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BLP May Weigh Telecom Venture
GRAND HAVEN — The city’s electric utility is weighing whether to begin evaluating the potential for a publicly owned telecommunications network that could offer services such as high-speed Internet access, telephone service and perhaps even cable television.
Such systems are already in place in two communities across Michigan and have prompted the state’s largest business group, seeing them as unfair competition to the private sector, to draft legislation designed to create a “level playing field.”
The Grand Haven Board of Light and Power already sees the need to develop a network in the future that would provide a direct link to customers and allow the utility, among other things, to do real-time electronic meter-reading and control electrical loads going into a home or business when the generating system is stretched to capacity, General Manager Phil Trumpfheller said.
Coupling a network with additional public services would generate revenues that could help offset the estimated $12 million to $14 million development costs and prevent electrical ratepayers from footing the bill, Trumpfheller said.
“You can subsidize some of your costs by offering other services,” he said.
Trumpfheller describes the BLP as “just talking” about the venture at this point by taking “the first step of 10,000 steps,” with any actual network being years away. He anticipates a meeting this summer with the Grand Haven City Council to discuss the city’s interests in it and to look at options on how to proceed.
The BLP’s Board of Directors will also explore the issue during a strategic-planning session scheduled for July.
“It’s something that needs to be put on the screen, so to speak, and molded into long-range plans,” Trumpfheller said. “This is something we feel is critical and the customers of the BLP deserve in the future. But the bottom line is, the city of Grand Haven has to endorse it.”
“There’s a lot of issues to be discussed before you start shaking everybody’s bushes,” he said.
The Grand Haven Board of Light and Power serves primarily the city of Grand Haven and has 12,400 residential, commercial and industrial customers, with annual revenues of about $20 million.
Discussion of developing a telecom network in the future was spurred by recent discussions with city council members who voiced frustrations over the rising costs of cable television. Council members suggested that the BLP look into developing a system that would compete with Charter Communications, the city’s sole cable provider.
Trumpfheller, however, said such a system would have to go much further than merely providing cable television, a service the BLP has looked at in the past and opted not to pursue. Deliberations on whether to proceed with evaluating the need for a local telecommunications network would likely include a survey of BLP customers to gauge public interest in it, he said.
“To my knowledge, we don’t have a huge demand on providing some of those services. However, surveys may show something different,” Trumpfheller said.
If the Grand Haven BLP does decide to proceed in earnest, it would follow the lead of at least two other municipal utilities in Michigan: Coldwater and Hillsdale have decided to develop their own telecom systems.
The city of Hillsdale, through its Board of Public Utilities, is developing a $9.5 million fiber-optic communication system that will offer high-speed Internet, local telephone and cable TV service. The city is financing the project through a bond issue approved by voters last year and hopes to have the system operating late this year or in early 2002.
The Coldwater Board of Public Utilities developed a $5.5 million fiber-optic network in 1998 that offers long-distance telephone, cable and high-speed Internet services. The network, originally planned as a control mechanism for the local power system, has 1,900 cable TV subscribers, and 1,000 high-speed and 4,000 dial-up Internet customers.
The system will begin breaking even by next month and so far has exceeded expectations, said Lindy Cox, communications manager for the Coldwater Board of Public Utilities. “We’re doing better than (anyone) ever forecast,” Cox said.
Cox says municipal utilities are only responding to their constituents’ demands for better service and, in the case of high-speed Internet access, a void in service. Many small towns have difficulty accessing high-speed Internet service because telecommunications firms are targeting investments in larger markets first, he said.
“If we don’t do it, nobody else is going to step up to the plate, and in those cases, we have an obligation to look at those options,” Cox said.
The Holland Board of Public Works in 1998 sought to get into the telecommunications business through a fiber-optic network it installed in the mid-1990s, but a ballot proposal failed to win the 60 percent majority needed for the utility to go forward.
The likelihood that additional communities will explore such ventures is drawing greater attention from business advocates who question the appropriateness of public bodies competing directly with the private sector.
The Michigan Chamber of Commerce last month adopted a resolution that encouraged “fair play” legislation in Michigan. The chamber claims municipal utilities have an unfair advantage over the private sector because of their tax-exempt status in purchasing equipment and financing.
The chamber also worries that cities will use their regulatory authority to prevent the use of public right-of-ways, effectively blocking competition.
The chamber is working with the Telecommunications Association of Michigan to draft “fair play” legislation and hopes to have something introduced in the state House and Senate this summer, said Rich Studley, the chamber’s senior vice president of government relations.
The legislation would subject municipal telecoms to the same taxes and regulations as the private sector.
“We’re not saying cities can’t compete or should not compete. What we’re saying is if cities are going to get into this business, there has to be a level playing field,” Studley said. “It’s OK to compete, but it should be fair and open competition. You have to sink or swim like everyone else in a competitive environment.”
While the Grand Haven BLP has begun to consider the move into the telecom business, Turmpfheller is quick to emphasize that there’s a lot of research and work to be done before making a decision on how to proceed. That decision including weighing the move with the BLP’s other needs, including an upcoming $10 million upgrade to its coal-fired power plant to comply with newe federal air-quality standards.
“There’s a lot of issues to be digested,” Trumpfheller said. “We have so many other directions we’re going in right now.”