The Need for Speed

Municipal fiber network could be a ‘game changer’ for business and community development. Traverse City Light & Power will spend year weighing cost vs. demand.

 

Three years ago Alex Mowczan, owner of Summerside Properties – which operates Cambria Suites, the Best Western and the Comfort Inn & Suites in Traverse City – made the decision to get wired with fiber through Charter Communications.

“I don’t think there are many hotels in our area or anywhere that have fiber internet,” Mowczan said. “It’s very costly – but it becomes so valuable to guests … thus worth every penny.”

But what if expansion of a fiber optic network in Traverse City made it much more affordable and offered customers internet speeds of up to 1,000 megabytes per second (1 gigabyte) for both downloading and uploading everything from high-definition movies to large amounts of data in mere seconds? That is one hundred time faster (or more) than what most residences and businesses in the area have now.

The Premise

Traverse City Light & Power will spend the next several months studying whether or not it will lead a project to offer what is known as “fiber to the premises” (FTTP) internet to all residents and businesses in its service area at an estimated cost of $20 million. This network would be capable of pushing high speed internet services, television and other telecommunication service offerings to customers.

If the idea of a public utility offering internet strikes as odd, know this: in February 2015, the Federal Communications Commission (FCC) voted to classify broadband internet service as a public utility, paving the way for an entity such as Traverse City Light & Power to undertake such a project.
Whether is aligns with the utility’s core business of supplying electricity – and whether demand for it exists – are just two of the many issues to be determined by utility leaders with help from the local tech community among others.

The Technology

A fiber optic network uses glass (or plastic) threads (fibers) rather than metal coaxial lines. It operates by converting electrical signals carrying data to light before being sent through the fibers, at speeds of 100 or even 1,000 times faster than is typical with cable or wireless.

Verizon was the first company in the telecom industry to use fiber on a widespread basis connecting homes and businesses to the network via its FiOS service. Fiber is already available in Traverse City via Charter, AT&T and a handful of other smaller providers, but it costs a pretty penny because the infrastructure and market is not here – at least not yet.

Last month, the TCL&P board decided to cut the fiber expansion project from its 2016 capital plan, which covers projects for the next six years. That does not mean, however, there isn’t support for exploring it among the city utility’s leaders.

“At this point, we don’t have enough information to talk to the city commission and our constituents about the project,” said TCL&P Executive Director Tim Arends, of the reason the utility directors removed the project from the six-year plan. “We always intended to use this next year as the decision phase (whether included in the capital plan or not) … to determine if it is appropriate to go forward.”

What many in the community may not realize is TCL&P already has fiber in the ground.

In 2008, TCL&P partnered with the Traverse City Area Public Schools (TCAPS) after the district received a grant to construct a fiber network as part of a technology project. Several organizations, including TCAPS, the Grand Traverse Area Catholic Schools, Munson Medical Center and the Governmental Center are now connected to it and able to communicate internally and with one another in a closed (or “dark”) system.

However, the fiber was “lit” with an internet connection in 2014, when the utility and the Downtown Development Authority (DDA) partnered to offer free wireless downtown.

“We have extra fibers (in that network) available,” said Arends. “It is an underutilized community asset.”

Cost vs. Demand

The utility is convening a focus group of local industry professionals to assist in the study process, which will include both a feasibility study and a business plan, according to Arends. The utility has budgeted $50,000 for the work.

“A year from now, we’ll have enough information on whether to include it in the capital plan or not,” he said.

Arends said the utility has already taken the first step in the study process: applying for a Cool & Connected grant that will provide federal planning assistance for broadband development as it relates to community and economic development.

It will also tap into TC New Tech, a local group of tech enthusiasts, to help with research and analysis. The group itself has already formed a subcommittee to create a unified voice in support of technological improvements, such as fiber, in the area.

Scott Menhart, technical director for TCL&P, said the utility would be looking at the $50 that many people pay monthly for 60 megabytes per second download speed and four megabyte upload speed and charging roughly the same price for “one gigabyte down and one gigabyte up.”

Full deployment of a fiber network in Traverse City has a preliminary estimated price tag of $20 million, according to Menhart. He said a project of that scale would be funded by bonding. The other option would be a incremental deployment focusing on one area at a time from an economic development perspective – for example Eighth Street – and funded by users.

Should TCL&P decide to go forward, Arends does believe it would be a “game changer” for business and community development.
So do some in the local business community.

Attorney John Di Giacomo, who owns Revision Legal in downtown Traverse City, said a municipal fiber network is beneficial for the retention of existing jobs, economic development, attracting new talent to the city and for local control of communications infrastructure.

“Currently, we have only one reliable and relatively fast broadband provider within the City,” said Di Giacomo. “By virtue of its access to City right-of-ways, this provider maintains a virtual monopoly over high-speed telecommunications in the City. If TCL&P lights its fiber network, it can either act as an internet service provider by providing service directly to the public, or it could lease its infrastructure to third parties so that we can have competition in this space.”

Last month, Kris Shafer, owner of Elevate Net also located downtown, gave a presentation to the TC new tech group about the potential of fiver expansion. He believes partnerships between the governmental entity and private providers could spell success for the project.

“There are private companies willing to put funds in place, to enter into a partnership with TCL&P, to make this happen,” he said. “We could go from a place of beer and wine to a place of business.”

J Mueller, founder of Traverse City’s MacUpdate – the second largest distributor for Mac apps – said he will be interested to see what TCL&P discovers in studying the feasibility of a fiber project.

Mueller said it’s critical to keep in mind what future technologies – such as wireless providers – may bring to the table in any discussion about a significant financial investment in city-wide fiber service. His company does not have fiber internet now, but he said it’s on the cusp of needing it – in particular because of issues with uptime (i.e. reliability), upload speeds and lower latency (i.e. response time).

There are also whispers and rumors out in the community of a tech incubator hub in the planning stages. It has been said by local tech professionals that such a project will be impossible without high-speed fiber broadband service.

Beyond the impact to the community, utility leaders will also be analyzing how fiber could benefit the electrical side of the utility.

“A lot of utilities are getting involved in fiber (for example in the Michigan communities of Wyandotte and Holland as well as Chattanooga, Tenn.) because of the benefits to the utility.

The big one, both Arends and Menhart said, is increased reliability for the system and vastly improved electrical outage restoration.

“It would push us into the next generation,” said Menhart.

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