City owned fiber optics starting to pay off
Published on Thu, Aug 26, 2010 by Pat RatliffRead More News
Edmonds has a problem. It has 24 strands of fiber optic cable (a fiber optic backbone), and city staff and Community Technology Advisory Committee (CTAC) are working to figure out what to do with it.
The city acquired the fiber optic cable as a result of granting a right-of-way easement to the Washington State Department of Transportation about six years ago.
WSDOT approached Edmonds with a request to use city right-of-way to install fiber optic facilities/strands from Hwy. 99 to the ferry dock at Main Street.
In exchange, the city was granted the use of 24 strands of fiber optic cable.
The problem isn’t that the fiber optic isn’t worth much. It’s just the opposite. It’s worth a lot, both in value today and as ongoing income to the city in the future.
But the city has to figure out how to market the fiber optic, to what they describe as “targets of opportunity.” Those “targets of opportunity” include citizens, businesses, organizations and government agencies.
Over the last five years, CTAC members have donated time to explore a range of options and developed a plan to optimize the savings and revenue from the network. CTAC also sought to develop strategies that would minimize the risks to Edmonds.
Excess capacity of the fiber optic system exists, and CTAC members have been working on ways to use the capacity for internal savings and position the city to sell excess capacity in order to generate revenue.
A goal is to reach a point where generated revenues from use of the city’s fiber optic system will help offset city budget shortfalls.
Edmonds is using the fiber optic network for its internal use, and is already enjoying cost savings.
CTAC is also attempting to identify short- and long-term stand-alone targets of opportunity.
To date, the city has spent money on consultants, capital purchases, installation, and legal fees in order to activate the network and prepare for offering services to other entities.
Those costs total $492,021. During that time, the city has received a total benefit (revenue and savings) of $115,714.
But that figure is somewhat misleading.
Of the dollars spent, $236,439 was for professional services, design and legal fees. Hopefully, those were one-time fees.
And the system hasn’t been used that much yet, but is already bringing a yearly savings (revenue + savings) of $115,714, minus yearly operating expenses of $16,352. That puts the city on the plus side of $97,428 per year.
While costs have exceeded current revenues and savings, estimated and projected savings and future revenues will eventually offset the costs sometime around April 2015.
At that time, the city will begin enjoying a positive cash flow, in addition to providing a better and more cost effective service to the City’s target customers.
It gets even better.
The total capacity owned by the city has barely been tapped. The potential is enormous. The problem is who to sell to.
CTAC first considered installing a network to hook up every household in Edmonds with broadband. But it was estimated to cost around $1,500 per household (or $30 million) to provide that broadband.
That doesn’t pencil out, but there are any number of users out there, big and small, who will benefit. And with each new customer, the residents of the city benefit from increased revenue to the city.
CTAC and city staff are working on using the system to help spur economic development. So it’s possible the fiber optics could bring double benefit to the city, by bringing in new businesses and from the monthly fees for the rental of the fiber optics.
In a nutshell, what this all means is that those fiber optics cables we’ve heard so much about could bring in an incredible amount of money to the city in the future, and city staff and CTAC are working hard to make sure that happens.
The city acquired the fiber optic cable as a result of granting a right-of-way easement to the Washington State Department of Transportation about six years ago.
WSDOT approached Edmonds with a request to use city right-of-way to install fiber optic facilities/strands from Hwy. 99 to the ferry dock at Main Street.
In exchange, the city was granted the use of 24 strands of fiber optic cable.
The problem isn’t that the fiber optic isn’t worth much. It’s just the opposite. It’s worth a lot, both in value today and as ongoing income to the city in the future.
But the city has to figure out how to market the fiber optic, to what they describe as “targets of opportunity.” Those “targets of opportunity” include citizens, businesses, organizations and government agencies.
Over the last five years, CTAC members have donated time to explore a range of options and developed a plan to optimize the savings and revenue from the network. CTAC also sought to develop strategies that would minimize the risks to Edmonds.
Excess capacity of the fiber optic system exists, and CTAC members have been working on ways to use the capacity for internal savings and position the city to sell excess capacity in order to generate revenue.
A goal is to reach a point where generated revenues from use of the city’s fiber optic system will help offset city budget shortfalls.
Edmonds is using the fiber optic network for its internal use, and is already enjoying cost savings.
CTAC is also attempting to identify short- and long-term stand-alone targets of opportunity.
To date, the city has spent money on consultants, capital purchases, installation, and legal fees in order to activate the network and prepare for offering services to other entities.
Those costs total $492,021. During that time, the city has received a total benefit (revenue and savings) of $115,714.
But that figure is somewhat misleading.
Of the dollars spent, $236,439 was for professional services, design and legal fees. Hopefully, those were one-time fees.
And the system hasn’t been used that much yet, but is already bringing a yearly savings (revenue + savings) of $115,714, minus yearly operating expenses of $16,352. That puts the city on the plus side of $97,428 per year.
While costs have exceeded current revenues and savings, estimated and projected savings and future revenues will eventually offset the costs sometime around April 2015.
At that time, the city will begin enjoying a positive cash flow, in addition to providing a better and more cost effective service to the City’s target customers.
It gets even better.
The total capacity owned by the city has barely been tapped. The potential is enormous. The problem is who to sell to.
CTAC first considered installing a network to hook up every household in Edmonds with broadband. But it was estimated to cost around $1,500 per household (or $30 million) to provide that broadband.
That doesn’t pencil out, but there are any number of users out there, big and small, who will benefit. And with each new customer, the residents of the city benefit from increased revenue to the city.
CTAC and city staff are working on using the system to help spur economic development. So it’s possible the fiber optics could bring double benefit to the city, by bringing in new businesses and from the monthly fees for the rental of the fiber optics.
In a nutshell, what this all means is that those fiber optics cables we’ve heard so much about could bring in an incredible amount of money to the city in the future, and city staff and CTAC are working hard to make sure that happens.
