The city's chief financial officer, however, is less optimistic and believes margins of error between success and failure are too thin for him to recommend that the city spend the $220 million to $270 million necessary to complete the expansion.
(TNS) -- City leaders have peered at the possibilities of a gigabit future, but the big money meeting next week could throw sand in the vision of a publicly owned, high-speed fiber optics Internet utility.
On March 10, the city's broadband task force will meet with its hired experts and the city's finance director to discuss financial forecasts if the City Commission decides to extend its fiber optics network into a retail Internet service provider.
Ahead of that meeting, Mike Brossart, the city's chief financial officer, has warned decision-makers away from that big ticket option presented by its consultant, Magellan Advisors.
The margins of error between success and failure are too thin for him to recommend the city spend the $220 million to $270 million necessary to establish a new Internet utility across Lakeland Electric's service area, Brossart said.
The initial report presented by Magellan in October projected a quick return on the investment as long as 40 percent of Lakeland Electric customers sign up, the project is financed on 20-year bonds and the price of the service increased by 1.5 percent each year.
"The financial model produced by Magellan is very sensitive. There is very little room for price elasticity in this model, which lends to being a very high risk. Missing or changing any one of the three key components noted above, much less more than one, is problematic," Brossart wrote.
Come up short on one component and success falls apart, Brossart said.
"It's highly speculative and we're not in the business of being highly speculative with the citizens' money," Brossart told The Ledger.
However, he said, "we're not saying we shouldn't do broadband or find a way to expand high speed services in our community. I'm simply saying the model we were presented that involved the city purchasing, managing (and) maintaining a broadband system is not feasible."
The commission has been briefed on several angles to leverage the city's fiber optics assets -- about 330 miles of cable -- from the low-risk, low-reward, low-control option of regulation reduction to the high-risk, high-reward, high-control option of starting a new retail Internet service utility.
Building a wholesale network and selling access to retailer Internet service providers was among the options outlined by Magellan, as was building a retail Internet service provider but keeping it within the more densely populated Lakeland city limits.
Commissioners have broadly agreed they would like to see improvements to retail Internet connection offerings but the business-leaning board has reservations about entering a market currently served by private enterprises, namely Bright House Networks and Verizon FiOS or the companies that will succeed them.
Verizon recently sold its wired Internet division to Frontier Communications. Bright House was purchased by Charter Communications.
And with their existing infrastructure, existing contracts and services like phone and cable television, the companies would be well positioned to hamper a local foray into their turf, Brossart said.
"Sides are lining up," Commissioner Don Selvage said, both for and against.
As chairman of the task force, he said, he has no interest in bogging the issue down in endless small group meetings and would rather have the discussion move to the full commission as soon as possible.
"Have the staff vet it, have the public debate," he said.
Selvage described Brossart's analysis as "not an overly optimistic scenario. It seemed to me to be the kind of risk I anticipated."
Advocates for a municipal service provider, like Gigabit Lakeland's Shane Mahoney, have been more bullish on the adoption rate and expect construction costs would fall below the $220 million lower estimate.
Generally, municipal Internet service providers have succeeded in other cities, so why not Lakeland where fiber assets are already installed and the electric utility already has customer service, billing and other business functions well in hand?
In November, Kevin Hyman, an executive vice president with Bright House Networks, said Lakelanders should be cautious about taking on the financial liability of starting, essentially, a new company.
If Bright House or any other company were to overreach and fail, the public wouldn't be stuck with the debt, he said.
On his company's plans to build fiber-to-the-home services, he said that it wasn't needed yet -- when there is demand his company and other providers will meet it.
It's not likely the commission will drop the issue, even if it forgoes the most ambitious option.
Wednesday morning, Terry Brigman, the city's chief information officer, spoke to the Downtown Lakeland Partnership -- a business group --about Polk County's broadband infrastructure.
Polk County is clearly underserved, Brigman said, referring to a 2013 study by Polk Vision that found the Lakeland-Winter Haven metropolitan area was the seventh worst served metropolitan area in the country.
Broadband offerings fall short in Polk County's needs, and constrained economic growth and "high-tech, high-wage jobs," Brigman said. "You can't have high-tech, high-wage jobs without high speed Internet access.
"We don't have what we need," he said. "We don't have what we need to compete with our neighbors," let alone the country.
But without competitive pressure, the incumbent providers have not shown themselves willing to increase broadband offerings in markets they already dominate.
"They're wringing out the assets they installed decades ago," he said. "There's not enough competition, that's for sure."
Whatever the method, a better outcome would be appreciated, two downtown business owners said.
Ellen Simms, the co-owner of Two Hens and a Hound, said that for a decade her connection has fizzled out when it rains and she can't get the provider to fix it.
Kate Lake, who hosted the meeting with Brigman at her business, My Office & More, said the dedicated fiber optics line she pays for at her shared office for hire "is killing me."
"I'm paying through the teeth."
©2016 The Ledger (Lakeland, Fla.) Distributed by Tribune Content Agency, LLC.
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