514 households commit to Gigabit deal

URBANA — More than 514 people in Champaign-Urbana and Savoy have committed at least $381,800 toward an effort to bring a community-wide fiber-optic network to the area, and officials are submitting an application to a private company offering to do just that.

It is a small percentage of the households and businesses that were eligible to sign up, but officials are pleased with the number.

At least 17 more people have signed up since the July 30 deadline, according to UC2B principal investigator Mike Smeltzer, but 514 is the number that will go in the application.

"We didn't have a target in mind," said Urbana City Council member Brandon Bowersox-Johnson. "But I was happy, very pleased with the results because we were asking people to contribute financially just to help us win our competition, something that may or may not happen right away."

Peter Folk, president of Champaign-based Volo Broadband, said he does not know what to make of the number of commitments.

"It's 1 percent of the households in Champaign-Urbana," he said. "I don't have enough background to get a feeling of whether that's good for this kind of thing."

Local organizers were using the "competition" as a way to persuade a private company named Gigabit Squared to build a fiber-optic network worth tens of millions of dollars throughout the area. It would be an expansion of the existing $31 million fiber optic network that was built primarily with federal and state grants.

The competition asked residents, businesses owners and landlords to pay, at minimum, $100 up front and potentially $400 later to hook their properties up to the fiber-optic network. They would also have to commit to buying at least one year of Internet service, starting at $30 per month.

Officials say allowing Gigabit Squared to build the network would expand the community's computing capabilities.

The plan has come under fire from local Internet providers within the past few weeks. They say letting a private, out-of-town company build, own and operate the network would put local providers' access at risk and send local dollars out of the community.

As a result of those discussions, Bowersox-Johnson said city officials in Champaign and Urbana are beginning to look at a "Plan B."

"The conversation in both of those places and the UC2B (Urbana-Champaign Big Broadband) policy board was really a conversation about (Gigabit Squared) as one option and making sure we explore all other options," Bowersox-Johnson said. "If we don't win this competition, we as a community want to be looking for any other avenue" to expand the network.

City officials have said expanding the network is crucial to maintaining its viability in the future. But some estimates put the cost of the expansion as high as $70 million, while others suggest it would be as low as $11 million.

Either way, it would be an expensive project for local government to take on. Bowersox-Johnson said a municipally funded network could be one option. Others include partnering with a different private provider or exploring a co-op model, where a group of businesses or agencies could collaborate on building the network.

Folk, who has been outspoken in his opinion that UC2B needs to consider options other than Gigabit Squared, said he is pursuing a co-op model, and it is going pretty well.

"It's not an organization yet, but it's a group of people that are strongly in favor of the co-op model," Folk said.

He has set up a Facebook page at http://www.facebook.com/gigcoop for interested parties.

Folk has also been outspoken in his opinion that Gigabit Squared will not come out on top once all options have been considered.

"We can do a lot better than Gigabit Squared," Folk said. "It's not a terrible company or a terrible plan for some areas, but it's way worse than what we can do here."

City officials are gathering "information to really help us compare those different models and figure out what is the best model," Bowersox-Johnson said. That will be helpful whether or not Gigabit Squared chooses to build in Champaign-Urbana.

A decision from Gigabit Squared is expected in about two months or so.

"I think right now we have a little bit of a waiting period, and we would let residents know as soon as we know anything more," Bowersox-Johnson said.

 

Local organizers will submit a proposal to Gigabit Squared for which 514 people committed to buying one year of Internet service and paying for fiber installation on their property. Officials hope that number will convince the private company to build an expanded fiber optic network in Champaign-Urbana and Savoy. Here's how the number of commitments breaks down:

 

CityResidents  Landlords  Businesses  TotalChampaign 28048292Urbana 18982199Savoy 220123Totals 4911211514

Source: Urbana-Champaign Big Broadband

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increvable wrote on August 09, 2012 at 9:08 pm

I'm big on cooperatives, for all the reasons Mr. Folk outlines, and if a viable business plan can be put together, then I think it would be a great option. However, laying fiber is very capital intensive, and that co-op wouldn't have access to a revolving fund from the federal government, as the rural electric cooperatives did during the 1930s. I worry about where the money would come from to get started.

I'm reminded of the lecture I went to this spring given by someone affiliated with the Evergreen Cooperatives in Cleveland. It's a deeply worthy endeavor and they seem to be doing okay, but putting together the financing seemed like a real trial, involving a complex mix of federal, state and city loans as well as foundation grants and bank loans, with many strings attached. One of my main takeaways was that raising tens of millions of dollars for a co-op is more than 10 times as difficult as raising millions of dollars. They can't trade equity for cash. That makes it hard to get off the ground if the membership can't supply the loans, as we saw with Common Ground's very successful fundraising drive for its expansion.

http://evergreencooperatives.com/