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TMCNet:  Revising broadband rates an ongoing effort

[February 20, 2013]

Revising broadband rates an ongoing effort

Feb 20, 2013 (The News & Advance - McClatchy-Tribune Information Services via COMTEX) -- Revising Nelson County's broadband rates in an attempt to make Internet service more affordable throughout the county is still an ongoing effort.


At a Nelson County Broadband Authority meeting last week, discussion was a continuation from the regular January meeting. It was continued again to Feb. 26, when the authority plans to wrap up the rate discussion and possibly vote on a new rate structure.

"It's my theory that if we can't serve the residential customers for $75 or under, we're not going to get many customers," said Tommy Bruguiere, the West District representative. "They'll stay with what they've got, whether that's satellite or cable." Baylor Fooks, co-owner of Blue Ridge InternetWorks -- the county's network operator and one of the service providers -- proposed the county create a three-tier pricing format with the network. Currently, the county has one rate structure for everyone.

Under Fooks' proposal, tier one would be asymmetrical, which is usually agreeable to homes. Tier two would be symmetrical, which tends to apply to businesses and high use homes. Tier three would connect buildings. An example of this would be the schools.

The authority was presented with three rate scenarios to give the authority an idea of how many customers are projected to join and the cost of it. Here's a look at the scenarios: --Keeping the rates the same: If the rates were to stay the same with a minimum $270 monthly transport charge, it is predicted that the network would get six fiber-to-premises customers and 72 DSL customers. This would bring an estimated $1,620 a month in revenues. Although the network would be in the black after 12 months of service, it also would lose about $30,000 during that time, Fooks said.

--Introduce a tier structure and new rates: Under this scenario, tier one customers would pay a monthly $25 fee and tier two customers would pay a minimum monthly $75 fee. It is predicted this scenario would get 36 fiber-to-premises customers and 288 DSL customers. This would produce an estimated $1,800 a month in revenue to the authority. Fooks estimated the network would barely be operating in the black after the first 12 months, and there would be a loss of $36,000 during that time.

--Subsidies to add fiber: This scenario also operates under the tier system, with tier one customers paying $25 a month and tier two customers paying $75 a month. The county also would pay 75 percent of the installation costs, up to $1,500, for the first 156 customers. This scenario is based on the assumption that 60 percent of the 258 possible customers located within 200 feet of the existing fiber network will connect. Under this model, it is predicted there would be 156 fiber-to premises-customers and 288 DSL customers. This would generate $5,850 a month in revenue for the authority.

Supervisors requested county staff continue working on prices but to not include the subsidy option. The decision passed 4-1 with Tommy Harvey, the authority's chair, voting no.

Some authority members had concerns with the possibility of subsidies, since the county already has invested a large amount of money into the program. The $234,000 proposed for installation subsidies wouldn't benefit a large portion of the population, they said.They said the installation costs could be spread out over several years to help residents with the cost.

Harvey disagreed, saying subsidies were something they should consider.

Nelson received $1.8 million in stimulus money to build the 31 miles of fiber and towers.

--In other business, Wintergreen Community Cablevision asked to be able to utilize the county's fiber network for free, and in exchange the county would be able to use the company's fiber for free.

Robert Kochanowicz, information technology director for Wintergreen Resort, said the area was underserved and maxed out with the current fiber available. He said this arrangement would benefit both the resort and the county because it would provide revenue to both.

Currently, both Wintergreen and the county are missing out on potential revenue from large conferences that book at other venues because the resort doesn't have enough bandwidth to support their Internet needs, Kochanowicz said.

"It would be a benefit to the community, the county and everyone involved," he said.

Authority members said they were willing to lease the fiber to the company but not to swap for free.

Joe Lee McClellan, president and CEO of Nelson Cable, said leasing the fiber would be cost prohibitive because in addition to lease costs, Wintergreen also would have to build more fiber to connect their current fiber network to the county's network.

County officials said they were unable to see how the arrangement would be mutually beneficial because it appeared the cable company would benefit from the added business, but the county would not be paid for the fiber.

"We don't think it's a fair and mutual exchange," said County Administrator Steve Carter.

He said there was not enough information at the time to endorse it.

No vote was taken and the county plans to address the situation again when more information is presented.

___ (c)2013 The News & Advance (Lynchburg, Va.) Visit The News & Advance (Lynchburg, Va.) at www.newsadvance.com Distributed by MCT Information Services

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