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Is Municipal Broadband Feasible?

Rochester, Minn., is studying whether or not the value of municipal broadband will outweigh the costs.

by Randy Petersen, Post-Bulletin / April 12, 2017

(TNS) -- Determining whether municipal broadband is feasible in Rochester, Minn., will require another $47,000 in study.

Peter Hogan, Rochester Public Utilities director of corporate services, said that was the finding of Kansas City, Mo.-based consulting firm Burns and McDonnell.

The further study would investigate whether a city-owned internet service could be sustained in the current market and what options exist for operating the service, which could include adding it to RPU's lineup, creating a new department or seeking a private entity to provide oversight.

The city council began tentatively looking at municipal broadband in August 2015. At the time, it came with a $42 million estimate.

In July 2016, research from Alcatel-Lucent was reviewed and the expected capital investment was determined to be about $53 million. Since the funds would need to be borrowed with bonds being issued, the city's total investment over time would be nearly $67 million.

Alcatel-Lucent's estimates were based on the new public utility securing 30 percent of Rochester's internet customers. If that happens, the company projected a city-owned utility would see positive cash flow within about four years, depending on whether phone and cable services were included.

The additional study discussed Monday would seek to determine whether the local market makes the effort feasible.

Council Member Ed Hruska said he was hoping to have more answers before spending additional city funds on the prospect of municipal broadband.

"I guess I was expecting a little bit more detail," he said.

The council is expected to consider the funding request during its April 17 meeting.

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