[1st-mile-nm] Powell, WY Fiber Network

[Richard Lowenberg]

Powell, Wyoming is proceeding with buildout of a fiber network.
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www.billingsgazette.net/articles/2007/12/21/news/wyoming/28-powell.txt

Powell council OKs financing fiber optic network

By RUFFIN PREVOST
Gazette Wyoming Bureau
Friday, December 21, 2007

POWELL - The Powell City Council voted unanimously during a special
meeting Thursday to authorize $6.5 million in private revenue bond
financing for a citywide fiber optic telecommunications network.

The council also approved documents outlining the structure and operation
of the network, which will be run for six years by anchor service provider
TCT of Basin and will be owned by the city after 20 years.

The network would bring ultra-high-speed data connections to every home in
Powell and allow customers to receive Internet, phone and television
services over a single line.

Consultants U.S. MetroNets of Utah, underwriters Seattle-Northwest
Securities and investment firm Global Leveraged Capital of New York City
are expected to sign final closing documents sometime over the next few
weeks, said Ernie Bray, founder of U.S. MetroNets.

Anchor service provider TCT will review the deal before it is finalized,
but Bray and attorneys involved with the process said Thursday that all
parties had agreed on terms and that only closing and due diligence
documents remained to be signed.

If the system is a success, the deal would cost Powell no money and could
end up saving city funds by allowing remote power meter reading, City
Administrator Zane Logan has said.

Starting in 2014, a future council will have the option to consider
helping fund the system, but only if it is not making money and seems
likely to do so with such assistance, Logan has said.

The city is due a refund of $125,000 it paid to U.S. MetroNets in February
2006.

Logan said the city's contract with U.S. MetroNets requires that refund be
paid back as soon as bond revenues are received, presumably sometime early
next year.

But he said the Northwest Improvement Joint Powers Board that will
administer the funds will explore whether it makes more sense to delay the
refund to avoid paying debt service on the funds, instead paying it back
from system revenues as they become available.

Nearly two years in the making, the project is thought to be the first of
its kind in the country to be financed entirely without any guarantee of
government funding.

Telecom giants Qwest and Bresnan Communications have opposed the deal,
successfully supporting state legislation making it more difficult for
other cities seeking to fund such projects.

A city-owned network represents an unfair competitive advantage for its
operator, the companies have said.

Bray said the network is expected to cost $4.9 million to build, with the
additional $1.6 million representing the total potential financing costs.

If the network performs well initially, terms allow the city to make early
repayments and avoid some of those financing costs, Logan said.

Construction on the project is expected to take up to five months and may
begin as soon as March if weather is favorable, Bray said.

The financing model for the Powell network has been drawing attention from
other investors and service providers, Bray said, and could serve as a
model for other small, rural communities seeking to build high-speed
networks.

Council members have seen the network as a way to jump-start economic
development in Powell.


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Richard Lowenberg
P.O.Box 8001, Santa Fe, NM 87504
505-989-9110,  505-603-5200 cell

1st-Mile Institute
New Mexico Broadband Initiative
www.1st-mile.com
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