Guest Commentary: County is a good utility partner
January 27, 2011 at 2:38 am in Lake County News-Chronicle
While driving up Highway 2 on my way to Virginia for a county meeting this month I kept noticing in our county right-of-way power poles, buried phone and other utility lines. This got me thinking about any revenue the county may receive for usage of our right-of-ways. Continue Reading
Commissioner Bergman continues to demonstrate his failure to grasp fundamental economic principles associated with any number of financial initiatives the county is involved in. If the county charged right-of-way or any other fees to those providing utility services, it would simply increase the cost of telephone and electrical services to the residents of Lake County. So, instead of “subsidizing” utility providers, the county has actually simply contributed to keeping the delivery of utility services more affordable to its residents. And, the cost of providing those cost reductions to its citizens has cost the county absolutely nothing. In fact, many of the main utility line service right-of-ways are not on county property, but cross federal, state and private lands. If the commissioner spent more time checking out and worrying about the business and personal capability of the partners he has allied himself with, and had been personally more proactive with existing service providers in Lake County, he may have seen a greater response to his RFP. In addition, as the Burlington VT fiasco has pointed out, these utilities may have foreseen the possibility of the same sort of poor business management and fiscal planning as now evidenced in the Burlington project, and felt the economic risk of following a very “specifically written” project RFP was neither in their best interests or the best interest of the public. It appears there is now plenty of evidence to suggest these folks who did not repond to the RFP may have had more foresight than they are being given credit for by Commissioner Bergman.
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Well said, Brian…and absolutely to the point. In addition, the RFP was not written for a partner or partners to “explore” the most viable and cost effective way to deliver affordable broadband services in working partnership with the county, it was specifically targeted to a county-built, county-owned and county-managed backbone and distribution system. A system requiring intensive capital investment with borrowed federal dollars and the hope of a significant subsidy, to reduce the exposure to losses and the possibility of having to pay back government loans while the project was losing money. In fact, given historical and industry norms, the projected cash flows from the county-run project versus its capital and operating costs were highly in doubt…and still are. Profitability may well prove difficult to achieve under the proposed debt load, necessary subscription count and operating dollar level requirements to keep the project business model viable on an ongoing basis. I believe this concern is what sincerely kept a lot of very experienced and viable partners from participating in the RFP process. I mean, these folks aren’t fools…they have been in this broadband business a long time and know what it takes to compete and be successful and profitable.
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Another way to think of it is this: Suppose Lake County had to pay the telephone, the power and the other communications utilities for providing links to their citizens, particularly in the outlying areas? But why would anyone expect the county to pay? Why, perhaps to connect their citizens for police and fire protection; to provide the power to run those communications devices; and for security purposes. It appears the county is now looking at duplicating some of the public and private utility services Commissioner Bergman is criticising, at a cost of $70 million to taxpayers (some of which money in a way came from Lake County residents). I guess I’d say the county saved perhaps many tens of millions of dollars by allowing the use of some of their right-of-ways at no charge. That is quite a benefit to county residents. Residents should be pleased at this situation. Now, I’m not saying expanding broadband services is not a great objective, it is! But when each of these “good citizen” private and public services will lose revenues because of the county’s choice of its methods to expand, I don’t think any county board member should complain about those businesses trying to recover costs or charge fair rates to recover their lost infrastructure investments. If it were me, I’d ask for an ongoing percentage of revenue for any county broadband lines using my infrastructure, and I would think the county would gladly comply. That would be an example of a truly good partnership offering. Come to think of it, why didn’t the county’s plan take this type of partnership approach in the first place? Kinda makes you wonder whose “partner” is really going to make all the money in this venture, doesn’t it? And just whose political ambition is looking for a stepping stone? Again, please address doing the broadband expansion, but do it cost-effectively, fairly for everyone involved, and do it right with proven, competent and ethical partners. And with truly no taxpayer risk.
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