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Should Lake Oswego offer its own broadband network?

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Councilors will hear the results of a survey Tuesday that gauges the city's appetite for a city-owned Internet utility


LAZENBYMost Lake Oswego residents seem to agree that fiber broadband networks are the Next Big Thing for Internet access. But when the question turns to who should build and run those networks, the discussion becomes more contentious.

It’s an issue that Lake Oswego has been grappling with for almost a year, ever since the City Council began to consider the idea of a municipally owned and operated fiber network. On Tuesday, councilors will hear the results of market research that will help them decide how best to proceed.

“For me, the market research is critical,” City Councilor Joe Buck says. “If the market is there, then we can move forward. But if there’s no market to begin with, we’re kind of wasting our time.”

Fiber “Gigabit” networks use light waves to transmit data at 1,000 megabits per second, which is anywhere from 10 to 100 times faster than the copper wiring found in older phone and cable lines. That means better, faster functionality in uploading, downloading, streaming or sharing content and greater capacity and connectivity for multiple users — whether in a residential, business or municipal setting.

BUCKLake Oswego, along with the rest of the Portland metro area, has been on the short list of candidate cities for Google’s new fiber-based Web service since 2014. But the Internet giant still hasn’t made a decision, and some cities have grown tired of waiting. Sandy finished building its own network in 2014, for example, under the guidance of then-City Manager Scott Lazenby. Wilsonville is currently weighing a similar proposal.

Lazenby is now the city manager here, and he is advocating for Lake Oswego to follow suit.

“Just getting this network would put Lake Oswego on the map,” Lazenby told the council last October. “I think increasing that level of service, especially for the demographics we have here — highly educated, many tech-oriented folks in our community — that would be a real service to make available.”

Lake Oswego began investigating the prospect in March 2015, when Lazenby first proposed the idea of offering broadband access as a municipal utility through a public-private partnership.

“What I would propose for Lake Oswego is something a little different than what other cities have done,” he said at the time, “and that is to do a truly public-private partnership. There’s only so much we can take on, and there’s a lot of private-sector experience in this area that we can tap into.”

GUDMANIn October, the council authorized Lazenby and his staff to negotiate an agreement with Lake Oswego-based Sunstone Business Finance to build the network. But final approval of that agreement hinges on the results of market research designed to gauge public interest and determine whether the network would be able to enroll the estimated 35 percent of Lake Oswego Internet users that it would need to pay for itself.

Last month, the city conducted an online survey about the project, asking area residents to provide open-ended feedback. The results were mixed but generally positive. The city also hired a market research group to conduct a phone survey; those results will be presented at the next City Council meeting on Jan. 26.

The level of public demand alone might make or break the project. But there are a number of other reasons why a city-run network makes sense, as well as several factors that make it a risky proposition. The city council was — and remains — divided on the issue.

For project advocates, the reasons to build the network are very straightforward: “Cheaper, better, faster and easier,” says Sunstone manager Keven Padrick. Data consumption has increased exponentially throughout the life of the Internet and will continue to do so, he says, which makes it critical to keep the city’s network technology up to date.

COLLINS“High-definition virtual reality, video conferencing, interactive education, interactive entertainment [and] highly realistic gaming ... will drive tremendous data needs, potentially 100-1,000 times more than current capacity,” says Manoj Agnihotri, a Westlake resident and member of the city’s Citizens Broadband Committee. “Fiber has the capacity to meet future data needs for decades to come.”

Robert Rowzee, another committee member, says he thinks users would jump at the chance to upgrade their connections ­— and to have more control over them.

“I work from home and I deal with large data sets. It would be tremendously helpful for me personally to have gigabit speed,” he says, adding that “the community as a whole really benefits from having more control over our access to the Internet.”

Supporters also see a municipal network as a way to future-proof the city’s technological infrastructure.

“It’s not a matter of should we or should we not do it, it’s just a matter of when is going to be the best time,” Buck says. “We have an ever-increasing demand for bandwidth, and in the long term we don’t want the residents of Lake Oswego to be held hostage by a network with outdated technology.”

GUSTAFSONPadrick says the high startup cost of building a fiber network means that whichever service provider reaches a given area first will likely become the only provider for that area, which is why it would be better to have the city step in and treat broadband as a utility.

