Ramsey County and St. Paul poised to enter fiber optics fray

  • Article by: ROCHELLE OLSON , Star Tribune
  • Updated: July 27, 2012 - 10:02 PM

Cable companies are not at all thrilled with the public/private project, saying it could lead to financial trouble for taxpayers.

Ramsey County and St. Paul next week will step into the high-stakes business of fiber optics by building and operating their own network in partnership with a private company that will sell cable services to homeowners and businesses.

The county and city say the new network will give them long-term control over costs and services. Public officials say they need the network for intergovernmental communications and that it made sense to partner with a private company to share construction costs of laying the fiber.

Others, however, say the two governments are unfairly subsidizing a private company while getting into a business without knowing the full costs and risk to taxpayers.

Janice Rettman, a Ramsey County board member, is a key supporter. "This is going to be locked down solid so that we will be able to protect the almighty pocketbook," she said.

Johanna Berg, county chief information officer, said negotiations continue with partner Minnesota Fiber Exchange (MFE) over the details. "We'll be reporting back to the Ramsey County Board with final numbers in the coming weeks when costs and funding sources are better known," she said.

St. Paul is expected to sign on Wednesday to work with the county. The plan has been vetted, and a city panel recommended to Mayor Chris Coleman's office and the City Council that St. Paul join the project.

Deputy Mayor Paul Williams is handling the issue for Coleman because one of the mayor's brothers, Emmett Coleman, is the vice president for governmental affairs at Comcast. The brothers say they do not discuss the issue, even casually.

"While Comcast remains an important technology partner with the city, we believe the county option gives us long-term stability in terms of access to the network, more flexibility and a greater ability to tailor the network to our specific needs," said Williams, who expects the city to pay roughly $1.5 million a year to the county.

The city payments will go toward the debt on the estimated $14 million construction cost for the county's half. The county could bond for the money as early as next year.

Rettman said she expects the state to be a partner also and other cities can rent fiber if they wish.

Fiber-optic cables transmit information by sending pulses of light through thin strands of glass. Fiber is 17,000 times faster than dial-up systems, and a few hundred times faster than most cable and DSL services.

MFE would be expected to manage and maintain all the fiber with consistent updating and upgrading and would sell to private businesses and homeowners -- pitting it against existing cable providers such as Comcast and CenturyLink.

Comcast lobbyist Mike Logan said he expects the county project to become a direct competitor by going after customers such as hospitals, universities and nonprofits. He said Comcast invests millions annually to upgrade its network while the county has a "rudimentary understanding of the total costs of ownership."

Ramsey isn't the first county to go down this path. Carver, Scott and Dakota counties have or are building at least partial or entire networks. Anoka County is building one with substantial federal aid. Hennepin County uses a mix of public and private fiber.

CenturyLink spokeswoman Joanna Hjelmeland also spoke against the plan. "We just don't think it's the role of the city or the county to over-build existing companies," she said. "We're heavily invested in the community, not just as a provider of service, but as a provider of [union] jobs, so we'd like to work with the city -- not as a competitor."

Matt Kramer, president of the St. Paul Area Chamber of Commerce, is concerned the county is plunging ahead too quickly with a loose grasp on costs.

"We have read, as so many have reported on from around the country, about horror stories of municipally managed fiber networks going wrong and impacting the taxpayers for years to come," he said. "The construction costs are just one factor in a project that will require long-term maintenance and operation for the next 30 years. We will be closely tracking this issue to ensure the process is transparent and that taxpayer resources are spent in the most cost effective and efficient way possible."

In 2009, Wally Wysopal, city manager of North St. Paul, was gung-ho to build PolarNet, a city-owned fiber optic network. Although voters rejected the proposal, Wysopal still declares victory.

"The private sector has responded with lower rates for broadband than they had prior to the PolarNet initiative, so we're better off," Wysopal said.

Rochelle Olson • 651-925-5035 Twitter: @rochelleolson

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