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Portland, Ore., may build fiber-optic network
[January 12, 2006]

Portland, Ore., may build fiber-optic network


(Oregonian (Portland, OR) (KRT) Via Thomson Dialog NewsEdge) Jan. 12--Even as they prepare to blanket Portland with a wireless Internet cloud, city officials also are looking ahead to the possibility of rewiring the town in a far more ambitious project.



Next month the City Council will begin studying the prospect of building a $470 million fiber-optic network, which could provide hyper-fast Internet access and an alternative to cable television in homes and businesses throughout Portland.

If built, the fiber-optic network would bring a new tier of Web access to Portland and fulfill a dream long nurtured by city officials to increase competition for Internet access and cable TV service.


The project, conceived in the city's cable and franchise office, has the backing of Commissioner Dan Saltzman. He said this week that he hopes a private contractor will step in and finance the network if the city clears the way -- although he wouldn't rule out Portland's footing the bill and he points to a city-backed study that suggests the project could ultimately pay for itself.

Skeptics point to an uneven history of municipal telecom ventures and question whether faster Internet should be among the city's top priorities. And the project's $470 million price tag -- more than the estimated cost of a Major League Baseball stadium in Portland -- could prove too steep for either a private company or the city.

"It's an ill-advised idea," said Brant Wolf of the Oregon Telecommunications Association, an industry group. "I just don't know why the city of Portland would invest that kind of money" -- though he added that his organization wouldn't object if the city finds a private partner to pay for it.

Despite the obstacles, Saltzman said, the network is worth pursuing, because Portland needs super-fast Web access to keep up with other technologically reliant communities.

"We want to make sure the city is competitive for both our citizens and businesses," he said. "This is really going to meet the needs of some of our tech-savvy citizens."

Portland residents were among the earliest in the U.S. to take to the Internet, and the city remains ahead of national averages in Internet penetration. Roughly three-quarters of Portland homes have Web access, and more than one-third have broadband connections.

Although none is of Portland's size, a number of cities have dabbled in telecom network construction, with mixed results. Ashland began building a $9 million cable system in the late 1990s that has been running in the red since. The city is now trying to sell it at a loss. In Utah, a 14-city cluster is building a publicly owned fiber-optic network.

In Portland, which has long chafed against phone and cable monopolies, the fiber network could revive efforts to create competitors to Comcast Corp. and Qwest Communications International Inc. In the 1990s, the city fought vigorously, though ultimately in vain, to force the city's cable TV operator -- then AT&T Broadband -- to open its network to competition.

Portland's city-backed fiber network would operate as a wholesaler, selling access to private companies, which could offer their own packages of cable and Internet service.

If successful, it would create the open competition the city failed to produce in the '90s. Backers say the network would drive down telecom prices as rivals vied for customers, while giving residents and businesses a better option for Web access.

"The first thing a municipal platform could do is lower rates," said David Olson, Portland's director of cable and franchising, whose office launched city interest in a fiber network last year.

"The second thing it could do would be to raise service way, way, way above where it is today," Olson said.

At speeds several times faster than DSL or cable Web access, the fiber network could rapidly download high-definition movies, transmit live Webcasts, or send and receive giant data files.

Verizon Communications Inc. is building a fiber-optic network to Washington County homes, but the company says it does not plan to build a similar network in Portland -- territory historically controlled by Qwest.

Qwest has no immediate plans for a fiber network in Portland, either. It is just emerging from years of financial woes brought on by profligate spending during the Internet boom, which left Qwest far behind other phone companies in building new networks.

So if a Portland network is going to be built, Saltzman said, the city may have to build or commission the network. While network planning is still in an early stage, he said, he would consider two approaches to the project:

--A publicly financed, city-owned network.

--A network built, financed and owned by a private company -- using city-controlled facilities and rights of way.

The private approach is being used to develop the city's wireless project, and it's the approach Saltzman said he favors. Backers say public rights of way and existing city-controlled fiber could be used as an incentive to attract contractors to the project, which would otherwise cost tens or hundreds of millions of dollars more than the proposed $470 million.

Instead of tearing up streets to lay fiber underground as Verizon is doing in Washington County, a $24,000 study commissioned last year by the city and the Portland Development Commission suggested stringing cables from Portland General Electric's utility poles. The city's franchise agreement with the electric company gives it access to those poles, for a fee.

The project would also need network hubs owned by Qwest. Qwest has a long history of legal fights with Portland over the city's telecom policy, and in Utah used lawsuits and political pressure to fight against a fiber network like the one Portland is contemplating.

In this case, though, Qwest said it's keeping an open mind about the city's plan and would consider participating in the fiber-optic project -- provided it's privately owned and not built with taxpayer money.

"In general we're supportive of public-private partnerships," said Bob Gravely, Qwest's Oregon spokesman. "We would be less excited about the city using public resources to build a duplicative and competitive system."

Either way, neighborhood activist Amanda Fritz said, the fiber network could distract the city from its core business. Fritz, who is seeking Saltzman's City Council seat in the May primary, said she supports Portland's wireless project but doesn't see the need for another wired telecom network.

"Let's take care of the things that we know we have to fund. Let's get back to basics," she said.

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