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County Government Asks: Why Rent Fiber When You Can Own?

Faced with increasing costs for telecommunications services, Martin County, Fla., built its own fiber network.

When Martin County, Fla., faced rising telecommunications costs, CIO Kevin Kryzda hit the rubber chicken circuit to persuade community leaders, business owners and elected officials to build a county-owned fiber network rather than leasing services with an impending price increase.
For 10 years, Martin County leased dark fiber lines from Comcast to provide services to public buildings at a cost of $10,500 per month, according to the report Florida Fiber: Martin County Saves Big with Gigabit Network by the Institute for Local Self-Reliance. In 2010, Comcast proposed a new five-year lease, phasing out the dark fiber network and resulting in monthly payments that would jump from $12,075 in the first year to $98,261 in the fifth year.
“The event that we always feared would happen, actually happened,” Kryzda said. “We knew that at the end of the lease, the prices were going to go up. A lot of folks couldn’t believe that it would be that expensive. Once everybody realized that the estimated increase had come true, there was very little time for a solution. So we issued a performance contract and were able to get off the network in time.”
Kryzda, anticipating the price jump since 2006, began researching how the county could build its own network. Comcast made up the majority of the existing network, however, over the years, the county and school district had supplemented connections with their own fiber-optic investments. Building a new network with existing investments was estimated to cost $9.8 million.
Determined to lower the cost, Kryzda began a conversation with the Martin County Traffic Division about merging pieces of their networks to share costs. The traffic division had recently received a grant from the Florida Department of Transportation to expand its intelligent transportation system, which created an opportunity for the county to share conduit that would be laid for that project. Kryzda contracted with an engineer to adjust the network design. This reduced the project cost to $7.3 million.
“The real challenge was being able to obtain money in a time when money was hard to get,” Kryzda said. “Any time that you want to ask for money, it’s a hard sell, especially something that’s intangible such as a network. I had to get people to accept that it was a good investment and that we should borrow the money to build a replacement rather than lease.”
In April 2010, Kryzda presented a proposal to the Martin County Commission, which voted unanimously to issue an RFP for the construction of the network, giving major carriers an opportunity to bid.
According to the Florida Fiber report, a local relationship presented itself with Indiantown Telecommunications Service (ITS), a rural exchange carrier. Between 2006 and 2010, ITS had installed fiber-optic cable in and around the county and offered a 43-mile fiber swap. ITS would use Martin County fiber to expand its service area, and the county would use existing ITS fiber to avoid higher costs. The savings associated with the agreement brought the expected cost of building the network to $4.14 million.
“The biggest problem was overcoming the financials,” Kryzda said, “which was coming up with money that didn’t exist. We had to borrow it.”
Martin County agreed to a 15-year, $3.12 million loan, which is expected to result in $30.3 million in savings over the next 20 years.
Construction for the project commenced in January 2011, and the county no longer required Comcast’s leased lines after July 31, 2011. Additionally, since the launch, unanticipated uses for the county network appear on a regular basis.
“We now use fiber optics to interconnect 133 buildings throughout the county and elsewhere for the purpose of voice, video and data communications,” Kryzda said. “For example, we send the cable company video feed, such as commission meetings and events. We also recently converted our public safety radio system. It saves $73,000 per year. These examples are savings to the taxpayer. We never thought of interconnecting towers with fiber optics, but now that our network is in place, we’re finding more uses for it that save even more money.”
Moving forward, there are no plans to provide commercial services to residents or businesses, according to the Florida Fiber report. Martin County is only leasing dark fiber selectively and considering offering Internet access to government entities.
Kryzda’s advice to other counties and municipalities researching a similar model: “Don’t be afraid; be cautious. The devil is in the details. There are lots of benefits.”
*This story was updated at 6:40 p.m. to correct an error. Martin County did not work with the Florida Department of Transportation (FDOT) on the project; it worked with the Martin County Traffic Division, which received funding from FDOT that helped to pay for the project.