St. Paul Pioneer Press, October 1, 2012
The streets have yet to be ripped up, the trenches yet to be dug, for a proposed $14 million ultrafast fiber-optic underground broadband network in Ramsey County. The county has long said the network would be exclusively for government use. Facilities without fiber connectivity, like the county workhouse, or governmental bodies like the City of St. Paul — which is considering leasing space on the network to replace its service from Comcast — would be the only users, the county says.
But once the streets are dug up, businesses are considering ways to leverage the project, too.
Warner Properties Communications, for instance. The Internet service provider, which serves Twin Cities apartment buildings and condos, isn’t looking at the county’s conduit, though.
Instead, Warner Properties is studying a proposed second conduit that would run alongside the county’s fiber cable.
That conduit, packed with its own data-carrying fiber, would belong to the county’s partner in the project, a startup business called Minnesota Fiber Exchange.
By taking out loans and raising money from investors, Minnesota Fiber Exchange is proposing to pay roughly half of the cost of building this dual-conduit network, or fiber ring as it is sometimes called.
The county estimates its share of the construction cost, including the necessary lateral connections to its various buildings, will be about $14 million. Minnesota Fiber Exchange’s share has yet to be determined because the
company is still negotiating with the county over its contract, but two years ago, the city of St. Paul and Ramsey County considered building a fiber optic network themselves, and the cost estimate then was $30 million.
The city dropped the idea as too expensive, but the county plowed ahead and picked up Minnesota Fiber Exchange as a partner.
Chris Mitchell, director of telecommunications issues for the Minneapolis-based Institute for Local Self Reliance, said he’s afraid the ISPs on the Minnesota Fiber Exchange side of the network will “skim off the cream of the crop” — meaning business customers.
That would leave little meaningful revenue for a later ISP targeting homeowners who spend less than a business does on broadband.
Mitchell’s group has long advocated for municipalities and counties to own telecommunications infrastructure and compete directly with incumbent broadband providers like CenturyLink and Comcast.
But that’s the very thing county officials say they do not want to do.
STRANDS OF MONEY
Eric Lampland, president of Lookout Point Communications, a St. Paul broadband consultancy, said the real money is in building a network like MFE would be doing.
Once the county’s dual-conduit network is buried, it would be all but impossible for other companies to come in later with a competing network, he said.
That’s because the biggest expense in building a fiber ring is digging the trenches, Lampland said. By sharing the cost of laying cable with the county, MFE is getting a huge financial break, he said.
Unlike Comcast’s skeptical Coleman, Lampland said making money would be almost too easy. It only takes a selling a few fiber strands in a project to break even, according to Lampland, and a conduit can be packed with up to 72 individual strands — typically the largest capacity used on projects of this kind.
“I’m totally with the City of St. Paul and Ramsey County for trying to build out their own network,” Lampland said. “But the irony is that the city and county — in looking at their costs that are getting totally exorbitant — are getting in the way of citizens who also are paying too much money. We’re all paying too much because there is too little competition.”
Mitchell and Lampland want the county to open up the trench to more conduits. But the problem with that argument may be that no one else has stepped forward so far. Berg, at Ramsey County, said MFE responded to a request for proposal several years ago.
Schultz dismissed concerns about residential service.
Building a network that can offer residential services — sometimes called fiber to the premise — would take a long time in an area as large as the Twin Cities, he said. He’s expecting to have the Ramsey County ring completed by the end of 2014 if work can begin next spring.
“Do you want to wait forever to get the whole thing?” he asked. “Or can you start now, and build something that can be leveraged for fiber-to-the-premise?
“I’d rather start.”