Monday Morning Thoughts: Broadband is Essential for Economic Development in Davis

There has been some criticism of Dan Carson’s op-ed and his approach, which some might argue are overly cautious.  However, it is important to recognize that, while he views the municipal broadband network as “a huge financial risk,” my read is that doesn’t necessarily mean he’s opposed to it.

In his op-ed he cites the consultant reports from CCG Consulting and Finley Engineering, who were contracted in order “to assess the feasibility of a municipal fiber network in Davis and whether local residents would sign up for it.”

He writes: “They determined that a municipal broadband project would be costly and risky and that community interest in committing to pay for such a service is weak.”

Such a network, they found, would be “costly,” running at around $100 million, similar ventures have failed in some locations, and thus “the financial projections for building fiber within the city were not as good as the city had hoped for.”

However, he notes, “Despite the troubling findings in the CCG and Finley Engineering reports, task force members remain steadfast in their support of the concept of a municipal fiber system. They are asking the city to spend more money on studying such ideas as building a municipal fiber network in stages or levying assessments instead of taxes to pay for it.”

And his key point is this one: “Nobody disputes the benefits of improved high-speed broadband for economic development, education, technological innovation, and addressing the digital divide. The question is, how do we get these benefits without saddling our taxpayers with huge financial risks? We already face an $8 million a year funding gap for basic city services over the next 20 years.”

To interpret this op-ed as opposition, as opposed to caution, seems like a mistake.

For their part, the letter from chair Chris Clements acknowledges that the financial component is vital.  Indeed, he writes in the letter agreed upon by the rest of the commission, “[o]ne message was recurring more than any other. That was the need to spend some time and effort to understand the financial options that could be used to make this program a success.”

They add, “It is the recommendation of the BATF [Broadband Advisory Task Force] that the City engage with someone with background and expertise in order to understand the financial possibilities that will make the deployment possible.”

At the same time, I see critical needs for broadband in Davis.  There are great needs to upgrade the city’s broadband if it wishes to engage in the kind of economic development efforts that it seeks.

As Mr. Clements points out, the project “would also pave the way for massive economic development.”  He adds: “The network would create the ability for businesses around the world to employ work from home professionals in the City of Davis.”

Furthermore, there is the digital divide and social equity piece that would be filled in as well.  The letter presents this in terms of students, noting that the university would be able to “provide parity to its students who currently experience a massive divide between the campus and home networking experience. It would create the ability for elementary and high school students to complete their coursework at home and not have to go back to the school library to be connected.”

But, as we know as well, low income people have much less access to high speed internet service than people who are of greater means.

The economic development piece is underestimated, I think, in Councilmember Carson’s otherwise thoughtful piece.

Matt Williams, in sharing the BATF’s reasoning, focused on economic developing, noting that without a municipal fiber program “there will be significant obstacles to Economic Development” and that “significant economic development opportunities will become available if the City does ‘own the last mile’ of the local Davis fiber communications network.”

He notes: “Prospect companies thinking about locating in Davis will see a proactive, in-place telecommunications deployment, ready for their immediate use, rather than an ad-hoc, reactive telecommunications deployment that requires expensive and time-consuming case-by-case buildout.”

Finally, “Being able to market ‘The City of Davis’ as a network neutral and fiber-ready city has a very broad appeal to startups and mid-sized companies, especially those in ‘soft industries’ (companies that employ knowledge workers and no heavy manufacturing).”

So, while Dan Carson makes important points about the risk financially to the city if the city engages in this project, the BATF concludes: “Fiber to every house/building, and those owned by the City, is essential for the City’s future economic health.”

The commission noted: “Telemedicine and medical education enhancements are making fiber essential to the personal health of more and more Davis residents, especially as our community’s cohorts of seniors increases.”

Furthermore, “A 21st Century Research University will require remote access to on-campus experiments. Without fiber that will not be achievable.”

That leaves the council in a delicate situation that it seems both the BATF itself recognized and Dan Carson acknowledged.  The BATF recommended the city go forward but “engage with someone with background and expertise in order to understand the financial possibilities,” while Dan Carson, leery about the financial risks, also understood the “benefits of improved high-speed broadband for economic development.”

How that gap is bridged will be vital in determining the future of economic development in the city.

One idea not floated could be to have the developers of innovation, along with the university, help mitigate costs and risk to the city.  How that would look will be open for discussion.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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6 Comments

  1. Matt Williams

    David, we will learn tomorrow night which of Dan’s statements will prove to be more important.

    Will it be Dan’s “worry about a bullet train-style boondoggle in which construction starts only to find out that the rest of the money needed to finish a network isn’t coming.”

    Or will it be Dan’s statement that “Nobody disputes the benefits of improved high-speed broadband for economic development, education, technological innovation, and addressing the digital divide. The question is, how do we get these benefits without saddling our taxpayers with huge financial risks? We already face an $8 million a year funding gap for basic city services over the next 20 years.”

    Setting aside the understating of the funding gap in the general fund, which is now $10 million a year, Dan appears to have chosen to discard the analysis of two BATF Subcommittees, appearing to prefer the words of the consultant’s report.  Why is that important?  Because the consultants report provides an incomplete set of options, omitting the public utility approach.

