(TNS) — Decatur Utilities is looking into the possibility of entering the broadband Internet business, potentially including TV and telephone service.
“This could be the first new utility for Decatur in two to three generations,” said DU general manager Ray Hardin.
The DU board on Monday unanimously approved the initial step of finding a firm to conduct a broadband feasibility and market assessment.
Hardin said the plan is to send out requests for several firms “to provide proposals for a study that we would like to perform to look at the current market conditions in our community to determine whether or not we should consider entering into the fiber broadband utility business.”
Board member Tom Counts founded Internet-based fiber network design and network management software company 3-GIS. He now is an executive at a fiber-optic construction business. Counts said his company would not be involved in any future project due to the conflict of interest, but board Chairman Neal Holland referred to him as “our resident fiber specialist.”
Counts said he can imagine huge benefits to Decatur if the broadband project moves forward.
“I’m really excited about it,” Counts said. “It would provide competitive service, excellent customer service, and most importantly it would help close the digital divide. If it works out, we should be able to provide affordable, readily available high-speed Internet to those who historically either can’t afford it or don’t get the option to even receive it.”
He said he would also expect a DU project to provide faster Internet than is typically available in Decatur from the private sector.
“It would be fiber based, so by nature you will have a much greater available bandwidth, but it will also drive [private] competition to do the same thing,” Counts said.
Counts pointed to Huntsville, where he said private Internet providers were running low bandwidth and charging “crazy prices for it.”
“Google Fiber came in, through Huntsville Utilities. The price dropped like a rock, service went up and quality got better for everyone,” he said.
Counts said it’s too early to speculate on the speeds that would be offered by DU, but he said typically with a fiber system the minimum is 300 megabits per second with a maximum of 2 gigabits per second. He said some private providers offer speeds as high as a gigabit per second, “but it’s very spotty on where that’s available in the city. And it’s very expensive.”
He guessed that if 30-35% of Decatur residents used the DU service, it would be financially feasible.
Counts said a DU system would not just benefit residential customers. Combined with a private provider, it would offer redundancy for businesses highly dependent on Internet, so if one system went down, another would be available.
Counts said he would expect the DU fiber-optic cable to run in existing power line rights of way, which adds to the efficiency of DU offering the service, and that many existing DU workers could also be involved in maintaining the broadband system.
“The feasibility might not work out, but I bet it will. I hope it will, because I think everyone would win,” Counts said. “There are benefits for everyone, from industry to our utility operations to libraries and hospitals. Everybody will benefit.”
Almost everybody. Existing Internet providers in Decatur would be an exception.
“They won’t be thrilled at all, because their margins will go down,” Counts said. “Their costs are the same, but they charge lots of money for it, and they won’t be able to do that anymore.”
Dave Hargrove, regional director of governmental and external affairs at Internet provider AT&T, did not immediately return calls Monday afternoon.
While the City Council would not have to approve the feasibility study, which is an operational expense, Hardin said both the DU board and the council would have to approve the capital expenditures that would be required to install a fiber-optic system.
Like Counts, Hardin expects some corporate pushback.
“We’ve seen in other municipalities, when municipalities chose to go into this business, the incumbent [Internet] services did oppose it. We expect that as well,” Hardin said.
He said DU’s business model would be different than that of a private company, a difference that likely would result in more affordable service.
“We will approach this more like a utility, as a service. There’s no profit motive there. We don’t have investors to try to create a return for,” Hardin said. “This is really more about providing a better service to our community than what is out there now. It can have two effects: We can provide that service, but also it may drive those incumbents to do a better job for our customers. They can expand in the area as well. I think both things can happen.”
Decatur City Council President Jacob Ladner, council liaison to DU, said he’s pleased the utility is looking into setting up a broadband system despite its potential impact on private providers.
“I think it’s good and still would have some capitalistic features in that it won’t be a monopoly,” unlike some municipal providers, Ladner said. “This will be competitive with private companies. Also it’s good because [broadband] is a utility that is needed. I think we learned that through the pandemic and just the age we live in. We need to have broadband access everywhere, not just where a particular private entity might want to put it. It’s very important for kids, especially, to have access to broadband, whether they’re rural or low income.
“The more competition the better; this just happens to be from a governmental entity. I think it will help drive down the cost of what private providers offer.”
Hardin said a DU-run broadband system would also provide significant operational benefits for other DU utilities. DU depends heavily on communication with remote facilities for all of its utilities so it can monitor them, communications which for the most part now are done via radio waves. Eventually, he said, a more robust and faster system could be run through fiber-optic cable.
“It’s the next step toward a smart grid type of development,” he said.
Glenn Boyles, DU electric manager, said he expects the feasibility study to cost $75,000 to $100,000. He said it would look at the coverage provided by all the Internet providers in Decatur, provide an estimate on the cost of installing the system, suggest a proposed business plan and “give us the details of whether or not they think this will be a successful venture for us.”
“We feel like it will provide the answers we’re looking for as to whether or not we should proceed in the fiber business,” Boyles said.
Hardin said getting a grasp on what broadband options are now available to Decatur residents is a key component of the feasibility plan.
“We don’t know enough about all of the incumbent services and the territories they serve. That’s one of the things the feasibility study will tell us,” he said. “I know where I live and what options I have, which is none. I have one service provider. There are many people in the community who only have one option for cable or Internet service.
“We’ve still got to determine whether we want to be in the triple-play business, which is TV, phone and Internet, or just broadband Internet only.”
Joe Wheeler EMC is installing a fiber-optic broadband Internet system and recently began hooking customers up in the Moulton area. It advertises monthly rates of $59.95 for 300 megabits per second, $79.95 for 1 gigabit per second and $99.95 for 2 gigabits per second.
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