Public Power - November/December 2007 - (Page 52)

COMMUNITY BROADBAND Washington PUDs Make Wholesale Broadband Successful By Cathy Swirbul When a its business in the company considers expanding Tri-Cities region in southeastern Washington it just assumes the area has access to highspeed broadband. After all, the region may have more PhDs employed in the local economy than any other area in Washington state. Both the Pacific Northwest National Laboratory and the Hanford Site, formerly a U.S. government plutonium production facility, are located there. But bringing broadband to the area was a financial challenge for the public utility districts in Benton and Franklin counties because state companies to the area moved the two PUDs to join 15 other public utilities in the state in the quest for broadband. Eventually, Benton and Franklin PUDs–sister utilities divided by the Columbia River –built a seamless fiber network with two local loops. One loop is in the city of Pasco, the other in Kennewick, with future plans for linking service to the city of Richland. The 17 public power utilities formed the Northwest Open Access Network, a nonprofit mutual corporation, to lease space on the Bonneville Power Administration’s fiber optic cable. Fourteen of the original utilities created a network that follows the BPA transmission lines. It spans most of the state. “Getting into broadband has been like paddling up a waterfall,” said McCollum. “At first, it was a burden that the state “But many people applaud our efforts,” said McCollum. “For instance, we have our schools linked by fiber and they are saving more than $100,000 annually on the fees they would pay because they have an all-Internet-protocol phone system and they can load all the computers with software from the administration building.” McCollum noted that working in the broadband industry has required the utility staff to adjust their thinking from working as a monopoly providing electricity to operating in a competitive business. Benton County PUD has invested about $8.5 million to put its fiber network in place. “The network was a big investment but the expectation was that this was a 20-year project,” McCollum said. “We are now meeting our operat- Working in the broadband industry has required the utility staff to adjust their thinking from working as a monopoly providing electricity to operating in a competitive business. law prevents the PUDs from providing retail broadband services. The utilities are limited to selling wholesale services to resellers. “Working on a wholesaleonly model, you have to rely on the reseller to do the end-user sales and that means you can’t control that portion of the business,” said Gary McCollum, Benton PUD’s manager of broadband. “You must rely on the reseller’s judgment and business plan.” Still, the economic imperative to provide broadband to rural residents and to attract 52 NOVEMBER-DECEMBER 2007 Legislature wouldn’t allow us to get into retail. But we’ve adjusted our business models and have worked well with the local, regional and national Internet service providers on our network. We’ve made the wholesale model work and we think to some degree that it’s the American principle to help the smaller ISPs who can’t access other networks.” As public agencies, the PUDs must be highly sensitive to their customers, who often question expenditures that don’t have a quick and clear return on investment. ing expenses. When you think of it as a start-up business, we installed our first fiber in 2002, so in five years we managed to build revenue to nearly $700,000 annually to cover operating expenses. Will we ever be able to pay back the initial investment? Probably not. This was an investment in meeting a necessary community infrastructure.” Amazon’s call center—The Tri-Cities network is beginning to have economic development results. Amazon.com located its 300-employee call center to the area knowing that access to PUBLIC POWER http://Amazon.com

Table of Contents Feed for the Digital Edition of Public Power - November/December 2007

Public Power - November/December 2007 Contents Washington Focus 10 Questions Connecting with the Customer Through Automation AMR or AMI? The High Court’s Antitrust Thunderbolts California’s Push for Demand-Response Plug-In Partners Get Plugged In Wiring Up for Double-Digit Growth For Engineers Safety Community Broadband For Governing Boards DEED Customer Service Hometown Connections Index to Advertisers Parting shot

Public Power - November/December 2007

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