LCUB considering internet service

Lenoir City Utilities Board representatives Jeremy Walden, left, and Ryne Clinard showcase a fusion splicer, which joins two optical fibers.

Lenoir City Utilities Board could still have involvement in offering broadband internet service to customers through an 84-mile fiber optic line, but officials are unsure how.

Since completion, the line has been largely used by LCUB, Shannon Littleton, general manager, said. The line essentially covers the outer perimeter of LCUB’s electrical footprint.

A feasibility study on internet service was completed in July through Magellan Advisors, followed by internal meetings. Total investment to provide fiber optics to every premise in the LCUB territory could cost $127.5 million.

“That could vary based on how much wireless technology was in the system, but it was well over $100 million,” Littleton said. “I think where our board will have the heartburn, and I can’t speak for them, but I think where the board will have a heartburn over that particular number is the fact that you’re obligating LCUB electrical ratepayers to $100 million with no guarantee of payback.”

Littleton pointed toward Farragut and west Knox County that already has “a lot of fiber options.”

“So we’re getting into a market — and that market is already well-served,” he said. “If we didn’t get into that market, this $127 million figure would come down drastically, but you’re also spending I’m guessing half that into a market that’s not as densely populated and you may not have the customer intake, so that payback may even be longer. You’re talking 14 years; it may end up being 24 years or something.”

The break-even point could take several years, Jeremy Walden, LCUB director of electrical engineering and operations, said.

“Anything beyond that far out is very nerve-wracking, especially when you’re dealing with ratepayer money,” Walden said.

Hopes are at the next meeting, scheduled for 4 p.m. March 18, the board will authorize a plan and rate schedule for using the fiber optics system. Littleton said there is a possibility he could then issue a request for proposal to see if there are takers in the market.

“I think we’re going to encourage someone to deliver internet to the under-served area,” Littleton said. “Now what we’re going to be asking is other people spend their money, so you know how that goes. They’re going to be in the same boat that we’re in with our money, our ratepayers’ money. … If we could treat it like an electrical system and I guess I’m talking monopolistic-wise, which I would never ask that because this is a free market issue to me, if we knew that we could put the fiber out there and everybody had to tie on and had to use, well that’s a no-brainer.

“We would amortize it over 20-25 years and know that it’s going to be there, but you could put all that fiber out there and no one has to tie on,” he added.

There is the possibility a company handle the retail side on LCUB’s fiber, Littleton said. An example could be something similar to Maryville’s municipal internet model, which partnered with an established company.

“It’s a whole other division within this organization, brand new business we’d have to create, which is a lot of work,” he said. “The private market’s already up and running in that arena. They already know how to do these things. So the more and more we look at that side of it, partnership with somebody who already understands that business and can operate with the ups and downs and the technology moves and everything that arena is probably the right decision to make.”

Lenoir City Mayor Tony Aikens, who serves as LCUB board chairman, wants to keep all options open. However, handling the service without other parties involved could be cost prohibitive, he said.

“One, do we go out and enter into a partnership with someone or do we go out and turn it over to bid it out and turn the service over to a company? Or do we do it ourselves?” Aikens said. “I do believe that doing it ourselves — it’s not just going out and hooking it up, you’ve got to have somebody to service it as well. There’s a lot involved and there’s a lot of dollars involved doing that, and from the numbers I’ve seen I’ve not been convinced to put the ratepayers in that situation.”

If partnership proposals are good enough, Aikens believes the board should consider that approach instead of “going into the business solely just for us doing it.”

“I want to see us look at the whole picture, not part of the picture, and we’re not hardly to that point yet,” he said. “We’re close but we’re not there yet.”

Littleton feels confident high-speed internet is coming for everyone, but the timeframe is in question.

“Just wireless itself is getting better and better,” he said. “I just heard yesterday that there’s a wireless device at the end of a fiber optic cable that can deliver 100 meg to seven locations within a certain distance. I mean that’s pretty strong, that’s impressive, and five years ago that was unheard of. That was just that’s not going to happen, but that’s how fast this is evolving.”