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September 16, 2014
Here's one that should stump opponents of municipal networks: A Missouri city is turning over operation of its fiber network to a local data center and plans to give away gigabit services to local residents after a one-time fee.
On September 2, the City Council of North Kansas City approved a 10-year agreement with DataShack for the operation and maintenance of the city's fiber optic network, known as liNKCity. DataShack will operate and maintain the fiber network, but the city will continue to own the network.
Under the agreement, DataShack will collect revenue for broadband services sold to businesses. But as of January 1, 2015, it will provide existing and new residential broadband customers with gigabit service for an installation fee of $300 (or $100 for 100Mbit/s service, or $50 for 50Mbit/s service). Residents in the city of about 4,000 people won't pay any more for service for the duration of the 10-year deal, according to Mellissa Hopkins, marketing and sales manager for liNKCity.
"For the longest time, our taxpayers have been paying in to fund liNKCity," Hopkins says of the fiber-to-the-home network, which was turned up in 2006. "We decided it was the right time to give something back to our residents."
Get the latest updates on the Gigabit Cities trend by visiting Light Reading's broadband/FTTx content channel.
DataShack also will provide free gigabit services to city hall, the North Kansas City Public Library, city churches and all public schools within the city. liNKCity offers no applications beyond the ultra high-speed connection, which in a world of over-the-top services can be preferable for consumers who want to make their own choices and is a model more operators are taking. (See Colorado Gigabit Network Shuns Video, Embraces OTT.)
"Basically you have a city smart enough to figure out that if you can find the right business that can benefit by the relationship, it leads to a very interesting public/private partnership," says Craig Settles, an independent industry analyst and host of the online radio program Gigabit Nation. "I've been advocating forever that people need to think outside the box, and this is exactly why. The giving away is genius, because it allows the access to be a loss leader."
The deal certainly is unique, especially in an environment in which many broadband providers and legislators voice fierce opposition to the idea of municipally owned networks. Under the agreement, North Kansas City will share profits and losses equally with DataShack, with any potential losses for the city capped at $150,000, including capital investment. DataShack will assume all costs associated with providing free gigabit services. (See Muni Utilities Take Gigabit Fight to FCC, If Not Muni Networks, Then What? and The Municipal Menace?)
For its part, DataShack views the deal as a way to leverage the network's bandwidth for its own purposes and expand on its service offerings, while at the same time providing a service to a community from which both of the company's founders hail.
"From a financial sense, I don't know that we're anticipating any great windfall, but it's an opportunity to give back to the city," says Brooks Brown, co-founder and managing partner of DataShack. "The city maintains ownership of the asset and can use it as an economic development tool, and we're responsible for operation and maintenance of the asset."
Indeed, Hopkins says the liNKCity network is a draw for residents and businesses, even in a community in close proximity to Google Fiber Inc. 's growing gigabit footprint in Kansas City.
"So far Google hasn't decided to come to North Kansas City, and we've had a lot of residents ask," she says. "Being able to broadcast that you're a gigabit city is a great way to attract residents and businesses. We've attracted a lot of different businesses -- a lot of startups are coming this way as they realize we have this capability."
— Jason Meyers, Senior Editor, Utility Communications/IoT, Light Reading
Jason Meyers joined the editorial staff of Light Reading in 2014 with more than 20 years of experience covering a broad range of business sectors. He is responsible for tracking and reporting on developments in the Internet of Things (IoT), Gigabit Cities and utility communications areas. He previously was Executive Editor of Entrepreneur magazine, overseeing all editorial operations, assignments and editorial staff for the monthly business publication. Prior to that, Meyers spent 15 years on the editorial staff of the former Telephony magazine, including eight years as Editor in Chief.
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