Today’s agenda item doesn’t address the kind of “fiber to the home” network that public power providers use to offer services that can compete with cable, but the chief Tennessee lobbyist for that industry is convinced a vote today could be a step onto a slippery slope. (Both Bristol public power providers offer FTTH, with cable television, Internet and phone service.)
“In our opinion, if they’re willing to waste $16 million ... there’s no stopping them (from proceeding to a FTTH network),” Stacey Briggs said Tuesday.
Briggs said public FTTH systems have not been cost effective, are paid for on the backs of electric ratepayers, and compete unfairly with the private sector.
Along with local Charter and Comcast representatives, Briggs, president of the Tennessee Cable Telecommunications Association, will attend today’s meeting and try to convince the JCPB to consider partnering with the private sector in any fiber initiative. In a June 12 letter to the JCPB’s board and general manager, Briggs said private cable providers have an existing fiber network that “can link your 34 electric substations together for a fraction of what JCPB is about to spend.”
That type of lease agreement, Comcast’s Steve Pollock said, would amount to somewhere between $1.5 million and $2 million, as projections for connecting substations have generally been in the $18 million range.
The Power Board has reviewed the fiber-optic issue for most of this year after a consultant’s report on a potential network in January. One reason for the study was a slate of new mandates for power providers, as those requirements bring a need for a stronger communication system within the power transmission system.
Those requirements — including federal initiatives to spur more efficient operations and give customers “real time” metering information — could make leasing fiber from a cable company unworkable, JCPB analyst Tom Bachman wrote to commissioners last week.
“To deliver the highest reliability possible it is imperative that all communication systems remain under our complete domain and be fully integrated into our normal operations model,” Bachman wrote in a letter meant to prepare commissioners for today’s discussion.
Bachman also noted that the “fiber backbone” itself is actually estimated to cost around $6 million, not $18 million, and that the cable providers have not consulted with him about JCPB’s technical needs for a fiber backbone.
“As such, I find it difficult to determine how a cost estimate can be provided by any area cable operators,” Bachman wrote.
Tennessee law requires that if the Power Board chose to move beyond substation fiber connections and branch into commercial services like Internet, the FTTH initiative would have to be funded separately from electric power operations. (Local cable providers don’t currently have fiber to the home, as their fiber cable terminates in neighborhood “nodes” from which data is transmitted to customers’ homes via coaxial cable.)
Estimates for a total fiber build-out, not counting the substation backbone, range from around $100 million to about $140 million. Power Board commissioners have discussed paying for the infrastructure through revenues generated when customers subscribe to cable, Internet and telephone through the JCPB.
In a meeting earlier this month, Briggs and local company representatives said they wanted to protect ratepayers from such a scenario as much as they wanted to protect their markets. They cited municipal fiber systems they said have played fast and loose with the law and with the public interest, including:
•Memphis, where they say Memphis Light, Gas and Water’s communications plan lost $30 million in 2007.
•Chattanooga, where the TCTA is suing the power board for “cross-subsidizing” telecommunications by using electric-owned fiber for retail purposes, and where the TCTA says the power board has lost $15 million since going into the phone business. “You can’t build the network with ratepayer money and use it for anything to do with cable,” Briggs said. “You need to issue a cable revenue bond and make that separate.”
•Bristol, where TCTA says a financial analyst has been unable to obtain separate financial reports for the cable/Internet side of operations and regular electricity sales.
Briggs and company said they just want an audience with the JCPB and a chance to forge a public-private solution.
“There may be alternatives to what their consultant has told them,” Comcast’s Pollock said. “We could use our existing network with very little capital to build that last mile if it requires fiber. ... It may be that we could use (coaxial cable) and then cable modems rather than a direct fiber connection.”