Onwards & Upwards (Green Fiber)
It would be the largest municipally backed telecom network in Oregon. Lake Oswego plans to operate it as a public utility, though a startup company would finance and manage it.
(Benoit Felten/Creative Commons)
Tired of waiting for Internet companies to bring faster speeds to Lake Oswego, the city is preparing to go it alone.
The city council voted 6-1 last week to pursue a municipally sponsored fiber-optic network, negotiating with a newly formed Lake Oswego company called Symmetrical Networks to provide hyperfast Internet connections of 1 gigabit per second to residents for $60 a month - adjusted for inflation in subsequent years.
If the deal goes through, city officials hope service could be available to at least some residents by late next year. Lake Oswego envisions it as a public utility, managed and financed by Symmetrical. The city hopes to have a contract proposal to present to the council in April.
Symmetrical estimates building the 105-mile fiber network would cost roughly $32 million. The startup company would operate it, manage construction and arrange financing -- Symmetrical said it's lining up funding through Texas Pacific Group.
Lake Oswego would provide a guarantee that at least 35 percent of homes and businesses would sign up for the service - and get an option to buy the network in 30 years for one dollar. The structure of the deal means there's no up-front cost to the city.
By promising a minimum number of subscribers, though, Lake Oswego could be on the hook for millions of dollars a year if subscribers dropped off over time or if the project fell apart completely. Alternately, project backers say they might raise the price by $20 a month to compensate for a shortfall in the number of subscribers.
Supporters say there's little chance the network won't hit the 35 percent threshold - the project will solicit advanced signups before starting construction and take a deposit from those who want service. A survey the city commissioned to gauge Lake Oswego's appetite for the project shows strong interest, they say, and similar networks elsewhere have easily exceeded the 35 percent "take rate."
"It certainly is a risk, but the historical data would suggest it is not a significant risk," said Kevin Padrick, Symmetrical's chairman.
City officials hope to have a formal proposal before the city council in April. Plans call for contracting with another company to add an accompanying cable TV service, but details and pricing haven't been set.
As people increasingly rely on streaming video and online games for their home entertainment, demand for faster Internet speeds has skyrocketed. Fiber optics offer high-capacity connections with considerably more bandwidth than copper phone lines or standard cable TV connections.
A gigabit connection is 1,000 megabits per second, 25 times faster than the current federal broadband standard. It's much faster than almost any household could use today - few online services can take advantage of such rapid connections - but advocates say those speeds will help enable new services, and will remain state-of-the-art for many years to come.
Lake Oswego's foray into Internet service comes as Comcast and CenturyLink are each upgrading their connection speeds, and as Google Fiber continues a prolonged flirtation with the Portland area.
Comcast now offers a 2 gigabit connection in Lake Oswego for $300 a month (see note below) but CenturyLink and Google Fiber have not said when -- or if -- they might come to the city. And no one offers prices as low as the $60 a month Symmetrical proposes (Google Fiber is the best deal, at $70 a month, but it doesn't serve Oregon and there's no assurance it ever will.)
Mike Dewey, director of the Oregon Cable Telecommunications Association, said operating telecom networks requires ongoing investment -- costs Lake Oswego's plan may not fully account for. And he said the city and its contractor may not be prepared to operate in a competitive market.
"It's a risk to the taxpayer," Dewey said. "I think it's really tough when you have so many competitors in the market."
Portland and Hillsboro have each looked at building their own fiber networks and discarded the idea after determining construction would be prohibitively expensive. Ashland built its own cable TV network in the 1990s, but it struggled amid intense competition from Charter Communications. The city continues to offer Internet connections but it has spun off the accompanying cable TV service.
More recently, Monmouth, Independence, Sherwood and Sandy all built out smaller networks. Lake Oswego city manager Scott Lazenby used to have the same job in Sandy and has been the leading advocate of the current proposal. Project backers say more than 60 percent of households in Sandy have subscribed to its service since that network began operating in 2014.
Lake Oswego's project would be the biggest municipally sponsored network in the state, but Lazenby said it might not be the last. The cost of building a fiber network has come down, he said.
"I absolutely think it could work on a larger scale," Lazenby said.
Update: This article has been updated to note that Comcast's 2-gig "Gigabit Pro" service is now available throughout Lake Oswego.)
Correction: This article has been corrected to delete a reference to Monmouth and Independence claiming their fiber network, MINET, is self sufficient.
-- Mike Rogoway
mrogoway@oregonian.com
503-294-7699
@rogoway