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Fiber-optic study mulled

Wednesday, December 12, 2012

By MICKEY POWELL - Bulletin Staff Writer

Martinsville City Council will hold a work session in January to scrutinize a consultant’s feasibility study before further considering whether to expand the city’s fiber-optic telecommunications system.

The date and time of that meeting have not yet been set. But in deciding to hold the special session, council members on Tuesday indicated they want a representative of CCG Consulting LLC — which prepared the study — to attend so they can ask questions about how the firm arrived at its conclusions.

Basically, the study shows it would be feasible for Martinsville to expand its system citywide and to Collinsville, but not throughout Henry County.

At about 100 pages, it is a “very detailed, in-depth” study, said Interim City Manager Leon Towarnicki.

It is posted on the city’s website at www.martinsville-va.gov.

“Let’s go through this report and talk about it,” Councilman Gene Teague said, before deciding whether to go further, such as establishing a citizens advisory committee to examine the study in more depth.

Martinsville installed its fiber-optic system in the late 1990s to supply high-speed voice and data-sharing services to city government buildings and infrastructure such as electrical substations and traffic signals.

Over the years, as costs for communications services increased, businesses asked to use the system, and the city agreed. The system now has about 30 private customers among businesses, according to Towarnicki.

City officials are considering expanding the system as a way of generating more revenue for the city and trying to keep prices for telecommunications services, such as phone and Internet, affordable locally.

The study shows that if the system is expanded citywide to both homes and businesses, it would cost an estimated $20.5 million and it could start turning a profit in five years.

Expanding it citywide and into Collinsville would cost an estimated $37.2 million and could start being profitable in six years, the study shows.

At the least, the city would break even if 42 percent of all Martinsville and Collinsville households signed up for service, the study shows. CCG thinks that percentage is attainable based on the interest of residents it surveyed.

CCG suggests that the city use bonds to finance the system’s expansion.

“The cost figures are going to scare a lot of people,” Towarnicki said.

While the study indicates it should be an “all or nothing” expansion, there are ways in which the system could be expanded for less money, he said.

One example Towarnicki noted would be to expand it just to businesses citywide. That, he said, could generate more revenue for the city and be used as a “springboard into other phases” of expansion in the future if the city can afford it then.

The study indicates expanding the system throughout Henry County would require an estimated $145.2 million.

That “ain’t gonna happen,” Teague said frankly — at least not right away.

Furthermore, “I would not support borrowing $20 million at this point” to expand the system throughout the city, he said, adding that a “piecemeal” expansion actually might be feasible.

Teague, Mayor Kim Adkins and Councilman Mark Stroud said an expanded system could help recruit companies that would bring new jobs.

Councilman Danny Turner said he has been told that the city cannot legally provide telecommunications services outside of the area in which it provides electricity. He did not say who told him that.

A few years ago, Martinsville lost a legal battle to take over the local cable television system, but Towarnicki said CCG has determined the city still can provide services such as phone and Internet.

“I’ve got a second opinion that we can’t,” Turner argued.

“Let’s find out what’s legal ... and what’s not,” he added.

Stroud said that because the city has a fiber-optic system in place that is serving some businesses, it would “not be a far stretch for me” to see the system expanded further.

He said he thinks city residents should be involved in discussions about expanding the system.

City resident Ural Harris said he thinks the city should decide how much it would charge for services before it further considers expanding the network.

 

 
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