Full build-out of network could cost city up to $140 million
By Alex Burness
If Boulder owns or has access to its power poles, such as these lining Broadway near Quince Street, it can dramatically limit its broadband costs. (Paul Aiken)
Boulder is primed to pump the brakes on its effort to establish citywide broadband, with those closest to the issue urging that the City Council delay any potential ballot measure asking voters to approve new funding for the project.
Top staff and their council liaison, the former telecommunications executive Bob Yates, agree that holding off for now is prudent because Boulder does not have enough certainty about the funding mechanism, the fast-evolving broadband industry or potential city business partners.
Given that state law forbids placement of general obligation bonds — the funding vehicle that Boulder would use in this case — on special election ballots, the earliest that the city would turn to its people for broadband money is November of 2018.
“As we looked at the work that still needed to be done by us,” Don Ingle, the city’s chief information officer, said of the staff recommendation, “we just didn’t feel that we could do sufficient due diligence, with defensible figures, to then put it to council to do a bond question.”
An additional factor in the recommended approach, which is almost certain to be accepted by the council, is that Boulder is currently waiting on a ruling in its bid to separate from Xcel Energy and form a municipal electric utility.
That matters because if a city owns or has access to its power poles, it can dramatically limit its broadband costs. Boulder hopes it will have that access in coming years, but for now, it does not.
Ballot measures should ideally be finalized in July and August, and the city’s municipalization trial doesn’t even begin until late July.
The most aggressive possible timeline for the trial sees regulators issuing a ruling in mid-August, and, Ingle said, “we just couldn’t have our ducks in a row to make a recommendation by then.”
While the “When?” of the matter hangs in the balance, the “How?” is for now less murky, as the city has already made at least one key decision related to its path toward a “fiber-to-the-premises, gigabit-class” broadband network that would give homes and businesses a faster, cheaper internet option:
Boulder’s City Council is not interested, as of now, in financing the full build-out of a network, which could cost up to an estimated $140 million. Instead, it would like to pursue a partnership with a private company that would pay to build the majority of the network, and then maybe operate it, too.
This is the rare issue in which there appears to be no formal opposition to the council’s desired outcome, but that hasn’t made the work any simpler.
Boulder wants to maintain some control over its future network, but doesn’t want to pay to build and own it all. The council has discussed possibly paying for the partial build-out, so that it might have some part of the network to its name if and when a private partner is bought out.
The strategy makes sense: by owning a small but critical portion of the network, Boulder could cover itself in the case of a sale to a larger company that might seek to undo the city’s progress by raising prices and lower speeds. It wouldn’t own the network, but it’d have a solid insurance policy, effectively.
But that could be a tough sell, said Jeff Kohler, a broadband expert who co-founded Englewood’s Rise Broadband.
“I would be wary as a company of partnering with Boulder” under those circumstances, Kohler said. “
“If they’re private equity-funded businesses, they’re not going to want to do a deal that pigeonholes them into not being able to sell or consolidate their business. It’s counterintuitive.”
The city presses on with negotiations, and has three private companies, including the local Zayo Group, open to partnering. The recent drop-off of a fourth partner — Canada’s Axia — signals another possible consideration Boulder may have in the next year of strategizing.
Axia removed itself from Boulder’s list because its parent company decided to pull away from that kind of investment. That was no isolated move; Google and Verizon have also scaled back from fiber, and municipally-owned fiber networks are in some cases struggling to stay afloat.
Wireless technology, meanwhile, is gaining in popularity. It is now a much more legitimate option for Boulder than it was a few years ago, when the broadband conversation picked up here.
“A lot of this new technology is evolving,” Kohler said, “and I think they need to take some time to understand what’s coming before they decide what’s going to be the best vehicle to provide broadband to the citizens of Boulder.”
With the recent staff recommendation against a 2017 ballot measure, it now appears the city will have that time.