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CU's $120M fiber network underway

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The clock is now ticking on a $120 million fiber optic network City Utilities of Springfield is set to finish within three years.

The expansion through CU’s SpringNet division started in February, with the initial attention on the city’s north side. It’s a public-private partnership with CenturyLink Inc. (NYSE: CTL) that will roll out gigabit internet service to over 90,000 potential users within the Springfield boundary market, said Jeff Bertholdi, SpringNet director.

“There is no official schedule and there’s no official order of how we will be going through town,” he said, noting CU has divided the city into seven areas. “We deal with it on a case-by-case basis. North and northwest will be our focus in the next six months.”

Crews currently are working in the area around West Norton Road, between the Springfield-Branson National Airport and Partnership Industrial Center. Workers are hanging fiber optic lines on utility poles, as well as installing conduits in areas where utilities run underground.

“We’re slightly behind, as we’ve had a wet February and March, so we’ve lost some days to weather,” Bertholdi said, adding the utility company is targeting a fall/winter 2022 completion. “That’s assuming weather works with us and we don’t have lots of lost time due to COVID-19.”

CU is adding 1,110 new miles of fiber-optic lines to provide high-speed internet to businesses and residences in Springfield. CenturyLink signed on to lease the network and build system drops to all businesses and homes that request service. Customers will directly pay for service to CenturyLink, which agreed to covers CU’s costs for the project. Declining to disclose costs for the partnership, CU officials said the initial lease is for 15 years, and it can renew every five years after that period.

Steve Kirks, senior manager and fiber market lead with CenturyLink, said SpringNet is building the fundamental structure for the network. CenturyLink will follow in behind as CU finishes areas of construction in town to start connecting customers in volume by the fall.

“We’ll light up entire areas at roughly the same pace at a 60-day interval,” he said. “The initial runs will be smaller to start with to make sure we have processes done well. We’re hoping we can get our first customers on during the summertime.”

‘Zero net effect’
CU General Manager Gary Gibson said CenturyLink’s gigabit plans in other markets run $60-$70 per month, according to past Springfield Business Journal reporting. Kirks agreed, but declined to confirm a pricing structure.

“We’re not ready to disclose specific packages or pricing at this time,” he said, also declining to disclose customer projections. “We’ll have a significant number of customers by the end of the year, if they want our product.”

Broadband providers like CenturyLink are connecting customers with fiber at a significant clip, according to market research firm RVA LLC. In its North American 2019 Advanced Broadband Report, the firm said broadband providers had reached 49.2 million homes with fiber, up 17% from the prior year.

Internet service overall has also permeated the U.S. market, as 82% of households are online, of which 96% is broadband, according to analyst firm Leichtman Research Group.

CU officials say the network expansion project won’t cost their customers – unless they’re buying the new service.

“The cost is a zero net effect on CU customers, in that the project itself is financially solvent. The tenant revenue pays for the project,” Bertholdi said, referring to CenturyLink and any other company that would pay the city to use the network. “There’s zero impact to utility bills … to utility rates. This is completely self-funded.”

New strategy
Springfield is the second market of similar size to implement the municipal utility lease model, according to Bertholdi.

Huntsville, Alabama was the first. Huntsville Utilities announced in February 2016 that it reached a lease agreement with Google Fiber to provide internet service throughout the city.

Bertholdi said CU officials have been in discussions with other undisclosed potential tenants besides CenturyLink.

A rental network is a new concept for Monroe, Louisiana-based CenturyLink, Kirks said.

“Springfield is part of a new strategy, a new blueprint in the way we do new businesses and new markets,” he said. “We’re going to be very careful to make sure we do it right.”

Bertholdi said gigabit internet service could make Springfield a more attractive place to live or relocate, especially for home-based businesses and those with greater demands for personal use, such as streaming video. Telecommuting, as well as online education and medical needs has a high attraction, Bertholdi said. That’s particularly true in the ongoing challenges brought on by the coronavirus, he added, calling the telehealth services vital.

“Springfield as a gigabit city adds a ton of value to consumers, not to mention all the things that come in on the pipe,” he said. “This COVID thing has shown us how that telehealth, in and of itself, might be a huge benefit in avoiding passing on sickness to others.”

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