, and to discuss the next steps.

“Just getting this network would put Lake Oswego on the map,” Lazenby told the council. “I think increasing that level of service, especially for the demographics we have here — highly educated, many tech-oriented folks in our community — that would be a real service to make available.”

Mitchell emphasized that municipal fiber networks allow for community self-reliance and provide protection from price-gouging.

“When I think about relying on Google, if Google decides to get out of this business, the community has no say about who takes it over,” he said.

Mitchell made the case that Lake Oswego had some unique advantages over other cities in establishing a municipal fiber-based utility.

“You have a collection of high-tech companies, various entities that appear together, in ways that communities don’t have access to in their backyard,” he said. “Not everyone has that regional connectivity that you have here.”

The city issued a fairly open-ended request for proposals in June and received two: SiFi Networks’ proposal for a largely underground infrastructure, and Lake Oswego-based Sunstone Business Finance’s largely aerial design. The proposals were reviewed by five city staff members and an eight-member advisory group, and city staff ultimately recommended the council approve Sunstone’s proposal for the financing and construction of a fiber-to-the-premises network, noting it had a lower lifetime cost over a 30-year period.

But Gudman argued the city lacked the market research to identify whether there was any need for the service in the community.

“The logic of (the project) says, ‘We’re providing a restaurant service at our Adult Community Center, therefore let us get into the restaurant service and compete with Babica Hen and Gubanc’s,’” he said.

But Councilor Joe Buck said the project would offer the council a chance to “exercise a little bit of leadership,” and called it a valuable proposition — assuming the council could review market research before signing off on a public-private partnership.

Councilor Jon Gustafson made a motion to direct city staff to negotiate an agreement with Sunstone for subsequent review, contingent on a market study. The council passed the resolution 5-1, with Councilor Charles Collins absent and Gudman casting the dissenting vote.

Contact Saundra Sorenson at 503-636-1281 ext. 107 or ssorenson@lakeoswegoreview.com.


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