Archive for Tuesday, January 21, 2014

City advisory board wants to further consider $500k grant to Wicked Broadband

January 21, 2014


A proposal to provide a $500,000 grant to Lawrence-based Wicked Broadband to spur a super-fast broadband service similar to Kansas City's Google Fiber project has some support among members of a key city advisory board.

But it also has some questions: Like whether a $500,000 grant may turn into millions of dollars in city investment in the next several years.

"This is going to cost us more than a half-million dollars," said Douglas County Commissioner Mike Gaughan, who is a member of the city's Public Incentives Review Committee. "What the amount ultimately will be, I don't know."

The Public Incentives Review Committee wants another month to figure those and other questions out. The committee at its Tuesday meeting delayed a vote on the project until its March 4 meeting and directed city staff members to produce more research on the proposal by Wicked Broadband, which formerly operated as Lawrence Freenet.

Wicked is seeking a host of incentives — including a $500,000 city-funded grant and forgiveness of some city fees — to help the company complete a pilot project that would bring 1 gigabit Internet service to downtown and to about 1,000 homes in East Lawrence. The 1 gigabit service is the same type of speed being offered by the much-publicized Google Fiber project in Kansas City.

Members of the public incentives commission will make a recommendation to city commissioners, who ultimately will determine whether to approve the incentives. Several committee members said the community's current broadband network may be affecting the city's ability to attract and grow technology companies.

"I think all the reports have indicated we have poor service," said Mayor Mike Dever, who chairs the public incentives committee. "We're below average. Let's put it that way."

But some committee members also said they were concerned that the city was contemplating providing the grant and incentives without finding out what other Internet providers — such as WOW and AT&T; — could do if they were provided similar incentives.

"I want to be supportive of a local small business, but to be fair to everybody who has been in this business for a long time, we need to make sure everybody has a chance to respond," said City Commissioner Mike Amyx, who also is a member of the incentives committee.

Committee members asked staff members to bring back information on how the city could advertise for a request for proposals from companies that may be interested in providing super-fast broadband service in the city.

But Gaughan said city officials also need to have a discussion about how serious they are about boosting the city's broadband capabilities. The Wicked proposal calls for a second phase that would provide the high-speed service to virtually the entire city. It is estimated it would cost $20 million to $30 million to build. Wicked hasn't asked for any city money related to that second phase, but Gaughan said he thinks it is likely public funds would be needed to make the project feasible.

"I think the question is, really what is the city's appetite on this?" Gaughan said. "I hope the appetite is there because I think it could do some great things for the community."

City staff members recommended against the $500,000 grant proposal, and several of the other incentives, which included a pair of 30-year, $10 leases that would allow Wicked to use a portion of the city's existing fiber optic network.

Members of the incentives committee asked for more information about what the market value of those leases may be, and also asked staff members for information on how the city could offer Wicked a $500,000 forgivable loan rather than a $500,000 grant. The loan would be tied to the company meeting certain investment or job levels.

Two of the city's larger broadband providers — WOW and AT&T; — both submitted letters of opposition to the city, citing concerns that the proposal would create an uneven competitive environment and may create some legal liability for the city.

Leaders with Wicked said they were encouraged that a majority of the committee had expressed an interest in improving the city's broadband capabilities.

"We think it would be a wonderful return on the city's investment," said Kris Adair, a co-owner of the company and a Lawrence school board member.


Richard Heckler 4 years, 5 months ago

"Several committee members said the community's current broadband network may be affecting the city's ability to attract and grow technology companies.

"I think all the reports have indicated we have poor service," said Mayor Mike Dever, who chairs the public incentives committee. "We're below average. Let's put it that way." Who says Lawrence has poor service?

Perhaps it is the more than 100% growth in taxes that makes Lawrence not attractive? Then again it is the homeowners and small business people who get stuck pay the taxes NOT corporate America tax abatements?

Perhaps it is the inflated real estate values?

Perhaps it is the rather shocking growth in violent crimes which is produces another handsome tax increase to the locals?

The larger the city the larger the crime rate the larger and larger the Law Enforcement budget and the larger the budget for courtroom proceedings and the larger the budget to care for inmates.

Ian Cole 4 years, 4 months ago

The following is an excerpt from a letter in support of Wicked Fiber in the City of Lawrence.

“The internet is the dominant platform for communications, Higher education, electronic commerce, and entrepreneurship. Higher speed data access at or near 1000Mbs will be of critical importance to our community to maintain demand and support community growth . . . Let’s not be on a long term waiting list, let Lawrence be in the lead for a change. Wicked Broadband is willing to step up to this consumer demand.” - William R.

To see this letter in its entirety please visit the link below:

Richard Heckler 4 years, 5 months ago

Perhaps WOW and AT&T would want to foot the bill rather than put taxpayers on the hook. Why do taxpayers need to pay shell out money to for profit industries?

If this market had such great promise anytime soon it seems to me Wicked could get financing and the other two giants would laying out the dough to provide Lawrence with this great and wonderful service.

I say there is more speculation than substance.

Mike Silverman 4 years, 5 months ago

"Why do taxpayers need to pay shell out money to for profit industries?"

You could ask the same question about the for-profit private companies the city paid to repave Iowa Street last summer.

The thing is, the city often contracts with private companies for infrastructure projects the city can't build itself. Building a fiber network is like building a street network - an essential economic backbone of the community, and something that the city should be funding. Just like a street project, the city should put out for bids, maybe WOW can build it, or Wicked, or AT&T, or someone else. But, it needs to be built.

Richard Heckler 4 years, 5 months ago

If the city government were being more responsible with our tax dollars perhaps I would not be so hostile.

