Citizen Harry: What all this talk about fiber optics really means for Edmonds

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Harry Gatjens

Recently, Edmonds City Councilmember Michael Plunkett asked me if I would be interested in joining the Citizens Technology Advisory Committee (CTAC), and I jumped at the chance. This committee was formed several years ago; its purpose is to advise city leaders on the best use of a fiber-optic cable that was given to the City by Homeland Security back in 2005.

At that time, Homeland Security wanted to run a fiber-optic cable to the ferry terminal, but in order to do so, they needed to get beneath Edmonds’ streets. In exchange for that access, the City was given 24 strands of fiber at no cost.

I’m interested in technology, so I recognize this as a valuable asset, which is why joining the committee is so appealing to me. To get the most from my volunteer role, I’ve also agreed to file a report with My Edmonds News about our committee meetings from time to time so the community can share in our discussions and progress.

Although the committee has been meeting for a few years, this was my first session and my task was to get up to speed with some of the background. Here is the overview that I took away from the meeting.

The principle question surrounding the fiber-optic cable has been what to do with it. With 24 strands, we have more than enough capacity to handle all of the City’s telecommunications, Internet and video needs, plus the same for every home in the city and more beyond that. It potentially gives the City an opportunity to be on the cutting edge of “wired” communities, which could in turn be helpful in attracting new “green” businesses to Edmonds, and with them, new sources of City revenue.

You can see why this would be important to Edmonds.

That being said, what was given the city was just strands of cable in the ground. The challenge is figuring out how to develop and use this asset to the highest benefit of the community. You can’t just plug into it and go, so how should we set it up? What infrastructure do we need to get the “juice” out of the cable and into the homes and businesses of the end user? How do we address things such as switching equipment, software, a billing system, a means to get connectivity from the cable to the actual end-users’ locations, and other issues?

One of the first things the City needed was to have the “right” to sell these services. Other providers of these services considered it unfair for a City to be able to compete with them in attracting customers. They said that the City could classify as a public utility and cut out the competition. So a lawsuit evolved.

The City of Edmonds was a pioneer in getting a court ruling that they could indeed sell these services to outsiders. They won the case and now had the right to actually explore the business opportunities of reselling these services to private entities.

During this time, the City set up its own internal information systems using the cable, and found it to be reliable, extremely fast and much more cost-effective than using outside service providers,  so the value of the asset has been demonstrated.

Seeing the City make progress on this issue, Verizon (now Frontier) rushed its own fiber-optic system into the area to capture its share of the market before the City established its own operation. Originally planned to be completed by 2021, Frontier completed the project in 2009 — 12 years ahead of schedule. This was good for citizens, because even if the City never turns its fiber-optic cable into a commercial project, the possibility alone resulted in the citizens of Edmonds getting access to the benefits of fiber optics a dozen years sooner than we would have otherwise.

The City’s current plan is to test a few commercial installations and prove the concept has broader use than just the City’s own, internal connectivity. Each new installation will be financially viable on a case-by-case basis. As more commercial installations are implemented, the City will gain more experience and data, and thus more insight into how to implement and operate the system efficiently and as a positive-return investment.

But even if nothing further happens, the City will be able to reduce its own connectivity costs by about $100,000 per year. It cost approximately $500,000 to get the first use up and running, and with annual savings, the City will break even and have a positive cash return by 2014.

However, the main opportunity — and the point of the committee —  is to figure out how to develop additional revenues for a net positive effect on the City’s finances, which could be substantial both now and for many years to come.

Remember, this was just my first meeting and there is much yet to learn. The committee is made up of some smart, impressive people who have contributed thousands of hours of their time at no cost to the city, and are preparing a complete review of the opportunity for presentation to the City Council on Aug. 24.

I suggested a number of questions and comments that I’ve heard from citizens, such as “We’ve spent $450,000, and it has all been for legal fees?” and “If we won the court case, why are we appealing?” The Committee has agreed that it’s important to answer these questions openly and in lay terms. I expect the presentation will be comprehensive and that it will help all of us become better informed about a significant project that has passed under the radar for the past several years. Don’t worry, all the money hasn’t been spent on legal fees.

CTAC meetings are held the first Tuesday of each month at City Hall. The public is invited to come watch and contribute. At the last meeting, we had more visitors than chairs, so we may need a bigger venue. But don’t let that stop you from attending if you’re interested. One day, we may be able to use our fiber-optic network to video conference citizens into our meetings. Trust me, that day will come.