“Whoever builds the first fiber network, no one else will likely overbuild them because it’s just too expensive,” he says. “If Google does it, they know that they’ve essentially locked in the fiber network. And if they’re a benevolent monopolist, that’ll be a good thing. But if they’re not, it won’t.”

Others see the network as a way to boost Lake Oswego’s public image, potentially attracting a younger demographic to move to the city.

“This kind of access to the Internet could really set Lake Oswego apart from other cities in the metro area and could benefit our businesses and help improve our local economy,” says Councilor Jon Gustafson. “I could see this system becoming another civic asset, like our schools and parks, that has a real positive effect on property values.”

Some residents are simply excited by the prospect of a cheap and readily available alternative to current providers. Lazenby said a city-owned network could offer gigabit-speed service to Lake Oswego customers at an estimated rate of around $59.95 a month, compared to Google Fiber’s $70.

MANZDisdain for Comcast was a common theme among the anonymous comments the city received from the online survey. “I don’t even mind if the price is higher than Comcast. As long as it isn’t Comcast,” said one respondent. “Bring fast Internet speeds soon! Get rid of the monopolies of Comcast and CenturyLink,” said another.

But the project also has its critics, who have raised a number of concerns about its necessity and viability.

The biggest risk is financial. Many critics believe that the project won’t enroll enough people to be self-sustaining, leaving the city with an unsuccessful investment that ends up becoming a financial drain.

“I think the financial risk is enormous,” says Gerry Good, a Lake Oswego resident and member of the city’s Citizens Budget Committee. “The number isn’t exactly known, but anybody who’s going to build this out for the city, if they don’t get a minimum revenue, they’re going to want the city to pay them for that portion that isn’t supported by revenue.”

Construction and operation of the network would be contracted to Sunstone, officials say, so the direct financial risk to the city is minimal. Still, critics argue that even a minimal risk is too much if the project fails to get off the ground.

“Do we really want our city to get into another utility business with taxpayers on the hook for another massive project, like the Lake Oswego-Tigard Water Partnership?” Councilor Charles Collins asks. “Why not leave the market forces — Comcast, Frontier, Century Link or Google — to develop a product that provides services the citizens demand at a fair market price?”

City Councilor Jeff Gudman is also among those concerned about the signup rate. He expects the survey results to be “lukewarm at best,” but he says he would still be skeptical even if the results are positive. Just because someone declares interest now, he says, doesn’t guarantee that they’ll follow through once the network is built.

“When the time actually comes, they may or may not do it. We as a city are taking on the risk. That’s not what we do,” Gudman says. “We provide basic services; we are not a risk-taking enterprise.”

Another concern is that the city’s network would consist solely of an Internet connection, without any additional content. Existing providers like Comcast tend to bundle Web connections with home phone service and cable TV packages. Councilor Jackie Manz expressed concern that consumers who are used to all-in-one plans might not be prepared for the lack of TV content, or might not understand what they’re signing up for.

“Although I am extremely skeptical and I personally don’t think it’s a good plan, I’m willing to support our citizens, provided that they have true and accurate information about what this means,” Manz says.

The aerial design of the network has also been criticized, because it would call for new wiring on telephone poles instead of buried cables.

“For the last several decades, as a city, we’ve been trying to get everything below ground — all our utilities,” Gudman says. “If we do this, (the other utility companies) are going to come to us and say, ‘Why are you giving (Sunstone) an exemption?’ And they’ll be right.”

Proponents of the project say the concerns about costs are overblown, since under the terms of the contract, Sunstone will assume most of the financial liability.

“Most of the people who have objected to it are pretty ignorant about what it is,” Lazenby says, adding that the city could pursue a model that solicits a modest deposit in an attempt to guaranteee the targeted 35-percent take rate that would make the project work financially.

Still, most city officials say the cost of the project remains the chief concern, and the phone survey results will likely play the biggest role in determining whether the project moves forward.

“The council is in pretty good agreement,” says Councilor Skip O’Neill, “that if broadband fiber is going to cost the city money, that it probably will not go any further.”

Contact Anthony Macuk at 503-636-1281 ext. 108 or This email address is being protected from spambots. You need JavaScript enabled to view it..