Tall for profit buildings receiving millions in corporate welfare makes it difficult to climb on board when perhaps a smart use of money surfaces. There is no hard evidence that spending on an advanced fiber network is going to lure and grow a technology industry anytime soon.

Amy Varoli Elliott 4 years, 5 months ago

That isn't a very good example, the city paid a company to fix a street the city owned. If you wanted to use the same example of street fixing then it would be like the city buying the company new trucks to fix Iowa and the company then keeping the trucks and then being paid to fix the street.

Ian Cole 4 years, 4 months ago

The following is an excerpt from a letter in support of Wicked Fiber in the City of Lawrence.

“I am writing to recommend that Wicked Broadband be provided funds to realize their high-speed Internet service. . . It is local efforts which are crucial to our city identity and concept of life quality . . . I do send my support for decisions that fortify Lawrence to be “outside the box,” despite how convenient or cheap larger entities may offer against our own.” - Elliot P.

To see this letter in its entirety please visit the link below:

Julius Nolan 4 years, 5 months ago

Your proposal to get a guaranteed profit for yourself off the taxpayer.

Ian Cole 4 years, 4 months ago

The following is an excerpt from a letter in support of Wicked Fiber in the City of Lawrence.

“As a single, working mother I receive free service from wicked broadband. The reason I have this service is to recive email form my daughter’s school and pay bills. I very much appreciate the service we receive . . . .It would be practical and wonderful if Wicked Broadband could provide ultra high speed internet service” - Kori W.

To see this letter in its entirety please visit the link below:

Lawrence Morgan 4 years, 5 months ago

Joshua, thanks for putting your proposal on the internet. I work in Silicon Valley as well as Lawrence, and I am convinced that upgrade of the internet is the only way to go if Lawrence is to have a future which includes almost any aspect of the internet - from medicine to genetics.

To all of the people of Lawrence who think that AT&T should be involved, for example, why didn't AT&T put in the ground work like Wicked has done? They could have made a proposal with money a long time ago. But they have done noting, except keep Lawrence at a very low level. These other firms have cared nothing about Lawrence - and, to be fair - many of the former and previous city commissioners are of the same mentality. The situation has got to change if Lawrence is going to have a future.

I am concerned, though, that all of Lawrence (and Baldwin City) get wired at a reasonable cost, and be available to all in Lawrence.

Joshua Montgomery 4 years, 5 months ago

Mr. Morgan,

I wanted to emphasize that our first preference for making this possible was to give our operation to the City as a gift. It was only when we were rebuffed that we chose to go the economic development route. To date we've received exactly $0 in cash subsidies from the City, we even paid the city $30,000 for use of the fiber we currently have in production.

We have, however, received in-kind subsidies in the form of access to water towers and the rights of way. We have paid for these subsidies by providing free service to hundreds of families at dozens of locations including the Homeless Shelter, Headquarters Counseling Center, residents of Habitat Housing, residents of the Housing Authority, etc. We also provide a free hotspot that extends from 6th & Mass to 11th & Mass.

We proposed a pilot project (rather than a city wide project), because it keeps the costs to a minimum and will allow us to demonstrate our approach. Our approach is a little different from other projects. We plan on taking a successful pilot project to the private capital market to fund expansion into an eventual City wide network.

We learned a lesson from our first roll-out in 2007. Don't bite off more than you can chew. Keep your capital focused on a small area and grow outward from there. Expensive lesson.

As far as the City's participation, there is not a single FTTP network anywhere on the planet that isn't funded by government in some way. It is only an accident of history that made the original cable companies possible. Susan Crawford wrote an excellent book on this subject: Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age, I highly recommend it.

Unless the City funds this themselves, capital simply isn't available for these types of project. See Gigabit Squared in Seattle or Chicago. I would not be surprised if something similar to happen in Baldwin, but I wish Dawn Fiber the best of luck making their project go.

Our preference would have been to have the local government take our network operation (which is profitable by the way), and expand it to cover the entire City.

Since the city didn't want to go that route, we are pursuing a subsidy so we can make our project successful.

If the City chooses to rebuff our proposal, we will continue to focus our efforts on expanding fiber to high value addresses with a goal of increasing our profitability and exiting the Lawrence market.

Feel free to drop me an e-mail. I like your suggested approach to the Venture Park project and would love to get lunch some time.


Joshua Montgomery


Amy Varoli Elliott 4 years, 5 months ago

What about all the money you already owe the city?

Greg DiVilbiss 4 years, 5 months ago

I certainly want to see gigabit service here in Lawrence.

Does anyone know how much Google has asked for and received in subsidies in the KC area?

Mike Silverman 4 years, 5 months ago

Do you mean direct cash subsidies or things like relaxed regulatory requirements / franchise fees / easements and such? I don't think Google has asked for (or received) any direct cash payments but they've gotten a ton of the latter.

John Middleton 4 years, 5 months ago

I don't know about cash subsidies but Google did a pre-installation survey to determine who and which areas were willing to pay for the service and that was used to make the decision on where to put the service first. I wonder where the concentration of actual subscribers willing to put out $100/month for internet access (not tv, not phone) exists in Lawrence. For some reason I don't think it is heaviest in east Lawrence.

Joshua Montgomery 4 years, 5 months ago

Mr. DiVilbiss,

From the KU Small Business Report submitted to the Lawrence PIRC 1/21/2014, Page 18:

"Google received stunning regulatory concessions and incentives from local governments, including free access to virtually everything the city owns or controls: rights of way, central office space, power, interconnections with anchor institutions, marketing and direct mail, and office space for Google employees. City officials also expedited the permitting process and assigned staff specifically to help Google. One county even offered to allow Google to hang its wires on parts of utility poles - for free - that are usually off-limits to communications companies"

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