“Citizen Harry” is Harry Gatjens, My Edmonds News own citizen reporter who writes about important issues facing Edmonds residents. Read his report on the 2010 Citizens Levy Committee here.

10 COMMENTS

  1. A few questions for citizen Harry:

    Is it true or not true that the state constitution does not allow utiliies to make a profit, but only to break even? ie. Seattle City Light

    How much has been spent on legal fees, employee and miscellaneos costs and are they all included in your 500K figure?

    And just exactly what is still at issue in the court case? When can we expect a final determination of whatever it is Edmonds is seeking in this prolonged court action. The public has been largely left out as far as information is concerned. Its time for some transparency.

    Assuming there are 20,000 cars in Edmonds. the Council would reap 1.2M in benefit in one year from the proposed new tax. Being currently in the hole 500K doesn’t help too much, especially if the best we can ever achieve is to gain back what has all ready been spent. any comments?

    Finally, will the August 24 meeting really tie all the rather loose ends together so we may all have enough info to determine whether to vote for the new rather high auto tax?

    Did former mayor Haakenson not leave this item out of a new budget?

    Thank you in advance for answers to these questions and for questions that I’m sure will follow
    from others..

  2. Ray:

    As I said in the article, this was my first meeting and so I do not have the answers to all your questions. I tried to let the readers know that the report planned for the council should indeed answer your questions.

    If you have more, please post them and I will monitor and do what I can to make sure your concerns are addressed.

    I don’t think project really has anything to do with the car tab issue however. I understand your frustration on both issues, but I am only trying to help achieve the transparency you seek and provide some information on the fiber-optic issue.

  3. It does seem a waste not to use the strands available to us. It has always been a mystery to me as to what is holding up the project. I am glad you are on the team., Harry. Maybe, you are the push the project needs.

    Thanks for keeping us all up to date.

  4. Good job Duke. You are as usual, getting into the heart of it. Your reports are interesting – a bit over my head – but the city is lucky to have you as an interested Citizen.

  5. Harry, thanks for responding.

    Your statement that a car tax has nothing to do with fiber optics disturbs me. The red ink fiber optics program is absolutely linked to the proposed car tax simply because both are part of ther city’s total worth.

    Both have been handled quite differently. Great publicity appealing to the public for transportation funding while secret/private defines fiber optics.

    Councilman Peterson points out that the car tax funds are targeted. While that’s fine, it also infers that fiber optics and other items may not be so carefully controlled or perhaps a different and less valuable kind of money.

    Citizens can now properly influence the PRUDENT use of our TOTAL resources through the ballot, if only on the car tax currently. And how will the potential levy be affected, but that’s getting off track.

    My questions are not that difficult to answer specifically. Above all, we need TRANSPARENCY to now be applied to the mysterious fiber optics program. While all the wondrous world of emerging electronics is difficult to comprehend and understand, including the dangers of obsolescence, just plain old mathematics will tell us what we really need to know, and that is readily available.

    Hopefully, the August 24 Council meeting will spell out the facts and better inform the public. So far, like Wash DC, we have been oversold with promises while receiving under performance and a disturbing lack of information.

  6. @Ron – the easiest way to see all of the responses at present, is to use the RSS Feed option. The “Comments (RSS)” link at the top/right of this page will get you started. Works better with a Firefox browser vice Internet Explorer, though.

    @Ray – I think the difference between “targeted” expenditures and others, is that the Transportation Benefits District concept separates transportation funds from others. This means that the TBD must be self-supporting, so if we want roads, we’ll have to find a way to fund them directly, not based on the general fund. Similar in concept to our public utilities. Eventually, if the fiber optic project gets off the ground, it too should be self-supporting, or better, though it is not under a separate structure like the TBD yet.

  7. Good luck figuring this out Harry and thanks for sharing your process with us. I am looking forward to trying to follow it.

    Maybe someone can explain to me why the city funds need to be targeted, and segregated from the general fund? It is the same purse, is it not? Isn’t that what budgets are for? Is there a need to have TBDs (setting aside my feeling on the fee increase proposition) and other layers of bureracy (sorry about the mis=spelling)? Isn’t having a budget supposed to deal with those issues and allow some flexibility? If the fiber-optics do bring revenue to the city, shouldn’t that benefit the general fund?
    I am seriously asking and any illumination will be appreciated.

  8. Thanks for the article Harry and your willingness to help the committee. Smart people who ask good questions are what move things forward in this City and your participation will hopefully help the committee clarify itself.

