Fiber for American Fork, Part 5: Mid-October Update

The American Fork City Council continues to weigh the proposal to create a new utility to extend fiber optic connectivity to every residence and business in American Fork. I’ve spoken with members of the city council and others about it in the last couple of week, some briefly and some at greater length. Without presuming to speak in detail for any of them, I thought I might offer a more general update.

No Vote Yet

A final vote on funding the plan was not on the city council agenda for last evening’s meeting. The next meeting’s agenda is not yet available.

Seriously Consider, We Said

In June an ad hoc task force on which I served recommended that the city council “seriously consider” funding and creating the utility. While this was a strong favorable recommendation, it did strike a note of caution. There were reasons for this, and I don’t think they included a desire to evade responsibility for our conclusions and recommendations.

  • Some of the fiscal modeling was available to us only in preliminary versions; the final versions had the same deadline we had for our report. We didn’t expect the numbers to change enough that our position would change, and they didn’t, but the possibility existed.
  • We were aware that the decision makers themselves would continue to study the proposal for months to come, and that pieces of it would be built out over time. We acknowledged the possibility that new issues, or new facets of known issues, might arise in those months, perhaps including a showstopper of some sort.
  • It’s normal for proposals and legislation to evolve as they move through a lengthy consideration process. It’s common for someone who is paying attention — even the sponsor of a bill in a legislative body — to support a measure initially, but then see it evolve into something unacceptable before it reaches a final vote.
  • We were conscious that our role was to make a recommendation to the city council, and we wanted to be respectful of their role as decision makers. We aimed to inform their judgment, not preempt it.
  • It was our elected official’s prerogative, not the task force’s, to decide to bear (or not to bear) the political risks of proceeding.

My strong impression is that the city council members, individually and collectively, are doing precisely what we recommended: considering the proposal very seriously indeed.

The Easy Questions

You can ask them yourselves, and some of you have, but to me the city council appears unanimous in believing that citywide fiber is an important, positive step into the future, which will offer major, long-term advantages to businesses, residents, and the City’s own operations. I agree.

I believe they are satisfied that the private sector alone will not extend fiber connnectivity to the entire city. The private market’s natural incentives discourage this. But if the City builds the infrastructure citywide, the private sector could then profitably use that infrastructure to reach the whole city. So in essence the City would be acting to extend the private sector’s reach to the entire city, not simply replacing the private sector. This is not untested theory; it works in any number of cities already.

It appears they’ve also accepted their technical consultants’ assurances that wireless technology, including 5G, will not be riding in on its mythical white horse and granting us a high level of highly affordable service citywide. Most people I know who think it will are employed at businesses with a stake in wireless. It’s good that they believe in their product, but I don’t share their faith, where each American Fork neighborhood is concerned, and I’m well aware that 5G itself requires a robust and comprehensive fiber infrastructure.

But those are the easy questions. Here are the hard ones.

That Proposed Utility Fee

The proposal includes adding a monthly utility fee for every residence and business in the city, to fund the infrastructure. It’s not a large fee; the numbers discussed are approximately $10 per residence and $20 per business, and basic service would be included. But the only basis for opting out of most or all of the monthly fee would be demonstrable financial hardship.

There’s a sense in which approaching funding this way — through a mandatory utility fee — is thinking outside the box. I’m not aware that it’s been done before, for municipal broadband. Whether this approach is creative and intelligent or simply pernicious is an open question for many in the city, and for some outside the city who are observing the matter.

More to the present point, everyone knew from the beginning that some residents would oppose this fee simply because it’s imposed on them without their direct, individual consent. They would oppose it even in the face of strong arguments that one result for nearly everyone will be more than $10 of savings in their monthly Internet bill, whether they use the new utility or stay with their existing provider — because existing providers will have to offer better service at lower prices, just to compete.

I think the entire council would agree that this sort of universal fee should be approached cautiously, even reluctantly. I don’t think any of them is enthusiastic about it in this case — but at least some of them think, and others are considering the possibility, that it is the best solution in this case.

So is there another model that would get us citywide fiber? I’m not convinced that there is. We might look for a moment at Woodland Hills. If I understand their new system correctly, they ran (or are running; I’m not sure whether it’s complete) fiber lines down every street, so everyone has the opportunity to connect — but if you want to connect, the fee is $1500. That’s not a show-stopper, especially because the initial offer (which I believe has ended, but wouldn’t have to) was to allow residents to repay that to the city over three years — a hair over $40 per month, if the math in my head is correct, so it would be manageable for most. Their take rate (subscription rate) reportedly is over 50 percent, which is excellent.

That said, American Fork and Woodland Hills are much different, economically and demographically, so it’s possible that such a model would fail in American Fork.

As a voter and resident, I want each of my elected representatives to be reasonably confident that the utility fee is the best approach for American Fork, before voting for the proposal. I think it probably is the best, and I’m not hinting that it isn’t. But this is one of the key decisions we knew each city councilor would have to face in the city’s behalf.

