City commissioners Tuesday night will consider a $30,000 offer from the operators of Lawrence Freenet that could shake up the competitive landscape among area Internet service providers.
Commissioners will consider a deal with Lawrence-based Community Wireless Corp. to allow the company access to a new fiber optic cable that the city will install along 23rd Street.
Community Wireless is proposing to pay the city $30,000 to use about 10 percent of the capacity of a new fiber optic cable that will be installed as part of a project to synchronize 23rd Street traffic signals. The city is set to receive a $150,000 state grant for the project, but it must come up with $30,000 in local funding to match the grant.
“We feel like we can save the city some money,” said Joshua Montgomery, founder of Community Wireless. “And this project would allow us to expand dramatically and increase competition in the Internet service market, which we think will benefit consumers.”
Lawrence Freenet primarily provides service to apartment complexes, fraternity and sorority houses and other group living areas. Montgomery said access to the new fiber optic cable would be the “backbone” for a multi-year expansion that would allow the company to be more competitive in providing service to single-family homes.
Community Wireless also is proposing to pay the city 5 percent of its annual Lawrence revenues in order to have access to various pieces of city infrastructure — such as water towers, traffic signals and city buildings — to install wireless Internet equipment.
But city staff members are raising questions about the proposal. Assistant City Manager Diane Stoddard said the city wants to be sure it is treating private companies that use city infrastructure equally.
The Community Wireless payment — based on current revenues — would be about $15,000 per year for more than 70 connections in the city. Other communications companies — like AT&T, Sprint and others — pay anywhere from about $1,500 to $2,500 per month to locate on a single water tower.
City commissioners previously agreed to allow Lawrence Freenet to connect to city infrastructure at low prices, citing the fact Freenet is a not-for-profit group that has a goal of providing free Internet to people who can’t afford the service.
But Community Wireless — which has provided much of the equipment and operational support for Freenet — is a for-profit company. Montgomery said he wants all the Freenet agreements to be transferred to Community Wireless in anticipation that the Lawrence Freenet non-profit organization may cease to exist in the future. Montgomery said the Freenet name likely would remain, but that the non-profit corporation may go into “hibernation,” in part because it has made raising capital for Community Wireless more difficult.
Montgomery said he believes the Freenet offer is fair, and said the 5 percent annual payment will grow as the company’s revenues and customer base grows.
“We think we could do $15 million to $20 million in sales, but granted, we’re probably still 10 years away from that,” Montgomery said. “But we could end up paying the city a substantial amount of money in the future.”
Montgomery estimated Freenet now serves about 1,500 to 2,000 customers. He said the company provides free service to about 150 to 200 people, mainly by providing service for multiple Lawrence-Douglas County Housing Authority units along Haskell Avenue, to residents at the O’Connell Youth Ranch and to other not-for-profit entities that serve low-to-moderate income individuals.
City commissioners meet at 6:35 p.m. on Tuesday at City Hall.