In June, American Fork announced its plans to build a $25 million broadband infrastructure throughout the developed areas of the city.
The announcement came with its own website, https://lighthubfiber.com/, in the interest of making the process transparent and keeping residents informed. There will also be three town hall meetings held throughout the summer for residents to attend and answer questions.
But many city residents are wondering how this will be different from the city’s first attempt at providing broadband to its residents.
In 2001, American Fork was looking to follow in the steps of Spanish Fork and become the main internet provider for the city. American Fork was looking at purchasing a broadband system from SwitchPoint, previously known as AirSwitch, and eventually approved a $6 million bond to purchase the system and make upgrades to it.
However, almost immediately after American Fork made the purchase, according to city officials, the Utah legislature passed a state law which, according to George Schade, American Fork Broadband director, made it so cities could only wholesale, not retail.
“The city thought that we could do a single ISP (internet service provider),” Schade said. “So our whole model had to change ... we had to bring on multiple ISP. And it ended up being a much bigger undertaking.”
In addition to struggling to split internet revenue with different ISP, Schade said the infrastructure required a lot more maintenance than the city had imagined, which prevented it from paying off the $6 million bond. The city tried to offset the costs by selling the residential system to American Fiber Inc., better known as AF Connect, and leasing some fiber lines the city put in place in partnership with a private company.
The city financed the deal with American Fiber, Inc., for $500,000, which would give American Fiber, Inc. ownership of the in-city fiber network, equipment, and receivables, according to city financial documents. American Fiber would pay monthly interest-only payments at 12%, with the expectation it would make the full payment in 2012. However, according to city administrator David Bunker, American Fiber only recently closed with a full complete purchase.
In 2013, the city again made a deal to help pay down the bond debt, to lease 12 strands of fiber to a company for $660,000. The company later leased another 12 strands of fiber for another $660,000 — but the debt remained.
In March 2013, according to city financial records available on the American Fork website, the city was able to “retire” the broadband bond. Bunker explained the city did this by borrowing from its own internal cash reserves. As it stands, the city is currently $2,627,526 in debt to itself.
It begs the question of why the city would seek a $25 million bond when it’s still almost $2.7 million in debt, but Bunker said the city hopes to use a portion of the revenues from the new infrastructure to continue to pay down the negative broadband fund balance.
“Over time, it will get taken care of, it’ll be reduced,” Bunker said. “It’s always a concern to borrow money, especially for our community where they’ve had this experience already in the past.”
According to current models and projections of the project, Bunker said, the bond would be able to self-fund in 10-20 years, as opposed to the full 30-year term.
Overall, both Bunker and Schade feel confident that building the new infrastructure will be worth the investment and will readily pay for itself. They also believe it shouldn’t be compared to what the city experienced 16 years ago.
“My personal opinion is that it’s apples and oranges as to what the city’s looking at now compared to what happened back then. The system we bought needed a ton of work, a ton of upgrades,” Schade said. “I’ve been in this industry a very long time, and in my mind, fiber is the way to provide the very best connectivity, the very best uptime, very few problems because of, if you build the network right, it’s cutting edge. It’s top of the line. Versus coming in and buying an old system.”
In the interest of transparency and keeping residents informed, American Fork is holding three town hall meetings throughout the summer, the first of which is Thursday at 6:30 p.m. at city hall. Bunker said the city also welcomes calls and emails from residents who want to share their concerns. The city council will officially consider the project on August 13, and bond approval likely won’t be considered until early winter. Both Bunker and Schade are hopeful it will be approved, and excited about the possibilities of the new network.
“It’s more than just internet ... it’s really connectivity,” Bunker said. “What we want to offer our community is that connectivity.”