    I’m one of only a couple of people who have served on the Citizens Technology Advisory Committee (CTAC) continuously since it was created in November of 2004, but there have been many others who have helped along the way. By my count, over 30 citizens of Edmonds and 10-12 staff members have contributed their time and expertise to help incubate the “fiber-optic” project from a “blue sky” idea to the revenue making enterprise it is today. Others have raised some good questions about this project, and I will try to answer some of them later on, but I should clarify some of your initial remarks first:

    1. CTAC was originally formed to advise the Council on ALL matters involving technology. Then Councilmember’s Mauri Moore and Peggy Prichard Olsen were championing the notion that Channel 21 could do so much more than replay Council meetings . We looked at that long before the fiber showed up.

    2. It was WSDOT that gave us the fiber strands, not Homeland Security. DHS had given WSDOT a pile of money to help with infrastructure security that year and part of that was used to install video cameras and other sensors at the ferry terminal. It’s a small point, but WSDOT deserves the credit for initiating the partnership that gave us our first 24 strands.

    3. Your point about it taking 500k before we ever got the first beneficial use out of the fiber is incorrect. WSDOT handed the fiber over to us in September of 2005, and in December of 2005, we utilized several of the strands to connect City Hall with the Public Works building up by Hwy 99. These strands replaced (2) commercial T-1 lines that saved the City about $500/month each. That one connection has generated 50k in savings to date.

    I will try to address some other questions that have been raised by directing the answer to the individual who asked the question:

    RAY MARTIN: Ray raises several good questions:

    1. “Profit or Non-Profit” More of a legal question, but a public utility is a “Non-Profit” entity. This only means that it cannot distribute profits (revenue in excess of expenses) to individuals or other entities. Every utility I am aware of earns more than it spends most years, and socks the “profit” away into a capital investment or other reserve fund. The City also has the option of establishing an “Enterprise Fund”, similar to what Parks & Recreation does. There are important differences between the two, and I believe we should probably look at both.

    2. “Legal Fees” The original test case cost the City about 50k in legal fees back in 2008 & 2009. We are currently appealing our own victory (see #3) and expect that to cost another 50k but other Cities have agreed to help us pay those fees as a successful appeal helps them as well.

    3. “Why are we appealing a case we already won” Winning the case in Superior Court in November of 2009 gave us the authority to sell some of the excess capacity of our fiber network to private citizens and businesses, but only in Edmonds. In order for the decision to be applicable outside our city limits, the decision needed to be appealed at the State level. The original “test case” pitted the City against an opposing attorney that we hired. (Seems weird, but that is how “test cases” are structured). Since an appeal can only come from one of the original parties, we had to initiate the appeal ourselves too. We expect to prevail on appeal which will expand the potential customer base for the network significantly which is why we did it..

    4. “Car Tab connection” Harry is correct, the car tab fee is unrelated to the fiber network. The fiber network is already earning (or saving the City) more money than it spends month to month, and is rapidly approaching the point where the City’s entire investment will be repaid.

    PRIYA CLOUTIER

    1. “What’s holding the up the project” I ask that question myself every day. The answer speaks to another statement that RAY MARTIN made.. about the CTAC seeming mysterious and secretive from the perspective of the public. We don’t try to be that way, but admittedly the committee is weighted heavily toward the “Techno-Geek” end of the human spectrum (I’d be the poster child for that character flaw), and communication is something we haven’t done very well to date.

    When engaged citizens ask legitimate questions and Council members / City Staff don’t have clear / easy to understand answers, even the best ideas will run into an undercurrent of resistance. In my opinion, that is what has happened over the last year. Harry will be a fine addition to the committee and more articles like his will certainly help restart a healthy dialogue.

    Rick Jenness
    CTAC Member

  9. Sorry, I forgot to address a question from DIANE T.

    “Fiber-Optic revenue to the General Fund” – This questions has elements of a question that RAY MARTIN asked about Utilities not being allowed to make a profit. If the council were to set-up a “Broadband Utility”, State law would prohibit the utility from making profits for the express purpose of funneling them to the General fund. There are valid reasons for those restrictions. The City on the other hand is allowed to set-up an “Enterprise Fund” like they do already within Parks and recreation. (Yost Pool, Francis Anderson Center, etc) and these enterprise funds are allowed to take in more revenue than they spend to offset other costs within the general fund. It sounds like a simple decision to make, but its not. I believe that we should look at both because the structure this initiative takes will forever affect its success in the future.

    Rick Jenness
    CTAC Member

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