Consultant Advises City to Borrow $17M for Broadband Service

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Lakeland, FL commissioners want more information before deciding on whether to move forward with launching a municipal-owned broadband service with an estimated cost of $97.5 million, according to The Ledger. Commissioners reviewed a $135,000 business plan provided by Magellan Advisors, the city’s broadband consultant, recommending the town borrow $17 million to begin the project.

“We have a good business plan started that is more competitively refined than I thought it would be. I don’t think I have enough information on the other elements just yet,” said Mayor Bill Mutz.

If Lakeland can get 38 percent of city residents and 41 percent of businesses to sign up for the broadband service, John Honker, CEO and president of Magellan said it would receive approximately $9.5 million in revenue a year. According to Mike Brossart, the city’s financial director, the city won’t generate, “any revenue for the first two to two and a half years.” The city would need to get at least 27.5% of residents to sign up for service to break even, reported The Ledger.

Additionally, there are concerns over competition from the private sector. “Every time you say something I hear a ca-ching in my head like a cash register,” Commissioner Sara Roberts McCarley said. “For the long-term benefit of our community, this is vitally important. I don’t want to get into a dog fight with the private sector.”

“Spectrum and Frontier have 97 percent of the market share,” Commissioner Scott Franklin added. “The big companies aren’t going to lose the fight without a fight. I anticipate them throwing everything they could at resisting this.” 

City Attorney Tim McCausland warned commissioners about state legislation that could potentially “create a lot of hurdles” including placing limits on the types of funding that can be used to build a municipal broadband network. “I think you need a lot more education to get closer to a decision point,” he said.

Some commissioners felt the plan left questions unanswered and questioned the success rate of other municipalities that followed Magellan’s recommendations. The commission asked city staff to provide detailed reports on specific options for the financing of a broadband network plus state law considerations. Also, the city will schedule a series of community meetings, soliciting residents for their feedback on the proposed project. 

August 21, 2019   

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