Claims of wide private-sector interest in signing up for the recently approved municipal broadband service in Peachtree City, Georgia, were exaggerated by the consultant hired to determine whether the proposal made financial sense, according to emails obtained by Watchdog.org.
The consultant, Allen Davis, owner of the Savannah-based Community Broadband, couldn’t have described the supposed need any more clearly when he spoke to city council members Sept. 17. Davis implied that he surveyed 76 business owners about the private Internet service they already had and “100 percent of the ones that responded to our request” said they would be interested in signing up for government-run broadband service. He later clarified that only about two dozen of those had been contacted. Based on those assurances, city officials voted unanimously to approve Davis’ plan at a cost of $3.2 million.
Emails exchanged among city council members and Davis paint a different picture.
According to a document attached to an email from city Finance Director Paul Salvatore to Davis, city officials reached out to 25 businesses in the city in April and May to gauge their interest. Twelve business owners expressed some degree of interest.
The document does not name any businesses or business owners, but three said they were “very interested,” five were “interested” and four said their interest was “dependent upon on price.” The remaining 13 business owners did not respond.
The feasibility study, meanwhile, doesn’t profile any business owners who say they want municipal broadband. Neither Davis nor any city officials will say which businesses they surveyed or offer any details on what other information was gathered in the responses.
The 320 emails Watchdog.org obtained date back to February, when city officials brought in Davis.
“The information about the business owners who said they were unhappy with what they had should be public record,” said Kelly McCutchen, president of the Atlanta-based Georgia Public Policy Foundation. “If customers are already agreeing to sign up, then this is critical. I want to see some evidence, whether it’s public testimony or people saying on the record, ‘yeah, this is what we want at these prices and at this service level.’”
The city will have 17 city government subscribers under the new plan and needs at least 12 business subscribers to pay off the $3.2 million bond — backed by taxpayer money — in 12 years’ time, according to Davis’ feasibility study.
City officials are still in the project planning phase, and say they’ll finish construction in the summer of 2016.
Once it’s built, this government-owned Internet service will cater exclusively to city government offices and will seek out business subscribers in the city’s industrial parks. The city will not serve residential subscribers or other businesses outside of those parks.
McCutchen said it sounds as if city officials approved municipal broadband without studying it carefully.
“I cannot believe the city council just took this guy’s word for it. At they very least they fail to understand what the financial risk is,” McCutchen said.
Among the risks, as Council Member Eric Imker acknowledged at the Sept. 17 council meeting, is the possibility that private-sector competitors could swoop in and take the potential business customers the city needs to make their plan financially viable.
Emails confirm that concern. On Sept. 23, one week after city council members voted in favor of the plan, Davis and Salvatore worried about potential business subscribers taking their business elsewhere.
“I am also concerned about other carriers going out and trying to secure long-term deals with some of the key customers that we had in mind, and wondering if we should reach out to some of them and explain what we are doing,” Salvatore wrote.
McCutchen said the two men are right to worry.
“Those private contracts are critically important to everything working out, and this is a very competitive market,” he said. “The private providers are going to respond to this. You can’t just assume the prices they’re charging today are just going to be static. They will certainly try to sign them up to long-term contracts and they may even lower the price. These are red flags that raise questions about the entire project.”
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