One possible path forward — I can’t rate its likelihood — would derail a November vote. There’s some thinking among the council that they may want to take a step back and issue an RFI (Request for Information, or maybe it would be called an RFP, with P for Proposal), which would set out American Fork’s specific expectations, needs, and circumstances, and invite expert insight into possible alternatives. This would be a more formal and public process than the production of the current proposal.

If the council then agrees on an approach, or if it proceeds with the current proposal, implementation presumably will involve one or more additional RFPs, but these will seek bids to implement a specific plan already chosen.

City Control

Another key question, which at least some council members are still weighing, is whether the current approach, through the LightHub Fiber interlocal agreement, allows the City to keep enough control of its own asset, both in the sense that the City still owns and controls the infrastructure and in the sense that the City retains control over key business decisions, such as fees and service levels.

The task force did not highlight this in its report. I wish we had, because it’s important, and it was on our minds. From the beginning our discussions assumed that the system we were studying would belong to the City itself. You can see this in our stated concern that the City be able to assure a high level of customer service by ISPs on the system, ensure that needed service level agreements are available to businesses, and offer fee waivers in cases of financial hardship.

As a voter and resident, I hope that our elected representative will vote in favor of funding the project only if and when they have reached a reasonable level of legal certainty that these protections are in place in the City’s service agreement with LightHub, which the council recently adopted.

I have not yet obtained or studied the final version of that agreement, to see if I can satisfy myself on the same point. But I don’t have a vote, so it’s less important that I’m satisfied here, as long as the city council is.

I’m still not an attorney, by the way.

The Interlocal Agreement

LightHub Fiber already exists as an interlocal agency. Both American Fork and Kaysville have joined it (essentially, created it). However, Kaysville has a referendum petition in process, to subject its city council’s vote to a public referendum several months hence. I expect they’ll be able to collect the necessary signatures. So things will probably be on hold for a while in that sense.

You must have two entities (not necessarily both cities) to have an interlocal agreement, so the interlocal agency itself is very much in limbo while the signature-gathering proceeds. American Fork has its own escape hatch, if it wants one: the city council can leave the proposal unfunded.

If American Fork’s interests are legally protected, I have no major reservations about the interlocal approach. It’s one path to leveraging American Fork assets to increase revenues by providing services to other interested cities — such as sharing our Network Operations Center (NOC) with other cities, so they don’t have to build one. (Another path would be to provide services on a contract basis, as the City does in providing police services to Cedar Hills.)

Another possible use of the interlocal agency is funding. Just as UTOPIA created UIA (Utah Infrastructure Agency) to increase its borrowing (bonding) ability — because UIA could borrow too — so the bonding for American Fork’s proposal could be handled through LightHub, not the City itself. This would not move American Fork’s total debt nearer to our statutory bonding limit, which we’re nowhere near anyway, but American Fork would still guarantee and pay the debt. The vote to issue bonds would be by the LightHub Fiber board, not the American Fork City Council.

I don’t think we’ll see the funding go that way. There’s a sense among at least some council members not just that the optics would be bad — seeming to shrink from the decision or even mostly hide it from view — but also that they should be the ones to vote, with no buck-passing. I agree.

Two More Notes About UTOPIA

My previous post was about UTOPIA — including its history and why I think joining it would be bad for American Fork. (As I stated there, it may make sense for other cities.) Here are two further notes:

Based on accounts from multiple sources, I reported that UTOPIA approached the City early this year with a detailed invitation to join, which the City turned away. I have additional (still secondhand) information now, suggesting that this communication was less formal than that. So the numbers I was given, which I reported, may not have been part of a formal proposal, just a less formal conversation. For what it’s worth.

Second, my argument in the previous post was that American Fork should not join UTOPIA. However, there is another scenario which could involve UTOPIA and which could make sense. If the City decides to proceed with the project, it will put construction and possibly operations out for bid. If UTOPIA chooses to bid on either or both, it would certainly make sense to consider them among all other bidders. My arguments against becoming a member city of UTOPIA don’t seem relevant to using them as a contractor.

What Happens Next?

What happens next? I don’t know.

Maybe there will be a final vote soon. If it comes before all council members are satisfied on the questions I’ve described, the proposal may fail.

Maybe the council will decide not to vote at all, but to engage in a longer process to consider additional alternatives.

As I said at a recent hearing, this issue is not a no-brainer. It’s complex on several planes. Different people — including different council members — will weigh things differently. Different people have different levels of trust in the elected and appointed officials and others involved. And while I would argue that this issue is not primarily political for the city council, politics are a legitimate consideration, and each of them will evaluate the politics a little differently too.

Meanwhile, one of my favorite things about this whole process is something I said above. The city council is taking a long, hard, thoughtful look. The issue deserves this. Residents and voters deserve this — not a hasty yea or nay. That level of deliberation and scrutiny is what the task force recommended — and when you can get it, it’s one of the chief advantages of representative government over direct democracy.

The city council seems inclined to resist being hurried, and they’re doing their job. My confidence that they will choose wisely, whatever that means, is doubly encouraged.

[Later note: Further reading and discussions have resolved the lingering concerns discussed in this post.]