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Despite warnings, Georgia town goes full throttle on municipal broadband

By   /   September 21, 2015  /   News  /   No Comments

Peachtree City, Georgia, is spending $3.2 million in taxpayer money for broadband, despite the financial risks and residents’ trepidation.

City officials presented details of the $3.2 million plan to the public Thursday, and the City Council approved it in a unanimous vote.

Photo by Chris Butler

TOWER OF POWER: Peachtree City officials are bringing Government Owned Internet to their city, despite warnings it might jeopardize taxpayers.

Unlike other cities and municipalities that sell government-owned Internet (GON), Peachtree City  will service only city businesses, it says  — residents can’t buy it.

GON plans have a history of failing to meet financial projections, but Peachtree City officials think they have the solution.

They have faith, they say, in the man who helped develop the feasibility study — Allen Davis, owner of the Savannah-based Community Broadband.

RELATED — Government Owned Internet may expand further in Tennessee

Photo by Chris Butler

Paul Salvatore

“I believe in the integrity of the consultant,” said council member Kim Learnard. “I researched the consultant, and I am 100 percent convinced that this is the right way to go.”

City Finance Director Paul Salvatore said other municipalities “failed to partner with the right people.”

The officials were reluctant to address questions about whether Davis’ company would build the new network and whether – because he wrote the feasibility study – that would constitute a conflict of interest.

“Effectively, if we don’t want him involved at all after the vote then he has no further contractual obligation to us,” Salvatore said.

Unlike cities where municipal broadband failed to meet expectations, Peachtree City will have exclusive access to the new ultra-high-speed service and will sell it to local industry only, Salvatore said.

Before Thursday’s vote, City Council member Eric Imker said things may not go as planned, especially when competing against the city’s two private Internet providers.

Photo by Chris Butler

Allen Davis

“If we don’t get the customers by year two, that’s where the whole thing falls apart,” Imker said.

“If we don’t keep up with the technology then a competitor like AT&T or Comcast steals customers and they can offer better service with better technology and cheaper. Suddenly we don’t have those customers anymore. Then the whole thing fails. That’s my greatest concern.”

Resident Bill Moore read a passage from the plan saying taxpayers would cover losses should the GON fall short of customers.

“It gets my attention that the citizens seem to be paying almost 100 percent while the other interests get almost 100 percent of the benefits,” Moore said.

“What if we’re wrong about this?” resident Eric Snelton asked. “What if the assumptions we’re making are totally incorrect.”

Photo courtesy Peachtree City's official website

Eric Imker

Salvatore and City Council members see a trend in people canceling their cable TV service in favor of streaming, making the deal more attractive, he told Watchdog.org after the meeting. Per Georgia law, the city is entitled to franchise fees from cable TV subscribers but not from Internet subscribers, Salvatore said.

“As people shift to fiber, all that franchise fee revenue will go away for the city — over half a million dollars a year,” Salvatore said.

“It will have to be replaced somehow. Either this city cuts services or raise taxes.”

The city is paying more to its private Internet provider, and a GON is another way to save money, Salvatore said.

Salvatore said he expects the city will offer this ultra-high speed service within nine to 10 months. The plan would require 22 miles of underground fiber cable, according to the Peachtree Citizen.

The city needs 29 businesses to subscribe to pay the bond, Salvatore said, adding the most expensive subscription package for 10 gigabytes costs $20,000 a month.

Large companies need that type of volume to move large amounts of data, he told us.

Photo by Chris Butler

Eric Snelton addresses Peachtree City Council members.

Relying on “very conservative projections,” Salvatore and Davis say the city can pay off the $3.2 million bond in 12 years.

Salvatore said city officials will post the feasibility study on the city’s website. He didn’t talk about how GON would handle marketing and operations.

Contact Christopher Butler at [email protected] 

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Chris formerly served as staff reporter for Watchdog.org.