Residents of Ashland, Ore. — angry over a surcharge on their electric bills designed to raise money to fund the community’s municipal telecommunications operation — are collecting signatures for a public vote they hope will lead to the sale of that enterprise.
The telecommunications business, Ashland Fiber Network, was created by a 1998 city council vote. The leaders of the town of 20,000 near the California-Oregon border wanted to bring in high-speed Internet access and achieve operating efficiencies for the municipal electric utility.
A WIRED CITY
At the time, the local telephone company, Qwest Communications International Inc., and cable operator Charter Communications Inc. did not offer such access, but competitive products are now available. Ashland since has been named among the most-wired U.S. cities.
The municipal business provides consumers Internet access from a choice of providers, as well as city-provided video service. The operation has an estimated 3,100 customers.
But according to a recent report to the city on network operations, debts for the operation, which were refinanced in August of 2004, are $15.5 million. The network has been breaking even, but debt-service payments are coming due.
For the 2005-2006 fiscal year, the operation anticipates $2.8 million in revenue, but $4.2 million in expenses. An appointed committee is to provide the council with suggested business options for the network.
The city has raised cable rates twice in the last two years (8% in June 2004 and 6.6% this past February) according to the city report. Charter dropped its charges in the face of municipal competition, but now city rates are approaching the $24 expanded basic rates charged by Charter.
Now the council has approved the surcharge on all power users — not just cable subscribers — to help pay the broadband network’s bills.
Lee Tuneberg, the city’s finance officer and interim manager of the fiber network, did not return calls regarding the network’s finances.
Opponents of the surcharge have already collected 300 signatures, and are shooting for 2,000 endorsements of a petition designed to force a vote, said Ann Marie Hutson, chairman of an ad hoc group against the continued operation of Ashland Fiber Network.
COUNCIL TURNED OVER
“It would be one thing for all [citizens] to decide to get into business, but it was just a few people, and they’re long gone,” she said of the council members who launched the network.
The petitions seek support for a city charter change that would prohibit Ashland from owning, operating or selling broadband services other than those expressly related to the proper daily governance of the city, such as public transportation, health, safety or the protection of citizens.
Hutson conceded that a system sale would not eliminate the debt incurred by construction of the network.
“Our main concern is to shut AFN down, then we’ll deal with the debt, which is infuriating because we never voted for it,” she said.
Opponents hope to get the issue before voters in May 2006.