There are just too many “ifs” in a local telecommunications company’s proposal for the city of Lawrence to guarantee a $1 million loan to bring 1-gigabit broadband service to parts of east Lawrence and the downtown area.
Every community wants to get on the bandwagon for super-fast Internet service similar to that being offered by Google Fiber in Kansas City, but local officials shouldn’t jump too quickly at the plan being offered by the local Wicked Broadband. The city’s Public Incentives Review Committee narrowly recommended, on a 3-2 vote, approval of the loan guarantee and other incentives for the project, but many questions remain to be answered before the Lawrence City Commission considers the plan, probably in mid-July.
For one thing, the city still is evaluating the information it received in March from four technology companies, including Wicked, who expressed interest in partnering with the city to bring super-fast Internet service to Lawrence. It seems premature for the city even to be considering incentives for the Wicked project before it completes its analysis of what other companies might offer.
The Wicked proposal also raises some concerns of its own. The city may not be making a direct investment in the broadband plan, but the $1 million loan guarantee isn’t without risks if Wicked fails to reach its income projections in east Lawrence and downtown. About a year ago, Wicked unsuccessfully sought to get sufficient pre-registration commitments in any Lawrence neighborhood to justify a pilot project similar to the one they now are proposing to fund with the $1 million loan. The company plans to offer 1-gigabit service for $99 per month plus a $300 installation fee. How many customers in the service area would be willing to pay that much is one of the big “ifs” in the Wicked proposal. If the response falls below what is needed to pay back the $1 million loan, the city could be left on the hook.
The $1 million loan guarantee also is unlikely to be the last request from Wicked. The company estimates it will cost about $30 million to expand 1-gigabit service throughout Lawrence, but other companies have estimated that cost at closer to $70 million. What would the city’s eventual investment in such a system actually be?
PIRC members who voted in support of the Wicked Broadband incentives expressed concerns that Lawrence is “falling further behind” in the race for high-speed Internet service and that high-speed broadband is essential to the city’s future success. Those concerns may or may not be valid, but there’s more than one way to address them. City officials shouldn’t jump at this proposal without thoroughly investigating all of their options, as well as the financial viability of the plan that’s on the table.