Sentiment mixed for Siloam Springs cable initiative

SILOAM SPRINGS – About 45 people came to learn more Thursday night (March 29) about the city’s proposal to invest $8.3 million to run fiber optic cable directly to residents’ homes and businesses and add cable, Internet and phone services to its city-owned utilities.

The meeting was the first of three public forums scheduled in advance of the May 22 vote on the proposal. If passed, the city could provide more bandwidth and faster service than offered by private providers, officials say, while providing new revenue for city projects and an enticement for new industries.

Mayor David Allen said the project would be funded by reserve monies and would be paid off in 12 years, according to projections. The end result would give citizens lower rates than they currently pay, in addition to serving future needs, he said.

“It’s about progress,” Allen said.

Conway and Paragould are the only Arkansas towns currently which have city-owned broadband systems. Nationwide about 150 municipalities offer broadband services, including nearby Sallisaw, Okla.

Keith Skelton, assistant city director of Sallisaw, spoke at the meeting, as did Mayor Allen and Dave Stockton, principal for Uptown Services Inc., the company which did a feasibility study for the city. The company’s report is posted on the city’s website.

Cox Communications and CenturyLink – the current cable, phone and Internet providers for the city – oppose the idea. Len Pitcock, director of government affairs for Cox and former head of the Arkansas Cable Association, previously said he didn’t think the city can provide the services they anticipate providing for $8.3 million.

Stockton said the study’s findings are “accurate and achievable.” He said messages to the contrary, such as an advertisement mailed to residents by a coalition called Arkansans for Limited Government, are propaganda. He said “misinformation” is being given to citizens that could cost them money that could be used in the community.

“The reason they (Cox and CenturyLink) are fighting so hard is they believe we (the city) will succeed,” Stockton said. “They’re running a campaign out of fear.”

Stockton addressed several claims on the Arkansans for Limited Government flier.

“The community has the right to facts, not bias,” Stockton said.

Clint Reed of Little Rock incorporated Arkansans for Limited Government in November to oppose the Siloam Springs’ proposal. Reed denied that Impact Management Group Inc., a public relations/public affairs firm for which he works, is doing work for Cox and CenturyLink — an assertion Stockton made — and said his only work regarding the Siloam Springs proposal was for the coalition. Reed has not released a member list, but Pitcock previously said Cox is a member of the coalition.

Reed attended but didn’t speak during the meeting. Afterward, he said that although the city proposal lists $8.3 million as the project’s cost, the city can’t guarantee how much the system will cost residents because it’s based on estimated penetration rates and subscribers. If the actual service doesn’t reach projections, the costs and pay-off date will change, he said.

Judy Keen said she came with reservations about the proposal.

“They persuaded me a little bit,” she said. “I want to hear more.”

Keen said the information the speakers presented was valuable. She said she hopes it was truthful.

Skelton talked about the success of the Sallisaw system, noting that 99 out of 100 test customers stayed with the city’s service after the trial period in 2005 and said the city should make a profit by the end of the year. Customer bills average $103, he said.

Stockton mentioned several cities his company has worked with, including ones comparable in size to Siloam Springs, that, according to him, are profitable and seeing growth.

“I’d like to see percentages” of cities that succeeded, Keen said.

Betty Shuler said she wants to know if utility rates in those other cities went up to help pay for their broadband systems.

“I just wonder is the timing right,” said Betty Shuler. She moved to Siloam Springs 16 years ago. The city was talking then about improving the town’s small library, she said. The lack of improvement and need for a bigger, better library was mentioned by several residents Thursday night.

“It has been a long time,” Keen said, that the city has talked about improving the library. She said the proposed broadband service’s potential as a revenue source will be something she considers in deciding how she will vote. She said the city does a good job managing the electrical and water utilities and provides reliable service.

Stockton said most companies won’t invest in smaller communities, which puts them at a disadvantage.

“Smaller towns can’t provide sufficient financial returns to warrant the investment,” he said. Municipalities often step in to build that technological infrastructure.

Stockton cited several towns that now provide broadband service and have, according to him, done quite well. He said a review of the Wilson, N.C., system, which he said is making a $7.5 million annual profit, shows that even customers who don’t sign up for city broadband service save money due to the city system. The extra competition forced the cable/Internet provider to drop or maintain rates in the city even though the company continued to raise rates in other parts of the country, he said.

Carl Mounger, a retired Siloam Springs postmaster, said he sees many current city projects that need attention.

“We need to get our priorities straight,” said Mounger. “We have a new library we need to build, a hospital we need to tear down,” in addition to needing a new police department and community center.

Mounger asked how far the proposed $8.3 million would go toward completing the project.

Allen said the amount included building the system and taking the fiber all the way to homes or businesses. Stockton said it also included future upgrades for electronic equipment, although the fiber optic cables, considered to be the best technology and most efficient way to move data, would not have to be replaced.

Mounger said after the meeting that he’s “not necessarily against this.” He said he sees the argument against it since it would put the city in competition with private industry, but he also understands that it could be used as a revenue source. “We just need to serve the citizens of Siloam Springs.”

Doug Blank told Allen and the others he was concerned about more than the costs.

“The numbers all roll together after a while. My question is what is the role of the city government? Should it not be to provide services the private sector can’t provide?”

He questioned whether the city would let a private electrical provider come in and compete against it. “It’s not a matter of broadband Internet. It’s ‘what will we take over next?”

After the meeting, Blank said neither cities nor other government bodies should compete against the private sector.

“Where does it stop,” he asked.

Shuler said she is also considering the public-versus-private sector argument. Like Keen, Shuler wants more information and will continue to follow the issue.

Don Cundiff said he had hoped Reed would be one of the night’s speakers because he wanted to judge the sincerity of both sides.

“I didn’t like the presentations,” Cundiff said.

Reed said he came prepared to discuss the issues, but said he wanted to respect Allen’s desire that the meeting not turn into a debate but rather be an educational forum with time to answer citizen questions.

“It wasn’t the proper time,” he said.

Cundiff said he’s likely made up his mind on the issue. He said evidence from the last 70 years proves that countries haven’t prospered when governments have tried to control or take on industry roles. Only when those governments have freed up private industries have countries seen success, both nationally and for their citizens, he said. “This is just a different approach,” he said, to the same kind of controls that have failed in other countries. “But this should be a wake-up call for those private companies to provide better service,” he said.

Ken Kloet has made up his mind, too. He moved here in July from Milwaukee.

“I don’t know anyone in Wisconsin” who runs fiber-to-the-premises. He sees it as ambitious. “It makes sense,” he said, since the city can follow its electrical trunk lines.