Prior Lake gingerly taking steps on fiber optics

  • Article by: DAVID PETERSON , Star Tribune
  • Updated: September 25, 2012 - 4:01 PM

Even skeptics find some things to praise, but no moves are likely prior to November's elections.

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Two and a half miles of fiber-optic cable sit in a northern Minnesota construction yard awaiting installation.

Photo: Bruce Bisping, Star Tribune

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Keenly aware of what one council member calls "scary disaster stories," Prior Lake's City Council is taking a go-slow approach to the issue of a proposed $35 million fiber-optics project aimed at boosting economic development.

Mayor Mike Myser emerged from a lengthy, behind-the-scenes workshop on the idea feeling encouraged by his colleagues' willingness to consider it, but also less than eager to fly into battle with the existing communications industry.

"I am hearing continued support for a push to have us ask more questions and also sit down with the current incumbents and explore collaborative ways to achieve a broader distribution of fiber," he said.

"These firms are in some newer areas putting fiber down now for individual use. People recognize that copper wire is not what we're going to do in the future. Data growth is only going up from here.

"And from our perspective, there's no need to do a double build. If the current incumbents have some infrastructure in some areas, how can we both build and share that and allow the incumbents to offer their service?"

The lure of fiber optics is blindingly fast data transmission, useful in private homes for things like watching movies and useful to businesses in a multitude of ways.

Consultants are warning, though, that other cities that have made this same move have found "existing providers of telephone, Internet and cable services to be formidable opponents when they learn of [any] fiber-to-the-premises project and the potential competition from the city."

Added the firm of Springsted Inc., in a memo dated Sept. 7, "These municipalities did not anticipate: the amount of money the existing providers would spend to fight the project; their ability to scare citizens with fabricated statements; nor the price slashing they may do once the city's system is installed in an effort to force the project to fail."

A recent example of things going wrong was the north-metro exurb of Monticello, which in June notified banks and bondholders that it no longer would make debt service payments on $26 million worth of revenue bonds sold in 2009 to build a fiber-optic system there. FiberNet Monticello offers high-speed Internet bundled with phone and cable TV, competing with private firms.

The ability to learn from the bumps and bruises of the pioneers in this area is an advantage for Prior Lake, Myser said. "Someone else took the arrows," he said, namely "those who went first."

Council Member Richard Keeney said he sees drawbacks.

"It's pretty darned expensive," he said. "It raises a big red flag. It's a big risk. We need a lot more information. What are the benefits, and what assurance do we have that they will happen? How many jobs? Will it spur development and improve our quality of life? So far the reports we've seen are shy on details."

An investment like fiber optics is promising in some sense but nerve-racking as well, given the fundamentals, he said.

"If you spend $10 million to build a road, people may not like it, but at the end of it, you have a road. If you spend millions on fiber optic, how do you know that five years from now you won't end up with an obsolete technology in an era when people are untethering themselves from things like landlines and cable?"

The topic is bound to come up Oct. 9 at City Hall when Keeney and other candidates for council gather for a forum.

And Keeney sees no prospect of action on the idea before an election that may change the look of the council a bit, even if it doesn't completely alter the existing balance of power.

Whether voters get a really crisp, clean difference of views on a major issue like fiber optics remains to be seen, however. Both Myser and Keeney, prone to be skeptics on major new spending, are intrigued by the possibilities.

"There are some exciting opportunities here as the world changes," Keeney said. "Scott County has disadvantages tied to its location: It's too far from core transportation lines. But you know what? With electronic commerce, that's not as much of a disadvantage. People like to live in nice places, with lakes and a rural feel, yet still be in high tech.

"But this goes nowhere unless people get excited about it and its benefits, both for themselves and the community. I do think we need to explore incentivizing existing providers to make it happen. It might be a much less expensive way to go."

Critics of government involvement in what has been a private-sector venture are keeping an eye on Prior Lake. The Freedom Foundation of Minnesota has made the issue a big priority, headlining an August blast on the subject, "$35 Million Prior Lake Telecom Proposal Pits City Against Private Business."

But Myser, who works in the computer industry, said it's not a free market vs. goverment issue.

"This industry is not a free market," he said. "I as an individual right now cannot get fiber. There is a role for government in providing it. At the same time, we're not here to compete with business and need to look at a hybrid model."

David Peterson • 952-746-3285

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