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Citizen's View: Fiber Follies, Part 2: Risks outweigh benefits

The proposal from Sunstone Business Finance and Symmetrical Networks for a public/private partnership in which the City would eventually own 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 taxpayers of Lake Oswego, but the proposal’s risks outweigh the benefits. Last month, I examined some of those risks. In this second of three Citizen’s Views I plan to write, let’s look at additional risks:

Fixed-Costs Risk: Last month, I identified fixed monthly costs for putting the fiber “pipe” in place. Now add the monthly fixed cost for the fiber “pipe” ($60), the loss of franchise fees ($3), the cost of undergrounding ($12) and personnel costs for one additional City employee ($2), and the total monthly bill is $77 before anyone even receives any content.

Community Risk: The City’s decades-long goal has been to underground new utilities. The Boones Ferry Road project now underway, for example, will underground existing utilities. But this proposal for a broadband network would cause us to walk away from that goal.

Pricing Risk: All the proposal does is provide a pipe. It does not include content. Everyone will be responsible for securing their own content — at an additional cost and with the hassle of combining multiple pieces of equipment and bills from different providers. Viewers are transitioning from cable packages to streaming packages, in a process called rebundling, as streaming platforms team up with premium cable channels. Add in Netflix, Hulu, Amazon, Yondoo, phone, security, a live TV option and a couple of premium channels and your monthly bill will be as high or higher than before, but with multiple providers, equipment and bills.

Duplication Risk: One provider, Comcast, already has 45 miles of fiber in place and plans to put more in. The Sunstone proposal is for 150 miles of fiber in the city. But this is comparable to the City wanting to build another I-5 next to the existing I-5. Is there really a need to duplicate the investment?

Reputional Risk: When things go wrong with the Internet service — and things will go wrong — the City will be blamed. After all, we are a partner. Irritation with Comcast and other Internet providers will be transferred to the City. And this will bring additional costs.

Competitive Risk: The assumption is that Comcast, Frontier Communications, CenturyLink, Wave, AT & T, Verizon, etc., will not respond competitively. Wrong assumption. How many times have you gone to your cell service provider and gotten a better deal just by asking?

Process Risk: The council has only heard from cities that proceeded with a municipal network. In both cases, cities presenting were relative Internet deserts. Where are the cities who looked at municipal ownership and walked away?

Process Risk: The council is moving forward without knowing exactly where the fiber will be located above and below ground.

Technological Risk: Over the next 30 years, will fiber be the only way to deliver fast, reliable data? This decision is a $71 million bet that no disruptive technology will be implemented in the next 30 years and/or that the tremendous increase in mobile delivery of information will not continue.

Can Lake Oswego afford millions of dollars in financial risks when we are not doing everything else as we want? Can residents afford higher utility bills even if they don’t use the service?

Let’s stick to the core services of the City. More details to follow next month.

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.