Mayor McElvain’s Fiber Optic Dream

“I began this project with the knowledge that it should never take any money from the General Fund. General Fund money is desperately needed for public safety.” -Mayor Adam McElvain

Redding’s new Mayor, Adam McElvain, has had a dream of bringing high-speed internet to Redding since 2007. Thirteen years later, now as an elected official, he’s developing a plan for a citywide publicly owned internet utility that would bring fiber optic access to all Redding residents.

Almost 100 years ago, Redding was taking a similar risk, when the City bought a local electric utility from a predecessor of today’s PG&E. It seems to have paid off. McElvain’s initial white paper proposing high speed internet in Redding, calls Redding Electric Utility (REU) “to-date, Redding’s most significant economic advantage over other mid-sized cities.”

Better yet, according to McElvain, with hundreds of municipalities now launching publicly owned internet utilities, REU is one reason Redding is positioned for success. After meetings with the city manager, REU engineers and Public Works officials, he says existing REU infrastructure can reduce the costs of building out a fiber optic network. And the fiber optic needs of REU and the City of Redding will increase the financial benefits of a publicly owned internet utility.

A Downtown Pilot high speed internet project has been in the works for several years in Redding. And McElvain decided early on that it was imperative not to spend Redding’s General Fund money on the project. Instead, he utilized free, and valuable, partnerships, notably the North State Planning and Development Collective and Broadband USA (a subset of NTIA under the Department of Commerce). Both contributed significant time and expertise to the City, free of charge, helping to develop the City of Redding Broadband Plan which was presented to the Redding City Council in April 2019. This plan estimates that high-speed internet could be installed in a section of downtown Redding at a cost of $2.5-3 million. And McElvain believes the costs will actually be lower, between $1.9-2.6 million, due to previously mentioned synergies with REU.

The next step, a study by Entry Point, determining the feasibility of a citywide internet utility (of which Phase 1 would be the Downtown Pilot) is now in process. And while the City has paid $30k for this study, McElvain was quick to assure me that no General Fund money was used. Instead, half the funds came from REU and half from the City’s IT fund.

Better yet, the build-out of both the Downtown Pilot and later phases of a citywide high-speed internet utility could be mostly funded by grants.

McElvain said, “We are in an opportunity zone here in Shasta County, and this means that we have access to more grant money. We are looking into applying for an EDA grant and think we are a prime candidate. Two other public fiber companies in California have received these grants, totalling 50% of their costs. But because we are in an opportunity zone, any grant given to us will be an 80/20 match.”

Most importantly, he added, “The plan is certainly not to spend any General Fund money at all.”

McElvain told me his original vision was for Redding to be a traditional internet service provider (ISP), much like Charter or AT&T. Now, after more research, he’s leaning toward something a little more unique – an open access network. This would allow the City of Redding to put in fiber, and operate and maintain it without providing the related services. Instead, the City would create a digital marketplace, allowing any ISP to participate and market internet services to residents. Such a network would require residential users to pay the City a standard fee to bring fiber to their residence, perhaps $30-40 monthly, which would cover operation and maintenance costs. On top of that fee, users would subscribe to an internet provider of their choice.

According to McElvain, only a handful of other cities have tried this solution, which has the obvious advantage of encouraging competition and driving down costs.

And while he has been pushing hard for exploration of this project, it’s also obvious he is highly aware of the risks.

He said: “Council members expressed an interest in private/public partnerships like the ones I found with an open access network. I looked at what other cities have done and I purposely looked at the ones that failed much more closely than I looked at the ones that succeeded. The number one reason for failure I found was when cities bit off more than they could chew. The number two reason for failure is when government groups partnered with private third parties that did not follow through. This second reason caused catastrophic failure.”

Moral of the story? While an open-access fiber optic network can be what he calls the “perfect nexus of private/public partnership,” it can also be a disaster. Proceed cautiously.

But the possibilities are exciting. McElvain gave me an example of what Redding could look like as a so-called Smart City. It’s the kind of tidbit that gets you thinking on a whole new level.

“For example, if a gun is fired in a school within the network, a sensor can pick it up, relaying the location, he said. “Then a camera attached to the network could begin feeding live video within three seconds and screen shots to first responders within fifteen seconds.”

Similarly, McElvain said, REU has already been looking into how fiber optics built between substations could allow them to monitor fire using infrared sensors and fire-spotting cameras. The City has already put aside $800k in their biennial budget towards developing this, he said.

But he was clear that some of the most interesting applications of technology in a Smart City could also be among the most concerning, specifically mentioning facial recognition technology and license plate readers and the data they collect.

“I’m not a fan of surveillance,” he said.

But from his perspective, running Smart City applications through a City-owned network allows Redding to set terms that will protect residents. And, according to McElvain, the City is already considering hiring a Director of Cyber Security to help manage these concerns.

But will a publically owned internet utility succeed? Some would say, if they can do it in Ammon, Idaho (population 16,500) then why not here? Others would point to the number of failed internet utilities nationwide, and give McElvain’s Fiber Optic Dream a thumbs down.

I saved the multi-million dollar question for last: Could MvElvain’s dream of a publicly owned internet utility turn out to be just another Stillwater Business Park?

(For those unfamiliar, the City of Redding spent between $23-40 million dollars in bond debt to develop Stillwater Business Park, for the purpose of attracting new jobs to Redding. Thus far Stillwater has not brought any new businesses or jobs to Redding.

I was pleased that Adam did not shy away from this question, instead making direct eye contact, clearly engaged.

“That’s a good question and one we should be asking ourselves,” he said. “One of the key differences between this and Stillwater is that a fiber optic network can and will be used immediately, unlike Stillwater which was banking on future companies moving to Redding.”

“And to increase our chances of success, before we put in any fiber optic service we will look at adoption rates. We want 30-35% adoption in our Downtown Pilot. That means 30% out of about 800 customers who have committed to using the service. This percentage of users means our customer fees will cover operations and maintenance cost.”

Notably, also unlike Stillwater, the City is not currently considering bond debt to fund the project.

I look forward to your thoughts in the comments.