City to consider $1 million loan guarantee for downtown, East Lawrence broadband project

The broadband battle in Lawrence is heating up.

At their Tuesday evening meeting, city commissioners will consider providing a $1 million loan guarantee and other financial incentives to Lawrence-based Wicked Broadband to bring the same super-fast Internet service to downtown and East Lawrence that Google Fiber is bringing to Kansas City.

At the same time, a Baldwin City-based firm is seeking new agreements with Lawrence City Hall that would pave the way for it to bring gigabit Internet service to Lawrence, but the leader of that company said he’ll likely scrap his plans for Lawrence if the City Commission provides the requested incentives to Wicked Broadband.

“As a private provider, there is no way I can compete with the financial backing of any municipality,” said Mike Bosch, CEO of RG Fiber, which is in the process of bringing high-speed Internet service to Baldwin City.

Lawrence residents, meanwhile, appear torn on whether the prospect of high-speed Internet, which will allow for everything from greater video streaming to high-tech business applications, is worth the city potentially committing taxpayer dollars to the project.

“I’ve received a lot of comments from people, both positive and negative on this one,” said City Commissioner Mike Dever.

The Wicked proposal is largely unchanged from when it presented the idea in 2013. The company proposes to offer the super-fast gigabit broadband service to about 1,200 homes and businesses primarily in East Lawrence and downtown. But company leaders say they need the city to provide a $1 million loan guarantee in order to secure private financing for the project. The city would only have to pay any money for the project if Wicked — which previously operated as Lawrence Freenet — defaulted on its bank loan. In that scenario, the city would pay off the balance of the loan and would take ownership of any of the fiber-optic cable and equipment already installed by Wicked.

Wicked also is asking the city to waive about $20,000 a year in franchise fees for each of the next five years and allow the company low-cost access to the ring of fiber-optic cable that the city already owns. Wicked officials said the gigabit project will pay major dividends for the community.

“I hear a lot about job losses in Lawrence,” said Kris Adair, a co-owner of Wicked and a Lawrence school board member. “It seems like we’re trying to change our economic development strategy in Lawrence to focus on small businesses and startups. One of the key things for those types of business is access to high-quality broadband.”

There are signs that city commissioners are split on the incentives request. Mayor Mike Amyx and Commissioner Jeremy Farmer both serve on the city’s Public Incentives Review Committee, which reviewed the Wicked request in May. Amyx recommended against the incentives package at that meeting, while Farmer recommended it.

Dever said he was struggling with how he’ll vote on the issue.

“We really need to have a discussion about what role government should play in helping create the proper environment for this type of service,” Dever said.

Dever said commissioners also need to figure out whether the incentives package would be a one-time offering, or whether the city would offer another round of financial incentives for Wicked to provide the gigabit service throughout Lawrence.

As currently proposed, the initial Wicked project primarily would serve only downtown and much of East Lawrence. Adair estimates it would take about $30 million in investments to expand the service to all of Lawrence. Adair, though, said Wicked is confident it can privately finance that expansion, once it proves to investors and lenders that the pilot project is successful in Lawrence.

“We’re not asking the city for any cash outlay,” Adair said. “We think the loan guarantee will be enough to get the project going and will signal to outside investors that Lawrence is really committed to this technology.”

But Bosch, the executive with Baldwin City-based RG Fiber, said city incentives to Wicked will create an unlevel playing field for other providers that are considering entering the Lawrence market. Bosch said RG Fiber — which previously operated under the name Dawn Fiber prior to a recent change in ownership — expects to begin providing gigabit Internet service to parts of Baldwin City in November.

Bosch said the company recently purchased a 4,000 square-foot building in downtown Baldwin City to house the necessary equipment for the project. He said the building will have the capacity to support gigabit Internet service in Lawrence and other communities as well.

As part of the Baldwin City project, RG Fiber will run a route of fiber-optic cable through Lawrence in route to Baldwin City. Earlier this month, RG Fiber formally requested that the city open up all its rights-of-ways to RG Fiber so that it could install additional fiber in the city. It also is seeking access to the city-owned ring of fiber-optic cable at terms equal to what Wicked Broadband is seeking.

Bosch said his company has been in contact with more than 200 potential customers in Lawrence and believes there are pockets of the city where RG Fiber could successfully offer gigabit service. But Bosch said he has suspended all further examination of a Lawrence project pending the city’s decision on Wicked.

Commissioners will meet at 6:35 p.m. Tuesday at City Hall.