Prior Lake is moving closer toward its goal of developing a community-wide fiber optic network, an ambitious project that's part of a broader strategy to stimulate the city's economy.

The Economic Development Authority (EDA) last week heard the results of a consultant's study outlining the costs and benefits of the network. It's likely that the project would cost about $28 million and would require bonding of about $35 million. It would provide a wide array of high-speed telecommunications services to residents, businesses, schools and health care providers, as well as local government.

Officials took no action, saying they need more time to study the proposal. "There's still so much to talk about," said Mayor Mike Myser. Officials agreed that if they can get their questions answered, it's possible the project could be considered by the City Council in July.

The development of a fiber optic network has been on the radar of Prior Lake planners for quite awhile. It's part of a larger plan that envisions a "technology village" that would serve as an incubator for tech-related businesses, including in-home businesses.

The city also wants to develop a data center that would allow companies to use other off-site facilities for data services and storage needs, saving them the cost of housing and maintaining their own equipment on-site. City officials said a site for the data center hasn't been chosen yet, but that it would likely be along the County Road 42 corridor.

"You won't get a data center without a fiber network that has multiple and diverse paths," said Eric Lampland, president of LookoutPoint Communications, the St. Paul consulting firm that prepared the study.

Attracting and maintaining more high-tech businesses could diversify, as well as increase, the city's labor force. Prior Lake's employment level decreased 3 percent from 2000-2010 compared to growth in neighboring cities Savage and Shakopee. A city report says almost two-thirds of Prior Lake's labor force works in the arts, entertainment and hospitality sectors, mostly at Mystic Lake Casino and Hotel. Councilman Ken Hedberg, who serves on the EDA, noted that the city's long-term growth projections have been lowered due to the recession.

Prior Lake's existing carriers -- Integra, CenturyLink and Mediacom -- provide service of 20 to 30 megabits per second, a speed the study said will be insufficient down the road. The report also said it's doubtful existing providers would be interested in upgrading because of the difficulty in recouping the investment.

The report said the existing carriers would be unlikely to serve as partners under its recommended plan for the city to provide phone, television and Internet service and have private businesses provide everything else. Under this plan, the network would generate a cash flow by its fourth year of operation and throw off excess revenue that would eventually total $5.6 million a year.

Those additional services include a wide variety of applications, including remote health care, distance learning and traffic control. The new network would allow people to connect at home, in a coffee shop or in city parks.

Myser said it's essential that existing providers be asked if they want to be partners. "Give them a chance to turn us down," he said.

Myser and other officials said the city needs to avoid alienating those companies. They also don't want to repeat the mistakes made by Monticello, whose fiber network ran into financial difficulties after the city was sued by its phone service provider and got into a price war with its cable company.

Lampland agreed, saying the appeal of the new network should be speed and quality service, not just price.

Susan Feyder • 952-746-3282