In the quest to bring gigabit Internet speeds to the Springfield bedroom community, Nixa City Council gave approval in January to pursue a $27 million contract with London-based SiFi Networks.
Four months later, those talks have come to a halt.
Mayor Brian Steele said a deal couldn’t be ironed out and now officials are exploring a partnership with a private Internet provider already working in the town of 20,000 toward its own gigabit goals.
“The city attorney and city administrator went in and negotiated with (SiFi officials) over an extended period of time and weren’t ever able to come to any final agreements with them. We’ve decided to put that on pause,” Steele said. “At this point, we are looking at a public-private partnership with Suddenlink.”
A month before the Nixa council gave a green light to pursue SiFi, Suddenlink Communications announced completion of the first stage of its Operation GigaSpeed in the Nixa area. That effort introduced a 250-megabits-per-second service – Suddenlink’s first step toward launching 1 gigabit service in Nixa this year, said Suddenlink spokesman Pete Abel.
The work in Nixa is part of Suddenlink’s plans to invest $250 million over three years to ramp up its in-home online speeds across its 15-state footprint. Suddenlink is a subsidiary of St. Louis-based Cequel Communications Holdings I LLC, which serves 1.4 million residential cable and Internet customers.
Abel said negotiations with Nixa officials are in the early stages.
“We continue preparations to offer a gigabit service throughout Nixa this year and look forward to ongoing dialogue with city officials about how public-private partnerships might advance the city’s economic development goals,” he said via email. “I don’t have specific information to share at this time, but we hope to further clarify details in the weeks ahead.”
Steele said conversations with Suddenlink have revolved around establishing high-speed fiber access to businesses, the Nixa industrial park and a business incubator, which currently doesn’t exist.
“We met with them several times as we were negotiating with SiFi to keep our options open, to see what kind of opportunities they could provide Nixa that could give us the same solutions we were looking for with SiFi or in a project on our own, to differentiate Nixa from other communities by having that Gigabit City label,” Steele said.
Giga-what? So-called gigabit cities, such as Kansas City and Chattanooga, Tenn., have invested millions of dollars to offer broadband connectivity at roughly 1 gigabit per second, or 100 times faster than the average broadband service.
Nixa officials in July enlisted fiber-to-the-home provider SiFi Networks to conduct a six-week feasibility study to determine resident demand for a gigabit broadband infrastructure. That study showed Nixa residents want gigabit speeds, and they are willing to pay for it.
All of the 45 businesses that responded to the survey said Internet service was “very important” to their operations, while 89 percent of residents identified it as a priority. Only 21 percent of businesses were “satisfied” or “very satisfied” with their Internet service, currently available through Suddenlink, AT&T, CenturyLink and Total Highspeed.
Six out of 10 residents expressed some level of dissatisfaction with their current Internet service. Eight out of 10 residents were “likely” or “very likely” to buy at least a 50 Mbps plan at $50 per month; 66 percent were likely to pay for a 100 Mbps plan for $60 per month; and 29 percent were interested in buying a 1 gigabit plan for $99 per month.
Steele said it was too soon to estimate the investment needed to partner with Suddenlink, but he’s confident the city’s cost would come well under the $27 million price tag residents were prepared to pay with SiFi.
“We wouldn’t have to do all the work, and we wouldn’t have to provide the service. They are already experts at that,” Steele said. “We would just help get things built, and they could provide that to the citizens of Nixa.”
What went wrong? From SiFi’s perspective, a less than welcoming legal environment in Missouri contributed to talks with the city of Nixa breaking down. Sara Pickstock, marketing and communications director for SiFi Networks, said state laws related to public-private partnerships were part of the problem.
“Anti-municipal broadband legislation at the state level, coupled with a slow legal process, have made our project timelines too tight this year in Nixa. So for now, the city and SiFi Networks have agreed to place the project on hold,” she said in an email.
Pickstock said a 20-year-old state law that prohibits municipalities from directly operating as Internet service providers could be worked around, but proposed legislation in the form of Senate Bill 266 posed a threat to a contract with the city of Nixa.
The bill, which hadn’t received a Senate vote by press time, would require a vote of the people should a city move to provide access to Internet services when a private company already provides that service. Kansas City, St. Louis and Springfield are exempt in the bill language.
Nixa City Administrator Brian Bingle said while the city was opposed to the bill and the real reason talks broke down was because SiFi did not provide the documentation the city needed to move forward as a wholesale provider of Internet access. In the end, Bingle said SiFi did not guarantee the city would be able to receive a sufficient amount of lease income from ISPs to pay down the millions in debt the city would incur.
He compared the situation to that of a developer proposing a commercial retail center but not providing the bank with a list of qualified tenant prospects.
“There is some means of assuring the lender that there is an adequate revenue stream capable of retiring the debt,” Bingle said. “That’s what we were asking SiFi to provide to the city of Nixa.”[[In-content Ad]]
