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Broadband project in Rock Falls takes next step

Consultant: Utility could generate revenue, spur development

ROCK FALLS – The city is moving ahead with a plan to bring broadband into its fold of utility offerings.

A representative from Magellan Advisors, a technology services consulting firm the city has worked with for about a year, presented a strategic plan to the council Tuesday. The plan looked at various aspects of the project, including feasibility, market analysis, and business model options.

Dick Simon, director of the city's electric department, has been working closely with Denver-based Magellan on the plan to develop a broadband utility. The department would be responsible for running the service.

Magellan's Kyle Hollifield told the council that the firm's findings indicated that the project is feasible for the city. He also outlined three business models, saying that the study findings suggested that the city was best suited to be a business services provider. Services would include Internet, data and voice options.

The city's existing infrastructure was a big plus for feasibility, Hollifield said.

"You should be pleased that someone had the foresight to put some dark fiber in the ground," Hollifield said. "The electric utility put that in place for their own needs and for substations, but half of it is unused."

Many electric companies decided to set up a fiber-optic network when the expensive engineering and construction work was done for its cable systems. It is referred to as dark fiber because it isn't currently being used, but was considered an investment for the future. The network can be a revenue generator later because it is sought after for its higher bandwidth and better connectivity capabilities.

"The fiber itself is inexpensive; the conduit and getting it in the ground are the expensive parts of setting up the network," Hollifield said. "With the dark fiber infrastructure already there, it doesn't take much capital to do a buildout."

In addition to providing a revenue stream as a business provider, the buildout could also help bring new business to the area.

"Businesses want to locate where there is strong infrastructure," Hollifield said. "I can't guarantee business growth in Rock Falls, but in my experience, cities of similar size find it difficult to do economic development without this type of technology."

In order for the city to provide broadband service, a referendum would be necessary.

City Administrator Robbin Blackert said the revenue stream could also come from outside the city's boundaries.

"The referendum would be done to provide services within the city limits, but we can compete outside the city," she said.

The council voted unanimously to accept the findings of the study, and move forward with the project. The cost of the next steps, however, is not to exceed $60,200.

The next steps include developing a formal business plan and a preliminary engineering design.

Alderman Glen Kuhlemier said the table has been set for this project, and it would be foolish not to take advantage of what has already been done.

"To go backward is untenable after the foresight of the past," Kuhlemier said.

Cost of project

Consulting firm Magellan Advisors estimates that the business services provider buildout would cost $700,000. The firms believe the city could reach a break-even point in 7 years. The broadband services market penetration target would be to provide services for half of the 350 businesses that were used for market analysis purposes. The firm suggests that bonds be used to pay for the buildout.

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