The City of Gainesville has heard presentations and considered several options to increase broadband access through funds received from the American Rescue Plan Act (ARPA), from running its own broadband service through GRU to partnering with companies already in the market.
The Gainesville City Commission considered using $9 million of its $32 million in ARPA funds for the project, the largest project allocation from the funds. But commissioners still need to decide which direction to take.
At its Jan. 27 General Policy Committee meeting, the commissioners listened to a presentation by Magellan Advisors, a consulting group hired by the city in 2020.
Magellan started its research in May 2021 and presented initial findings in August before coming back to city leadership in December.
In the January meeting, the group recapped three options the city could take: offering broadband as a city amenity, selling broadband as a city business or partnering with a private company.
The amenity option would mean offering broadband to every resident who wants it as a baseline service.
Courtney Violette, chief operating officer for Magellan, said the cost to start and run this option would be the greatest. The city would need to find a funding source with estimated capital expenditure at $157 million over the first 20 years along with operating costs of $116 million.
The model assumed connections to 100 percent of Gainesville’s single-family homes and that half of the users would pay for a faster service than the 50 MB free option.
After 20 years, Violette said the city would practically break even with just $2 million in revenue for that time frame.
“This amenity model was not meant to be a huge cash generator,” Violette said in the presentation. “Amenities normally are not. So we really focused on this as a break-even model.”
Magellan also pointed to risks involved like changing technology, the creation of a new utility and potential legal challenges.
For the business model, Violette said Gainesville would need lower initial funding, and after 20 years, the city would be making more than the amenity model.
Dealing only with residential clients, Magellan estimates the city would earn just over $5 million in 20 years if 45 percent of its residents sign on as customers. With 55 percent of residents, the earnings jump to $44 million.
Adding businesses into the equation also caused the city’s potential revenue to jump considerably. With 10 percent of businesses, the city could gain $34 million on top of the residential revenue.
Both plans would see the city entering the market against companies like AT&T and COX. Customers the city attracts means other local companies will lose customers.
The third plan would have the city partner with these private companies to increase broadband access to those in need, addressing the “digital divide.”
That partnership could take many forms. The city could lease already existing infrastructure or build the infrastructure then lease it to a company. Details would depend on how the city and the third party set up the agreement.
During public comment, Aimee Pfannenstiel, market vice president for COX in central Florida, said the company can already service 99 percent of all Gainesville residents.
She added that programs through COX and the federal government provide cheap or free broadband access.
Cam Johnson, public affairs manager for COX, said in an interview that the company has met with city officials in the past.
“We’ve offered to partner with [the city] to see what it is exactly they’re wanting to accomplish and how we might be able to help them do that,” Johnson said.
Johnson said the company has established programs to address the digital divide. If families qualify for federal benefits like SNAP, WIC, SSI, Pell Grants, then households qualify for reduced prices.
Families with K-12 students can receive 50 MB, double the standard for broadband, for $9.95 per month. Those without students can receive the same service for $30 per month.
The federal government’s new Affordable Connectivity Program (ACP) started on Dec. 31, 2021. Johnson said COX has partnered to administer this program as well. It provides qualifying customers with $30 off their monthly internet bill.
Pfannenstiel told the commission that affordable internet already exists for low-income families in Gainesville.
“Free internet is alive and well in the City of Gainesville through COX with supporting federal programs and the Affordable Connectivity Program,” Pfannenstiel said.
The commission lacked a quorum to put forward any motion at the meeting. From here, the commissioners will decide which direction to take and confirm how much in ARPA funds to invest.
Commissioner Adrian Hayes-Santos expressed support for moving forward with the business option, pointing to the program in Chattanooga, Tenn. as an example to follow.
“I think it’s a big opportunity for our community,” Hayes-Santos said. “I believe that building it ourself and going with the utility model is the best choice versus other options.”
Commissioner Desmon Duncan-Walker expressed interest in learning more about the programs COX already has in place.
“There’s still a number of things that I believe need to be addressed before we even think about moving forward on this,” Duncan-Walker said.
She asked for COX to send more information about its programs to the city commissioners and said she’d like to see a deeper dive into how a public/private partnership would function.
Gainesville received $32 million through ARPA and has allocated around half of the funds. It has until 2024 to figure out how it wants to use the money in accordance with guidelines from the Department of Treasury.