Lakeland, Fla., Could Be Exception to Muni Broadband Ban

A document that dates all the way back to 1994 may be a linchpin for Lakeland, Fla., becoming the first city-owned broadband service for widespread residential use in the entire state since 2005.

by Sara-Megan Walsh, The Ledger / August 13, 2019
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(TNS) — A document dating back to 1994 may be a linchpin for Lakeland, Fla., becoming the first city-owned broadband service for widespread residential use in the state since 2005.

Florida is one of 26 states that has laws that either restrict or outright ban municipally-owned broadband networks, according to an April study published by Broadband Now, a company that tracks broadband availability across the nation.

In 2005, the state Legislature enacted bill 350.18 that Lakeland's broadband consultant Magellan Advisors describes as "places onerous procedures and requirements on government entities seeking to offer communication services" in their 94-page business plan for the city. These state regulations include mandatory public hearings, required studies and report that municipalities must complete, then restricts what funds can be used and borrowed to build a network.

Tim McCausland, the city's attorney, said the law "creates a roadblock" to cities that want to provide their residents with high-speed internet service.

"To my knowledge, no one has tried to do it since the statute, it hasn't been tested," he told The Ledger. "No one I know of has tried to complete the process."

Both the Ocala Fiber Network, which provides internet services to 1,600 of the city's residents and businesses, and Gainesville Regional Utilities' GRUCom, which oversees the University of Florida's GATOR NET, started offering telecommunications services in the 1990s prior to existing state regulations.

"There's not many like us," Mel Poole, director of the Ocala Fiber Network, said. "Between us and Gainesville, there's really not many doing what we're doing as a municipality."

Lakeland officials' predecessors had the foresight to obtain a certificate to provide communication services from the Florida Public Services Commission in 1994. At the time, it was to create a telephone network, according to city spokesman Kevin Cook, but it was never completed.

The document will exempt Lakeland from "most" of the state's business and procedural requirements to operate a broadband utility, according to Magellan's report.

"We have a certificate, we are grandfathered in and it's why we are able to do what we are going to do," Commissioner Justin Troller said. "I wish I knew who it was, I'd like to shake his or her hand."

Magellan Advisors believes the city would still have to meet one key provision of Florida state law: showing its revenues exceed operating expenses and debt payments on any money borrowed to build the broadband network at the end of four years.

"It doesn't worry me at all," Troller said. "If we are strategic in the way we roll it out and focus on dense areas that include residential and business customers, we can absolutely show a profit amount that exceeds our debt service."

If a municipality-owned broadband utility can't show a profit after four years, the state requires it to hold a public hearing on whether to continue services.

The Ocala Fiber Network is one example that shows city-owned broadband in Florida can be profitable, according to Poole.

"It's key to be slow, take your time and be methodical about your approach to building out fiber," he said. "We've been in the black since our inception."

Poole said when Ocala first opened its internet services, it was "inundated with calls" and developed a 250-customer wait list. The city refined its approach, according to Poole, choosing to go with a "Fiberhood" model, only building a network in communities where 30% of residents or businesses have already agreed to sign up for internet service.

"It gives us a good return on our investment," he said.

Poole said Ocala does not offer its residents a triple-play bundle — a package of internet, telephone and cable television services. Magellan Advisors have strongly recommended Lakeland consider it.

Lakeland commissioners directed city staff on Aug. 5 to evaluate how the city could potentially finance the nearly $80-million price tag for broadband infrastructure within city limits. If approved, Magellan Advisors estimated it will take between four to seven years to build and could net $10.5 million in annual revenue if 38% of residents sign up.

"I think our take rate will be closer to 50-55%," Troller said. "People are excited the city can offer an alternative as people feel trapped in their contracts and want to invest in our community and in our future."

The city's broadband committee is scheduled to meet Aug. 19 to discuss possibly financing the network and how commissioners want to proceed.

©2019 The Ledger (Lakeland, Fla.). Distributed by Tribune Content Agency, LLC.

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