Citizen's View: Future should be in the hands of citizens
Lake Oswego, like many communities, is mired in the past when it comes to its Internet infrastructure.
The future depends upon the construction of a world-class fiber (glass strands that transmit light) network infrastructure that will meet the needs of citizens for education, economic development, health care and entertainment. Without fiber, we will cede our Internet future to cable companies using cable designed for video networks started in 1940.
Internet service has become part of the daily lifeblood of communities. The cable companies that provide our Internet have a natural monopoly. While it is theoretically possible to have more than one cable provider, the high cost of installing the infrastructure prevents it. Cable companies charge what the market will bear while delivering poor customer service because they can. In fact, Comcast controls 79 percent of the Lake Oswego market.
To keep up with technological improvements and new applications, Internet speeds will continue to grow at a 50-percent compound annual rate (known as Nielsens Law). That means Internet speeds must grow by more than 300,000 percent in the next 20 years and that is not a misprint. Only fiber, not wireless or other technologies even in development, will be able to deliver these speeds.
Recent polling of Lake Oswego citizens reflects that they understand the situation. Seventy-nine percent want the City to build a municipal fiber network, and only 9 percent oppose it. No doubt the majority believe very strongly in a free market; however, they recognize that a free market doesnt exist.
Seventy-eight percent of those polled say that they will definitely, are very likely or are somewhat likely to sign up for municipally provided Internet at the proposed price of $59.95 for 1 gigabit per second. The percentage increases to 84 percent if the bundled price for telephone, video and Internet is less than they pay today. Today, citizens are paying $188 per month on average for bundled Internet, phone and video. Expected bundled pricing for the City network will be lower with better service.
After an extensive RFP process, in which all entities interested in providing a fiber network were invited to respond, Lake Oswego is evaluating a public-private agreement with our Lake Oswego-based firm, Symmetrical Networks. There will be agreed-upon pricing and service levels, with a proposed rate of $59.95 for 1 gigabit per second less than Google Fiber and one of the lowest rates in the United States. The revenue-neutral model will be built with private funds and owned by the City at no additional cost after the lease term, with risk mitigated through pre-signups and our firm taking very unlikely first losses. In fact, the City will not move forward with construction until 35 percent commit with a refundable deposit to subscribe. Lake Oswego will be empowering its citizens to decide how important a fiber network is to them.
If Lake Oswego doesnt move forward with its network, Google Fiber may come to Lake Oswego. But it, too, will be a natural monopoly. While Google would seem to be a better monopolist than Comcast, history has taught us to be wary. Also, the City will never own the network, nor have control over rates or service levels, or know whether the entire City will be served.
If the City does move forward, the future will be in the hands of its citizens.
Kevin Padrick is a Lake Oswego homeowner and the chairman and co-founder of Symmetrical Networks. The company is negotiating with the City to build, finance and operate a municipal fiber network.