The county board met in special session Friday, August 7, 2009 to decide whether to authorize application for a federal stimulus grant that would bring high-capacity broadband Internet service to homes and businesses throughout Cook County.
A consulting firm was hired in February to study the feasibility of broadband, Cook County Information Systems Director Danna MacKenzie told commissioners, but when federal stimulus dollars became available, the work was moved to pursuing a grant.
Arrowhead Electric Cooperative Inc. will not be the owner of the proposed fiber optic network, MacKenzie said, because it did not have enough collateral to be named as a primary partner in the grant and because of the short turnaround time of the grant.
“It was purely a funding issue,” said County Attorney Tim Scannell. “It had nothing to do with the merits of the system.”
MacKenzie asked the board for a motion authorizing her to pursue the grant, saying the application would be due August 14.
Commissioner Jim Johnson asked whether Cook County could apply together with Lake County. While Cook County would be a customer of the route leading out of Lake County, MacKenzie answered, the two counties are competing for grant dollars, and the amount being requested by the two counties could total “what is coming to the state altogether.” Historically, she added, the two counties have not always agreed on how to do things.
What would be the economic benefit of such a system? Commissioner Fritz Sobanja asked. How would it stimulate jobs? How would it bring money back into the community?
Workers would be needed to install the lines and run the system, MacKenzie said. Businesses would be able to utilize “better business practices,” and people with $50-70,000/year jobs could move here and telecommute.
The grant being considered, however, is for areas in which usage is low enough that a return on the investment is not expected, MacKenzie said. The cost of the proposed system is $50.9 million, of which close to $33,000,000 could come from the grant, plus financing costs related to the county’s $18,000,000 match. An August 2 outline from Doug Dawson of CCG Consulting proposed that user fees pay about $10,000,000 of the installation cost (plus bonding costs) and that the proposed 1% tax coming up for referendum this fall pay about $8,000,000 (plus bonding costs).
“It’s a lot of money,” Sobanja said.
Based on a telephone survey conducted several months ago, “a great portion” of the money the community would pay would come from people who are currently paying to buy phone, Internet, and TV service from other providers, MacKenzie said. Buying those services through a county-owned broadband system is expected to cost at least 10% less than what people are already paying.
With fiber optic lines throughout the county, the power and speed of even the fastest systems in Cook County could be increased fourteenfold. The fastest service available in the county is in Grand Marais and Grand Portage, where computers can access up to seven megabytes per second. The system being proposed would bring 100 megabytes per second to every Cook County property currently hooked into the power grid if the property owner wanted to pay for that much speed.
Costs to users would vary according to which services were desired, the level of megabyte speed purchased, and hookup fees, which could be amortized over time.
Funding for Grand Marais and Grand Portage is included in the total projected cost but would not be covered by the stimulus grant portion of the funding since they already have a type of broadband.
MacKenzie said fiber optic infrastructure is the best technology invented to date and is expected to be unsurpassed for decades.
Some people have wondered whether the federal government would bring broadband to Cook County whether or not it comes up with almost $18,000,000 on its own. On January 2, 2009, CNET News (news.cnet.com) quoted President Barack Obama’s answers to a fall 2008 presidential campaign questionnaire on technology. In part, he said, “I believe that America should lead the world in broadband penetration and Internet access. As a country, we have ensured that every American has access to telephone service and electricity, regardless of economic status, and I will do likewise for broadband Internet access.”
Commissioner Bob Fenwick said he would not consider applying for the grant if it was feasible for the business sector to do it. He noted several ways hospitals, courts, and schools could save money by conducting business online. MacKenzie said that broadband is a tool that could help struggling entities like the school and the hospital. They have anecdotal evidence on its benefits, she said, but tracking solid numbers has been difficult.
Commissioner Bruce Martinson wondered whether the cost of phone service from current phone companies would go up if those companies lose business to municipal broadband systems.
The proposed broadband system is expected to bring 11-13 permanent jobs to the county, but Commissioner Sobanja suggested that the addition of those jobs could mean that others currently working in businesses replaced by broadband would lose their jobs.
“We will fall behind if we don’t do this, for sure,” said County Auditor- Treasurer Braidy Powers.
The grant is significant, Commissioner Johnson said. It goes a long way to bringing this technology here.
Johnson made a motion, seconded by Bruce Martinson, to allow the county to apply for the grant. It passed unanimously.
After the vote, MacKenzie asked for authorization to spend up to $5,000 from Information Technology Department reserves to consult with specialized attorneys on legal issues regarding the grant.
Asking for money right off “strikes me the wrong way,” Commissioner Jan Hall responded.
“If we’re going to do this, we do need expert advice,” said Attorney Scannell, adding that a project such as this is outside his office’s areas of expertise.
If the county were awarded the grant, by law it would need to pass a 65% referendum authorizing county government to operate a telephone network. The county might also need to obtain new rights-of-way and easements to install the infrastructure and would need to find a market for bonds to pay its portion of the project. Receipt of the grant would be expected in November, and the project would need to be started before the end of the year.
Other rural Minnesota areas that have or are pursuing broadband include Grand Rapids, Wyndham, and Monticello.
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