Building a municipal broadband network in Seattle wouldn’t cost as much as the city once thought, but the city would still need additional funds.
Building a state-of-the-art municipal-broadband network in Seattle would cost less than previously estimated, a new feasibility study says.
But officials in Mayor Ed Murray’s administration say it would still be too expensive without an additional funding source such as a private partner, a voter-approved levy or a federal grant.
The price tag for a fiber-to-the-premises system would be $480 million to $665 million, according to the city-commissioned study released Tuesday by CTC Technology & Energy, a communications and engineering firm.
That’s less than the $700 million-plus that a similar study commissioned in 2011 by then-Mayor Mike McGinn predicted municipal broadband could cost.
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In order to make the project pay for itself, however, the city would need to hit a sweet spot of 43 percent market penetration with a monthly service charge of $75, the new study says.
And that’s something that no U.S. city with an existing broadband network has done, according to Murray’s chief technology officer, Michael Mattmiller.
“It’s a very challenging take-rate that exceeds what cities like Chattanooga (Tenn.) have achieved,” Mattmiller said.
In a memo, Murray budget director Ben Noble expressed concern that the city would put itself at risk if it tried to finance a network exclusively with subscriber revenues.
“The report highlights that the city’s entry into the broadband market will face stiff competition from well-funded incumbents, whose aggressive pricing strategies could thwart efforts to build a robust subscriber base for a municipal system,” Noble wrote.
“If the municipal effort were to falter, the result would be immediate pressure on the city’s general fund,” he added.
The news is a setback for activists pushing the city to improve equal access to the Internet by treating it like a public utility.
“We see the realities of the study, and we still see city-owned and operated Internet utilities as inevitable,” said Sabrina Roach, an activist with the Upgrade Seattle campaign. “This study raises as many questions as it does answers. We will see low risk and lower costs in the future. We’ll be advocating at the local, state and federal level for creative ways to make broadband a utility.”
Mattmiller said officials are digesting the report. They’ll soon start a conversation about next steps, he said, giving no timeline.
In the meantime, the city will continue working to reduce regulations in an effort to make the Internet market more competitive, Mattmiller said.
Under McGinn, Seattle partnered with the startup Gigabit Squared, which said it would use city-owned fiber to provide broadband in 12 neighborhoods. That project failed. Mattmiller said public-private partnerships are working in other cities.