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Citizen's View: Fiber Follies: Risks outweigh benefits

GUDMANThe proposal from Symmetrical Networks and Sunstone Business Finance for a public-private partnership with eventual City ownership of a fiber broadband network is not in the best interests of the City. The goal should be to provide better service at a lower cost without risk to the taxpayer residents of Lake Oswego. The proposal fails, because the risks outweigh the benefits.

Details matter, of course. But long-term policy implications matter, too. Let’s examine a fundamental issue about the nature of the proposed public/private partnership.

The proposed public/private partnership has the City on the hook for 30 years to ensure a monthly guaranteed payment to Sunstone Business Finance/Symmetrical Networks of $197,000 for a 35-percent “take rate” for fiber service. The City has been and/or will be a part of other public/private partnerships:

The Lake View Village public/private partnership: The City did not guarantee a 35-percent take/occupancy rate for the commercial space for 30 years; the City partnered by providing funding for public parking.

The Wizer property redevelopment: The City did not guarantee a 35-percent take/occupancy rate for apartments for 30 years; the City partnered by providing funding for public parking.

The North Anchor: The City is not going to guarantee a 35-percent take/occupancy rate for the hotel for 30 years.

Should the City guarantee a 35-percent take rate for putting in fiber? It must not. To make matters worse, the City does not share in the upside if excellent service is provided by Sunstone Business Finance/Symmetrical Networks.

If this is such a good deal for Sunstone Business Finance/Symmetrical Networks, then why do they need the City to financially backstop the transaction? Why, as a startup company, are company officials unwilling to release their entire set of financial projections? That is standard operating practice when investing/guaranteeing in startup companies.

Either Sunstone Business Finance and Symmetrical Networks are too weak to sustain themselves over 30 years, or they are going to make a lot more money than what they are saying they will make. In either case, the City Council and residents, who are on the hook for the guarantee, need to see the financials to evaluate and decide.

Assume for the moment that the fiber lines get installed throughout the city. A fiber-optic line will then have to be run to each and every house that signs up, but even that won’t be enough to take full advantage of the speed capabilities. Once at the house, fiber lines will have to be connected and installed in the house. Both will be expensive, but the latter will be enormously so. You can imagine what that might be if you had to replace all coaxial cable currently embedded in your walls with fiber.

The high-speed characteristics of fiber cannot be fully taken advantage of unless the line is completely connected from source to destination (destination being directly connected to your TV or home network system, for example).

As an additional note, the world is going wireless, rather than wired. It might make better and cheaper sense for a service provider to install very high-speed WiFi repeaters citywide. As that technology advances over time, repeaters can be easily replaced with newer, higher-speed and more-secure devices to keep up with the latest technological changes.

The Sunstone Business Finance/Symmetrical Networks proposal is the wrong proposal at the wrong time in the wrong place.

Jeff Gudman is a Lake Oswego resident and a member of the City Council. This Citizen’s View is a reflection of his own views and not necessarily those of the entire council.