    That is meaningful on a number of levels.  The consultants built $800 per household of Marketing costs into their estimates.  The public utility approach would not need to expend those millions of unnecessary dollars. $800 times 25,000 households equals $20 million, but it isn’t clear whether the consultants included the full $20 million in their $106 million cost estimate.  Regardless of the amount, there will be a substantial cost savings by using the public utility approach.

    The Public Utility approach was suggested as an alternative by one of the state’s preeminent financial advisors in a meeting with one of the two BATF subcommittees, who reported the results of that meeting to the BATF.   The Public Utility approach would  change the political approval process under the provisions of Proposition 218.  It would also segregate the funds and funding into an Enterprise Fund, separate/isolated from the General Fund. The Water Fund is structured that way.  The Sewer Fund is structured that way.  The Solid Waste Fund is structured that way.  The Utility Service Advisory Commission oversees both the rates for the Enterprise Fund services and the associated service costs.

    Another huge difference between Municipal Fiber and Dan Carson’s comparison to the Bullet Train is the existence and reliability of the revenues.  There is no committed revenue stream from the public/consumers for the bullet train.  It is a “build it and they will come” approach.  If a Telecommunications Enterprise Fund were established in Davis the revenue stream would be established, with every parcel paying into that fund the same amount or less than they are paying the monopoly suppliers Comcast or AT&T for Internet services currently.  In my own personal case, our household is paying $39.95 per month for Comcast’s lowest level of Internet service.  The monthly bill from the Telecommunications Fund would be less than that, so I would save money every month.  That is the antithesis of the bullet train.

    In addition, because of the provisions of Prop 218, the rates would be set for five years.  No consumer would be subject to the annual haggling with their monopoly supplier in order to avoid a steep price increase.

    Hopefully on Tuesday night Dan, and the rest of the Council will see the wisdom of siding with Dan’s second statement about the the benefits of improved high-speed broadband for economic development, education, technological innovation, and addressing the digital divide rather side with Dan’s first statement of worry about a bullet train-style boondoggle.

  2. Matt Williams

    For those who did not read yesterday’s comments, a a member of the BATF I would like to again share with the public the following list of reasons that explain why BATF came to the official conclusion in writing that “the emotion and passion around the concept of a municipal fiber project could not be any more intensified.”

    BATF officially chose not to include the detailed list in the current recommendation memo because the focus of the memo was limited to the two additional tasks Council gacve the BATF in 2018. These reasons cover what was learned during the whole BATF duration from 2016 to 2019. It is important to note that there are some BATF members who might not personally agree with some of the listed reasons; however ALL of the reasons were actively discussed by the BATF.

    While I am a member of the BATF, and also the Chair of the Finance and Budget Commission, I present these reasons to you as an individual:

    1. ECONOMIC DEVELOPMENT

    __ 1A. There will be significant obstacles to Economic Development if the City does not proceed with Municipal Fiber as discussed by the BATF and “own the last mile” of the local Davis fiber communications network.

    __ 1B. … and significant economic development opportunities will become available if the City does “own the last mile” of the local Davis fiber communications network.

    __ 1C. Prospect companies thinking about locating in Davis will see a proactive, in-place telecommunications deployment, ready for their immediate use, rather than an ad-hoc, reactive telecommunications deployment that requires expensive and time-consuming case-by-case buildout.

    __ 1D. Being able to market “The City of Davis” as a network neutral and fiber-ready city has a very broad appeal to startups and mid-sized companies, especially those in “soft industries” (companies that employ knowledge workers and no heavy manufacturing)

    2. Fiber to every house/building, and those owned by the City, is essential for the City’s future economic health.

    3. Telemedicine and medical education enhancements are making fiber essential to the personal health of more and more Davis residents, especially as our community’s cohorts of seniors increases;

    4. A “21st Century Research University will require remote access to on-campus experiments. Without fiber that will not be achievable.

    5. Helping UCD build a city-wide virtual campus will be a very positive win-win step forward in building the relationship between UCD and the Davis community

    6. Fiber supports Smart City/Public Safety initiatives like Police and Fire applications; utility meters, and various other civic applications.

    7. Fiber is necessary to implement Smart City/Smart Grid requirements to respond to and make meaningful progress on the Climate Emergency Declaration passed by Council.

    8. Broadband Access for every resident of Davis will define economic and social justice for all based on access. Some examples of such access are:

    __ 8A. Extension of In-Class/On-Campus grade school and high school assignments and research tools to off-campus venues. The City could establish training program/internship for high school students wanting hands-on experience with the maintenance of the network. This could be a gateway into real-world IT and there is a need for IT professionals.

    __ 8B. Online education. It will be essential for economic mobility, crucially so for the disadvantaged.

    __ 8C. Interactive access to City services, which will evolve to require bb service.

    __ 8D. Employment and career development opportunities

    __ 8E. Family communication, such as keeping an eye on aging parents

    __ 8F. Greater choice and level of service and net neutrality for residents and businesses in the community,

    __8G. Private service without commercial data mining of every action by Davis residents, and

    __ 8H. City-owned fiber to every premise is essential for social justice and net neutrality.

  3. Craig Ross

    Strangely this isn’t getting a lot of attention, maybe its because the first response was a book by Matt.  I see it as imperative for our Economic Development efforts that we figure out how to get this right.

    1. Bill Marshall

      Technically, not a book but rather a post or epistle…

      You are spot on as to figuring out how to get this right, before any action is taken… except to ‘table’… indefinitely…

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