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Central Coast Californians Choose Cost Savings Over Charter

| Written by Lisa Gonzalez | No Comments | Updated on Sep 12, 2013 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/central-coast-californians-choose-cost-savings-over-charter/

California’s Watsonville, population 51,200, joins the ranks of municipalities considering the benefits of a publicly owned fiber optic network to connect key facilities. At a September 10 the City Council passed a resolution approving plans and calling for an RFP for a next generation fiber network. Bids will be accepted until October 8, 2013.

According to a Register Pajaronian article, the City Council expects the network to cost $480,000. An August 27 memorandum [PDF] provides more detail on the project.

Charter Communications currently provides fiber optic I-Net service to Watsonville local government. The network provides data connections, Internet, gate controls, and security systems throughout the City. The fiber I-Net also provides backhaul for wireless systems for the police department and various remote city locations.

As has happened many in states that have revoked local franchise authority, Watsonville’s favorable long term cable franchise agreement with Charter is ending. Charter will no longer provide the I-Net services for no cost as part of its agreement to place its equipment in the public rights-of-way. Instead, it has proposed expensive lease options.

Charter has offered two quotes: $43,115 per year for a reduced level of service and $149,153 per year for the same level of service the city now receives. The memorandum goes on to note that a reduced level of service would require reduction of some uses for the current network, such as eliminating a number of security cameras.

City staff estimates that installation of a next generation network would cost approximately $480,000. They would connect the high school, the City Information Technology office, the Veterans Building, the local reservoir, the library, the airport and the fire station. Watsonville has a significant amount of fiber already in place for use in the citywide transportation system which will reduce the cost of installation. The project will be financed primarily with library and water enterprise funds and other city departments that connect will contribute to the project costs.

When compared to Charter’s quote for services comparable to Watsonville’s current level of service, the network will pay for itself in a little over three years. Even compared to the reduced services rate from Charter, the network will pay for itself in 11 years (likely even sooner as Charter would certainly raise the rate over the period). The memo also states that other entities have expressed an interest in leasing excess capacity from Watsonville when the network is up and running. The excess revenue would shorten the payback period still more.

Finally, just by owning its own infrastructure, the community will have security in knowing that moving bits will be cheaper over time due to technological innovation and they can budget more securely as they will plan the upgrade cycle rather than having to negotiate with other providers.