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Report says municipal broadband too expensive for Seattle to build alone

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Residential survey results

For Seattle to build a municipal broadband service, more than 40% of households would need to sign up to pay $75 a month for the service — a higher rate of penetration than any other municipal network in the country, according to a consultant’s report released by the City of Seattle Tuesday — or we’re going to need help.

The report completed by Maryland-based Columbia Telecommunications says that it would cost Seattle between $480 to $665 million to build out the system that municipal broadband advocates believe would level the playing field with entrenched providers like Comcast and provide better service to the city.

You can read the full City of Seattle Fiber-to-the-Premises Feasibility Study here.

“Broadband internet service is a necessity in the 21st century but many Seattle residents don’t have equal access,” Michael Mattmiller, Chief Technology Officer for the City of Seattle, said in a statement. “This report builds on past studies and take a comprehensive look at whether the City could provide universal broadband service in today’s landscape that is affordable, competitive and equally accessible to everyone.”

Recommendations for the project identified small businesses as particularly eager customers for a better broadband solution. The study recommends that the any municipal service in the city should be designed to serve households and small businesses:

Three key responses from the business surveys seem to support our recommendations for
providing niche service to residential and small business customers:
 It seems reliability of connection is the most important factor for business survey respondents, with speed and price of service close behind.
 Most business respondents answered that they pay somewhere between $50 and $199 for their current connection.
 Less than a quarter of respondents to the business survey claim that their Internet connection speed is fast enough for their business needs.

In the statement on the release of the report, the city said that if a municipal effort in Seattle failed to reach 40% penetration or was priced below $75 per month, the network would be a financial failure. “With a smaller customer base or prices below a $75 monthly charge, financials deteriorate quickly and the City is exposed to significant potential losses,” the statement concludes. “With a proposed service price increase of just $10, raising it to $85 per month, the study found customer interest fell significantly, also exposing the city to substantial risk.”

The study also considered a tax-funded solution but the analysts found that it, too, would be too risky for the city to take on.

The consultants found that the most feasible approach for Seattle to create a municipal broadband utility would be through a joint venture, “where the City would work with a partner to create a service that allows the City to maintain its status as a technology leader and provide equity to the public.”

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One thought on “Report says municipal broadband too expensive for Seattle to build alone

  1. Perhaps the study should have included the possibilities of over the top telephony and video services that such a high speed connection could enable. With the advent of ala carte video subscriptions and VoIP the cost-benefit of GigE to the premise becomes much stronger.