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The election results in Lake Oswego could send a larger signal of whether voters in Oregon have any appetite for municipal telecom service.
(Ben Felten/Creative Commons)
Don't like your choices for internet service? In Lake Oswego, voters have a chance to demand their own.
A November ballot measure asks residents whether the city should back a new fiber-optic network that promises superfast, "gigabit" internet service for $60 a month. A private company would build and own the network, but the city would be on the hook if signups don't meet expectations.
Some advocates of making internet service more accessible have called on municipalities to treat broadband service as a utility, like water and electricity. They say rising prices and notoriously lousy customer service follow when one or two companies control regional markets.
Opponents warn against government intrusion in the private sector and financial risk to the city.
The election results in Lake Oswego could send a larger signal of whether voters in Oregon have any appetite for municipal telecom service.
The measure isn't binding, so the City Council could reject the project even if voters support it. Or the city could, conceivably, go ahead even if voters say no.
City Manager Scott Lazenby, who proposed the fiber project, said he expects council members will abide by election results.
"They still have mixed feelings about it, but they're the ones that put the advisory vote on the ballot," Lazenby said. "So my sense is if it does pass, the majority would be inclined to go ahead with it."
If voters do give the green light, Lake Oswego would have the largest municipally supported internet service in Oregon. Sandy, Monmouth, Independence and Ashland have also built local networks, with varied results. Nationally, city broadband networks remain very unusual.
Portland and Hillsboro have each studied the possibility of building municipal fiber networks, but each rejected the idea as too expensive. In both those cases, plans called for the cities to finance and own their networks.
Preliminary estimates last winter suggested Lake Oswego's 105-mile network would cost $32 million to build. Lake Oswego wouldn't actually build or finance its project, though, or operate it when it's complete.
Plans call for contracting with a Lake Oswego company called Symmetrical Networks, which says the investment firm Texas Pacific Group would provide the cash to build the network. The city would have an option to assume ownership of the project in 30 years for $1.
In return, Lake Oswego would provide a financial guarantee that at least 35 percent of the homes and businesses in the city would sign up to use the network. The city has roughly 16,000 households and 5,300 businesses, suggesting close to 7,500 customers would need to come on board.
If subscriptions fall well short of that, Lake Oswego's annual bill to make up the difference could conceivably run in the millions of dollars.
Lake Oswego's City Council voted 6-1 in January to move ahead on the project but punted when faced with a final decision, sending the project to voters instead.
Most Lake Oswego residents already have a pair of internet options to choose from: Comcast and CenturyLink. Each offers connections cheaper than the city's proposed fiber network, albeit at considerably slower speeds.
CenturyLink has begun offering fiber service at 1-gigabit per second in some Lake Oswego homes, matching the speeds Symmetrical promises. CenturyLink's service is now available in "hundreds" of homes, according to the company, which said it will eventually be available to 5,000 households in the area.
But CenturyLink charges $80 a month for the service -- $20 more than Symmetrical's proposed price. And to get that price, CenturyLink subscribers must bundle the fiber connection with cable TV service.
It once appeared Lake Oswego would have a third option: Google Fiber. But that company put its plans for the Portland area on a shelf in July and is exploring a less expensive wireless alternative instead. There's no timetable for when Google might decide whether to proceed.
Symmetrical has been waiting for the vote for eight months. Working with municipalities can be "more complicated than one might expect," company chairman Kevin Padrick acknowledged, and he said the company is exploring other business models.
But he said Symmetrical remains committed to the project -- if Lake Oswego wants to proceed.
"We still have the funding sources. We still have the plan," he said. "So nothing's changed from our perspective."
-- Mike Rogoway
mrogoway@oregonian.com
503-294-7699
@rogoway