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Broadband Commission receives preliminary business plan

By Kelly Terpstra,

The pieces are starting to fall into place and the timeline is starting to take shape.

That doesn’t mean there aren’t major decisions that the Broadband Commission has to make in the coming weeks in its effort to construct a $13 million fiber-to-the-home project in Charles City.

The commission received its long-awaited preliminary business plan from Erik Lampland and Look Out Point Communications on Tuesday. The plan lays out the framework for the cost and operation of the project.

The cost incurred into the third year of project lists capital expenditures of $13.2 million and a bond requirement of $12 million. The cost of the project would be recouped through subscribers that would purchase a triple-play package of high-speed internet, video/TV and telephone.

The commission is hoping to designate the location of a data center, learn more about financial backing and bring forth the desire to move forward with the plan to the City Council to vote on all by sometime in October.

“We’re eating this elephant one step at a time,” said City Administrator Steve Diers.

The fiber optics broadband system would connect residents and businesses in Charles City with the objective of providing a fast, reliable and universally available network within the city.

“Now with the business plan, it’s applied actual estimates from suppliers and applies what the engineers have physically laid out,” Diers said.

Now the commission’s task is to determine the location of a data center. Members of the board have recommended to get an appraisal and look into an option to buy the Unggoy building at 800 N. Main in Charles City. The appraisal would run around $1,500 and that cost would be split with the owner and city. Diers said an option to buy would be around $1,000.

Without pinpointing the location of the data center, the business plan cannot move forward.

“We can’t really finalize this business plan until we know where we’re terminating fiber,” said Lampland.

Diers said the commission has budgeted around $650,000 to purchase a data center and/or have remodel work done on the property. Diers said the owner purchased the Unggoy building for $265,000 a few years ago and was asking upwards of $300,000 after initial negotiations with the city.

“Our best turn-key option would likely be that 800 N. Main location,” said Diers

Diers said the commission still needs to review pricing and services offered in the triple-play package that could be purchased via a la carte or in increments of data speed for internet connectivity.

A closed session to discuss spreadsheets that determine pricing and include trade secrets could be scheduled in the coming weeks by the commision.

“The business plan addresses some questions we have and seemed to generate some more,” said Diers. “We’re tightening those things down some and then those affect the overall financials.”

Around 73 percent of the cost ($10.3 million) of the project is the outside plant architecture to build a redundant ring that would connect fiber in the towns of Mason City, New Hampton, Waverly and Cedar Falls.

If the council greenlights the project, Mayor Dean Andrews would form a five-person utility board that would be responsible for hiring a general manager to oversee the operation. Diers said members of the current commission could be on that utility board.

Diers said he is still hopeful to be able to break ground on construction next spring and line up potential customers shortly thereafter.

“The initial plan was to have it up and running by now,” said Diers.

Lampland said the idea is to have the physical plant built by five crews during a five-month stretch in the summer of 2020 between May and October if the data center is completely operational by then.

Charles City is looking to become the first town in Iowa to move forward with a broadband project without the backing and support of its own electrical utility.

Vinton, a town of about 5,000 northwest of Cedar Rapids, has recently secured financial backing in the creation of a $9 million project to provide broadband service to its local customers. Diers said the community is already putting fiber in the ground and has signed up 1,100 customers for the service. Community members voted to use Vinton’s electrical utility to help fund and run the project.

“We’ve already passed the referendum, now we just have to pass a resolution that says we’re moving forward with it,” said Diers.