A proposed agreement with Astound Broadband was pulled off the council agenda on Tuesday – it is unclear why, but there was some pushback against the agreement.
According to the staff report, the city has negotiated with Astound to provide a fiber-optic network.
Staff writes, “Working with the city attorney on this agreement, Astound will bring fiber-optic cable into the City of Davis using existing City owned conduit to supply high speed network to their existing and future customers.
“In exchange for using City conduit, Astound will build a fiber-optic network to some city buildings, well/pump sites, Yolo County buildings and a connection to UC Davis. This new network will be available to city/county/UCD free of charge and provides more capacity and redundancy to the existing computer/phone network.”
Staff notes that the city has relied on two fiber-optic network deployments for years in order to run the city, county and school district computer and phone networks. The city owns and maintains one of these.
“The second network was part of the cable franchise agreement with Comcast that expired in October of 2018 and is cost prohibitive to continue using,” the city writes.
Robert Nickerson, the owner of Omsoft Technologies, during public comment on Tuesday cautioned the council against proceeding with the proposed contract for fiber optic services.
“This arrangement is backwards,” he explained. “This is a big giveaway to a company, that according to a statement of its representative that was at the last broadband advisory taskforce, makes 95 cents of profit on every dollar of internet revenue it brings in.
“City IT is going to give them free access to a city-owned conduit for 30 years to build an exchange for connecting city buildings with 12 strands of fiber,” he continued. “This should tell you right away how much unconscionable profit is being drawn by these large investor-owned companies and the opportunity the city has to take some share of this aggregate monthly broadband revenue from citizens in Davis.
“There has been a task force that is meeting to discuss and evaluate municipal ownership and investment in fiber-optic cable. This agreement was never brought to or discussed at the task force,” Mr. Nickerson said.
“The representative from Wave was at the last meeting to talk about the possibility of the city tapping into some of this 5G fiberoptic that going to be deployed by large companies as a way of making profit – this agreement was not discussed at that meeting,” he stated.
“After months of analysis a plan is being hammered out that does pencil out and the city is in the driver’s seat and they can lease 12 strands of its own fiber to Wave,” he said. “Wave operates cable networks in West Sacramento and Woodland and they would love to work in Davis.
“Great. I’m all for it. Own the platform that they need. Lease it to them. Make revenue on every customer, every month. Lease it to other companies too so residents have more choice and competition, restores reasonable pricing and performs the internet access market,” he said.
“If this agreement is allowed to continue as it is, it will seriously inhibit and curtail a municipal fiber network from happening,” he said. “Not only will the city get no monthly recurring revenue, no long-term asset of great value, there will be no innovative edge and no competition.
“I urge you to look into renegotiating this arrangement and place yourself in an ownership position and lease access to Wave,” he said.
—David M. Greenwald reporting
The problem isn’t the idea of Astound/Wave *using* city conduit, it’s that the agreement — which was on the consent calendar for approval before being pulled — grants “exclusive possession, use and control” of the city’s own conduit to Astound/Wave for 30 years. This isn’t just a move by Astound/Wave to make use of a valuable public asset, it’s an attempt to prevent any other provider from using it. It’s a sweetheart deal that quashes competition, and it nearly succeeded. Adding insult to injury, under the proposed agreement the city gets a pittance in exchange: 12 strands of fiber, the incremental cost of which is insignificant to Astound/Wave.
If the city really wants only to capitalize on its installed asset — rather than assisting in the realization of ubiquitous fiber-to-the-premises for all its residents — it should get an engineering estimate of the cost to replicate its conduit assets, discount that by maybe 10%, and tell Astound/Wave that they can have exclusive use of the conduit for 30 years at that price.
This is an example of the sort of one-sided agreement that creates community distrust in our City’s management. It is fortunate that it was withdrawn, but that doesn’t answer why it was negotiated in the first place. I think we should all expect better performance from our professional staff and the CC should demand an explanation for how this came about and how similar failures will be prevented in the future.
I’ve known Robert Nickerson and used Omsoft internet services for over two decades now. Mr. Nickerson is a citizen of great integrity in the Davis business community and has done a wonderful service by creating and owning a local and accessible I.S.P. in town that collaborates with many community projects and services — many may not realize what a rare and advantageous thing this is. I implicitly trust his knowledge of civil internet policy issues, and I believe the City Council and the citizens of Davis should weigh heavily his opinion on this matter and take heed.
The Broadband Advisory Task Force was recently presented with a cost estimate for laying a fiber network for a monthly cost of about $20 according to Matt William’s back of the envelope estimate. That’s substantially less than the embedded cost in current providers’ bills to consumers. The City needs to be making consistent decisions across all venues and platforms and not prematurely precluding promising opportunities.
This reminds me of a cell tower company a few years back… David will remember it… they wanted the City to allow them to place their facilities on City street lights/traffic signals with minimal/no charges, with them taking no liability… and when rebuffed by PW (Planning bought into the 1st amendment BS) they threatened to sue the City… we may see a replay of that, again… kinda’ like telemarketers knowing the answer should be “no”, but finding a gullible person to “believe in them”… and carry the football for them…
That company also wanted to use city conduits, and pay nearly nothing to the City, with all sorts of empty promises…
My thoughts exactly on Robert Nickerson. If he says there’s a problem, there’s a problem. The Broadband Advisory Task Force needs to be elevated to a required node in any decision-making process by our city staff or City Council around internet technology. I’m thankful that the city council pulled this from the consent calendar and postponed action on the item indefinitely. Hopefully, the mayor and council will insist that the Broadband Task Force be integrated into the discussion from here on out.