Fiber for American Fork, Part 1: What’s Proposed

(And Who Am I to Write About It?)

American Fork, Utah, is considering establishing fiber optic service to every residence and business in the city as a public utility, as permitted by Utah Code 10-8-14. Here we’ll discuss the proposal itself, and I’ll tell you how I learned enough to write about it. (Teaser: I got a head start.) Later posts will address specific issues in more detail and attempt to answer related questions.

This proposal will not be a measure on the November ballot, though candidates may make it an issue in the 2019 municipal election. The city council will hold a preliminary vote, probably in mid-August, to put some things in place for a final city council vote in mid-November.

The August vote will not be whether to build the system or not. The November vote is the big one.

In the meantime, several public information meetings will be held — one already has been — to explain the proposal and answer questions (of which more soon).

The Fiber Proposal

Under the proposal, each residence in the city will pay a monthly fee as part of its utility bill. No additional fee will be required for basic service. The numbers in discussions I’ve attended have ranged from about $9.00 per month to about $12.00 per month for each residence. Flyers at the first public information meeting said $9.95 per month, but that’s still tentative.

Each business will also have a monthly fee, again on the City utility bill. The same flyers at the same meeting projected that at $19.95.

The current plan involves no installation or setup fee.

(Note that the The Daily Herald missed entirely the part about inexpensive basic service in its recent story.)

Faster service will be available at an additional charge, at competitive or lower rates.

There will be provision for residents to opt out of the fee and the service (but not the physical connection) on the basis of economic hardship, but otherwise every residence and business in American Fork will see the monthly charge on the utility bill, regardless of participation — as is the case with water, even if you use none that month.

A frequent question is, what will be my total bill for Internet connectivity on the basic level? Will it be the City fee plus another payment to a service provider? The answer is happier than that. It will be just the fee to the City. (For my part, I’d love to pay $10 per month for faster service than I get now at five times that cost.)

If you choose faster service, you’ll have the City bill plus a payment to the Internet service provider (ISP) of your choice (among those on the system). Likewise, if you choose additional services through other providers which may inhabit the system — such as security services, medical services, private networking (separate from the Internet), and other things fiber optics can support, those will also come with a fee.

Time and Treasure

The proposal includes the City issuing approximately $30 million in revenue bonds, primarily for the initial capital investment (building the infrastructure citywide), but also to retire the remaining $2.6 million debt from the City’s purchase of AirSwitch nearly two decades ago (which is a story for another post). The borrowed amount may also support operations for a brief initial term, perhaps a year, within the narrow limit imposed by state law.

Citywide build-out is expected within two calendar years, but may be complete much sooner.

Even deliberately conservative financial models lead the City to expect the system to begin to cover its own costs within a year or two, and within a few years to deliver surplus revenue which can be used to retire the debt early, pay off other debt, and better fund essential City services such as road maintenance and repair and public safety – perhaps lowering residents’ taxes, or perhaps avoiding increasing taxes as much as might otherwise be necessary.

Because the bonds would be backed by the utility payments, the bond rate should be quite favorable, and rates are fairly low now anyway.

Note that, because they are backed by this revenue, these would be revenue bonds, which require a city council vote but not a ballot measure. By contrast, general obligation (GO) bonds obligate the taxpayer — the taxpayer’s property, ultimately — and would have to be paid through tax revenues, if other funding sources failed. Those require voter approval. The road bond proposal American Fork voters rejected in 2013 involved GO bonds; hence the vote.

Fiber Beyond Internet

Providing Internet service to residents is not the sole object of building this infrastructure. The City itself could leverage the system in such areas as the metering of irrigation water, which will soon be required under a new state law. Other municipalities, such as Ammon, Idaho, have demonstrated that such networks can be used to enhance public safety, including school safety.

The system will also accommodate virtual networks and private networks, which will be separate from the Internet, to serve financial, health care, and other industries, as well as educational institutions. A city-wide fiber network will also facilitate and deliver future technologies and services, which are already in development.

Briefly, Economics

A later post will dive deeper, but for the moment let’s note that such a system should mitigate an ongoing problem which American Fork shares with many municipalities. As a predictable matter of economics, the private broadband market significantly underserves the city and its residents, in terms of availability, service levels, and price. At the same time, citywide fiber will make American Fork more attractive to large and small businesses and encourage home-based businesses and telecommuting.

How I Got a Head Start

In May 2019 American Fork Mayor Brad Frost assembled an ad hoc Task Force on Telecommunications, consisting of four current and former city residents with varied expertise. I was one of the four, along with Dave Anderson, a retired banker with expertise in big numbers with dollar signs; Rhonda Bromley, an Alpine School District Superintendent with extensive experience in public administration and public relations; and Allen Frost, a wide-area networking specialist with expertise in planning and delivering connectivity to large organizations. For my part, I have enough technical, government, political, and other background to follow the experts into the weeds on the major subjects related to the proposal, as well as some experience writing reports and, generally, explaining things.

Mayor Frost explained that he and members of the American Fork City Council, with other City officials, had studied the city’s present broadband situation and various alternatives, including the present proposal, for several months. He commissioned the task force to examine the proposal that emerged and to offer a second opinion, while the City continued to study it too.

The task force was to examine the proposal deeply and from every useful angle, to ask every tough question we could devise, and to report our thinking to the city council. We met for several hours over two evenings with prominent experts in the legal, fiscal, administrative, and technical sides of municipal broadband. They told us up front that Mayor Frost had directed them to withhold nothing about the proposal, so we could see everything City was seeing in its explorations. We found our experts to be patient, candid, and thorough.

Task force members served without compensation and held no paid or volunteer leadership or administrative positions with the City while serving on the task force.

On June 18 we delivered as our unanimous report a signed, five-page letter summarizing our findings, recommendations, and concerns.

I drafted that report — after which it underwent numerous revisions by the task force, as well as some technical and legal review. I’m freely quoting, summarizing, restating, and otherwise exploiting it here in this post and some subsequent posts. You probably miss much of it if you prefer to read just these posts — but you can read it here.

The City has also posted results of a recent survey, to which the task force had access but gave little weight, and a more consequential cost study.

In subsequent posts, we’ll take up various facets of the proposal and look at some good questions people are asking. The next post, coming soon, is mostly about the proposed system’s expected benefits to residents and businesses.

Questions, comments, and discussion are welcome in the comments below. Comments are moderated for relevance and civility, but not specific positions on any issue. Moderation may cause some delay between your posting a comment and its appearance on the page. Anonymous comments are typically rejected, but may be approved at the moderator’s discretion.

Website: All Sizzle, No Steak (for Now)

Meanwhile, there is a separate website for information about this project. At the time of this publication, it offers very little information about this project. When it does, I’ll be happy to link to it.