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Chelan PUD to take hard look at fiber optics [The Wenatchee World, Wash.]
[May 06, 2010]

Chelan PUD to take hard look at fiber optics [The Wenatchee World, Wash.]


(Wenatchee World, The (WA) Via Acquire Media NewsEdge) May 6--WENATCHEE -- An independent consultant will study the Chelan County PUD's $80 million fiber-optic network for ways to lower costs, boost revenues and ensure its technology is up-to-date.



Joe Jarvis, the utility's executive manager of operations, said PUD officials are close to signing a contract with telecommunications consulting firm Uptown Services to scrutinize the network and make recommendations.

The $104,000 study should be finished by early July, Jarvis said.


The network is currently available to about 85 percent of Chelan County residents. A buildout to the remaining 15 percent is expected to cost $40 million, Jarvis said.

Local companies, called "service providers," use the PUD's network to sell Internet, telephone and cable TV services to retail customers.

The fiber network will cost the utility $8 million this year. Its expected break-even point remains decades away.

Until the network breaks even, the utility is subsidizing its cost with revenue from the sale of surplus electricity on the region's wholesale market.

Wholesale revenue has taken a hit in recent years from drought-caused low river flows and recessionary low market prices for power. PUD financial analysts say this year's budget deficit could exceed $30 million.

"Fiber has been a commercial business since 2003. Since then, we've been doing the same things over and over and over," Jarvis said. "With that much time passing, the world changes around you. It's a good time to look at the business model and the services we offer." Fiber has been a polarizing issue among Chelan PUD customers.

The latest customer opinon survey, completed in December, shows that 70 percent of ratepayers who are familiar with the cost to complete the network favor postponing buildout, at least until finances brighten.

The survey showed that customers consider network expansion an important economic driver for the county, but not at any cost.

Cost to the PUD is less a deterrent for those ratepayers who live in areas with no other alternative for a fast, low-cost Internet hookup.

Overall, about 30 percent of customers who have fiber available actually subscribe to the service, Jarvis said. This increases to 50 to 60 percent in some areas where the system has been available the longest, or where no alternative services are available.

The PUD has applied for $35 million in federal economic-stimulus funds available for rural, high-speed broadband networks.

The funding, which covers 75 percent of a project's cost, would allow the utility to virtually complete buildout.

Jarvis said officials should know in September if they'll get the funding.

Uptown Services has done business-case analysis for municipalities that have started telecommunications networks, Jarvis said.

It was one of six companies that requested information about the scope of the PUD's analysis. Of those, two submitted bids.

The company's bid wasn't the lowest of the two, but it was a complete bid, Jarvis said. The other bidder submitted only an approximate price.

Commissioners and the public will have a chance to discuss the study results, Jarvis said.

PUD staffers are capable of doing their own anaysis of the fiber system, but Jarvis said they want an independent party to look at it.

"All of us who have been involved with this project are biased in some way," he said. "Our goal is to increase revenue, reduce cost and look down the road for any competitive or technological threats." Christine Pratt: 665-1173 pratt@wenatcheeworld.com To see more of The Wenatchee World or to subscribe to the newspaper, go to http://www.wenworld.com.

Copyright (c) 2010, The Wenatchee World, Wash.

Distributed by McClatchy-Tribune Information Services.

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