Southwick High-Speed Internet Committee Discusses $17 Million Fiber Buildout and Pricing Models
-
Meeting Type:
Utility Board
-
Meeting Date:
08/15/2024
-
Recording Published:
08/16/2024
-
Duration:
96 Minutes
-
State:
Massachusetts
-
County:
Hampden County
-
Towns:
Southwick
- Meeting Overview:
The Southwick High-Speed Internet Committee met to review updated financial projections for their $17 million fiber buildout project, emphasizing the importance of accurate cost assessments and sustainable revenue models.
The committee began by examining the financial estimates related to the fiber buildout, which included updating outdated numbers. The total project cost was projected at $17 million, factoring in various grants, and was brought down to approximately $15.85 million after accounting for available funding. A focus was placed on proposed subscriber fees, with various scenarios presented. The first scenario suggested a monthly fee of $85 per subscriber, assuming a 50% take rate from a potential customer base of 36,885, leading to an estimated annual revenue of $1.87 million but projecting a negative net income of $546,000. The second scenario adjusted the monthly fee to $89, increasing annual revenue to approximately $1.96 million, resulting in a positive net income of $33,860. A third scenario proposed a tiered pricing model, estimating an annual net income of about $80,000 at the same 50% take rate.
The committee delved into the logistics of construction, including potential underground installation options to bypass the need for pole attachments. Leveraging existing infrastructure, such as conduits, was noted as a way to enhance reliability and reduce costs. However, challenges with existing utility companies, particularly regarding pole make-ready work, were discussed. There were references to West Springfield’s experience, where payments to utility companies had not resulted in timely completion of necessary work, raising concerns about efficiency and accountability.
A detailed explanation of the bonding strategy was provided. The finance committee suggested optimizing interest rates by aggregating these notes with other municipal borrowings.
The topic of how to manage the costs of service drops and installation fees was also discussed. A proposed framework suggested covering the first 250 feet of installation while charging additional fees for any distance beyond that. The conversation highlighted that different communities had varying policies on installation fees, with some charging flat rates of about $90 to $1,000 depending on circumstances such as whether the installation was underground or the length involved. Concerns were raised about geographic conditions, such as rocky terrain, which could increase installation costs.
The anticipated take rate was another important topic. However, attracting subscribers might be challenging in areas already served by existing providers. The timeline for construction was addressed, with expectations set at two and a half to three years before significant construction could begin following the signing of contracts. A proposal was made to conduct a survey within the town to gauge interest in the service, similar to a previous initiative in Westfield, where a significant percentage of residents expressed interest.
The current advisory board’s governance structure was described as having “zero authority,” requiring all decisions to be approved by the select board. The committee highlighted the necessity for a more autonomous body to oversee the project. It was noted that community members would still seek assistance from local officials regarding internet services, emphasizing the need for a clear structure for customer service and oversight.
The committee also discussed the costs associated with the “Make Ready” process, which involves submitting pole applications with costs determined by utility providers like Verizon and Eversource. A representative noted the need for a community-wide investment, as the town would need to bear these costs upfront. There has been ongoing communication with Verizon and Eversource, with a recent increase in progress from Eversource, contrasting with a slowdown from Verizon. The committee clarified that service areas are typically structured to accommodate around 200 to 250 potential subscribers, allowing for future expansions.
In terms of financial projections, the committee discussed the need for the project to cover its costs and generate sufficient revenue to repay bonds without imposing on taxpayers. Comparisons were made to other towns, with West Springfield and East Longmeadow cited for their service costs. The need for competitive pricing was stressed, especially given increasing costs from incumbent providers.
The committee also touched upon potential additional revenue streams from business customers, which had not been factored into the financial model. The potential for offering services to commercial clients, especially in industrial zones, was recognized as a vital component of the overall strategy. Structuring rates to subsidize consumer pricing while ensuring the enterprise fund’s sustainability was suggested.
Karl J Stinehart
Utility Board Officials:
Jessica Bishop, Ian Creswell, Jim Crowley, Marlene Quinlan, Tom Kolek, Bob Boyd, James R Johnson, Christopher D Boyd, Ryan Pease, Jason Giguere, Douglas A Moglin, David LaBombard (Select Board), Alisha N Sullivan (Select Board), Pari Lirim Hoxha (Select Board), Kaitlyn Leigh Haseltine (Select Board)
-
Meeting Type:
Utility Board
-
Meeting Date:
08/15/2024
-
Recording Published:
08/16/2024
-
Duration:
96 Minutes
-
Notability Score:
Routine
Receive debriefs about local meetings in your inbox weekly:
-
State:
Massachusetts
-
County:
Hampden County
-
Towns:
Southwick
Recent Meetings Nearby:
- 09/16/2024
- 09/17/2024
- 98 Minutes
- 09/16/2024
- 09/16/2024
- 87 Minutes
- 09/16/2024
- 09/16/2024
- 249 Minutes