Thursday, December 9, 2004
MONMOUTH-INDEPENDENCE -- Citizens of Monmouth and Independence could be getting telephone and high-speed internet access through the communities' publicly owned broadband utility within the next three months.
City leaders say they're close to securing $10 million in financing needed to break ground on the second phase of the Monmouth-Independence Network (MINET).
The last major step is for Oregon's Economic and Community Development Department to greenlight loans to both towns that total, collectively, $8 million for capital construction of the project.
Independence City Manager Greg Ellis said the state has already recommended approval of the loans.
"We can't obligate any funds until we get notification," Ellis said, noting that official word could come within the month.
Once that happens, the system could be "ready to go" by late winter, Ellis said.
The first phase of MINET was activated in 2003. It provides broadband internet access to businesses and schools located along a fiber optic loop that passes through central areas of both cities.
The second phase means extending fiber lines to all businesses and residential neighborhoods, a scenario officials envisioned when the idea for the system was conceived six years ago.
MINET will act as a retail provider of internet, telephone and cable services. Customers could sign up for one or all three items and be billed for them through one account. Third-party vendors will also be able sell services over the infrastructure.
Development of the network has moved along rapidly since the summer, when the city councils of Monmouth and Independence agreed to form an intergovernmental body, the MINET board of directors.
The autonomous entity is comprised of six citizen and government members from both towns and will make decisions regarding the direction of the utility.
Each city then sought out loans to construct MINET's expanded infrastructure.
Independence and Monmouth are asking for $3.6 million and $4.4 million from the state, respectively. Sterling Savings Bank in Independence has agreed to issue a $2 million line of credit to cover the initial operations cost of the venture.
Alcatel, a company that builds telecommunications networks and has offices across the globe, responded to the board's request for proposal earlier this year.
Fiber lines may be put underground for future neighborhoods and hung from telephone poles in older ones.
As part of the deal, Roseburg-based Rio Communications will act as an internet service provider (ISP) and telephone service provider. Ash Creek Wireless -- which purchases bandwidth from the system and redistributes it using wireless technology -- will also remain a vendor.
MINET will hire a manager who will oversee its daily operations. The MINET board is currently in the process of drawing up a profile for the new position.
Officials are projecting a potential customer base of about 5,500 between the two cities, based on the existing number of water and utility bills. Subscriptions and user fees will be used to pay off the $10 million debt.
A preliminary business plan created for MINET shows that 30 percent of that customer base must subscribe to the service in order for MINET to recoup its start-up costs.
The board is projecting an 11 percent buy rate for the first year, with subscriptions reaching the desired break-even mark during the following two.
"It's a very conservative number to start with," said Monmouth City Manager Jim Hough. "We didn't want to fool ourselves with a business plan just to make the books look good initially."
Hough said the plan is do a "soft opening" for MINET, providing phone and cable service to those residents and businesses located nearest to the existing fiber loop. The cable service would follow in four to five months.
Subscription rates for services have not yet been determined, said Steve Milligan, who represents Monmouth City Council on the MINET board.