Document's Author: Timothy W. Clark/Plan/Wake County Date Created: 04/20/1999
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Description of the Call Date: 04/20/1999 Subject: Cary looks at high-tech highway
Summary of the Call:
By CHRIS O'BRIEN and KYLE YORK
SPENCER, Staff Writers
CARY -- People once made towns
into centers of commerce by building
them next to rivers and railroads. As
electronic commerce grows, some think
it is just as important for a town to be
located next to a high-speed ramp to the
Internet.
That's why Cary is considering
building a $60 million fiber-optic network
to provide homes and businesses with
blazing fast Internet connections plus new
telephone and cable TV options.
"A [telecommunications] wave is
going to go rolling across the U.S.," said
Cary Town Council member Glen Lang,
who proposed the network. "And the
question is, 'Are we going to be on the front end of it or behind it?' This isn't
a nice-to-have. This is mandatory."
Cary is confronting an issue facing municipalities across the country: Do
local governments have a role in providing the next generation of
telecommunication services to residents and businesses?
Proponents believe creating a network is a natural extension of local
governments' tradition of building public infrastructure, such as roads, water
and sewer. They say the network would boost economic development by
drawing high-tech companies that move goods and services along the
Internet.
Skeptics say such ventures should be left to private companies. They
doubt that the town could get enough telephone and cable companies to
participate to cover the network's cost. And they warn that because much
of the technology to provide these services is new, pulling this off could be a
lot trickier than it sounds.
"Lots of folks have tried to do this," said Alan Blatecky, vice president
of information technologies at the nonprofit MCNC research center. "In
order to make this work, you have to understand the technology, which at
this point is not insignificant. And you have to ask yourself, is it the city's
business? You have to have the expertise in place. You have to build a staff
to do that. It's a lot easier said than done."
Lang, a former software executive and now a technology consultant,
came up with the network idea when he was unable to get high-speed
Internet service from either his local cable or telephone company.
Under Lang's scenario, Cary would spend up to $60 million to build the
high-speed network without costing taxpayers a dime. The town would
raise the money by floating low-interest bonds, which it would pay off by
leasing the network to different telephone, cable and Internet companies.
Lang said the town wouldn't lay an inch of fiber until it had enough leases to
cover the cost.
In return, residents would get cutting-edge telecommunications services
and new competition that Lang predicts would slash monthly telephone,
cable and Internet bills by 25 percent.
So far, the Town Council has voted 7-0 to approve $100,000 to study
the idea. Lang has assembled a committee of engineers and executives from
some of the Triangle's most prestigious tech firms, including BellSouth,
Alcatel, Nortel Networks, MCI and Interpath Communications.
"We live in an area where high tech is something that everyone
understands," said Cary Mayor Koka Booth. "We always want to look at
all the options and look as far into the future as we can."
The existing infrastructure is owned by cable TV and phone companies.
A company that wants to provide local telephone service must lease lines
from BellSouth, but many have complained that the company has set terms
that make it impossible to compete.
As for cable, every few years Time Warner must renegotiate contracts
with local governments that grant it a monopoly in exchange for setting
certain rates. In January, Cary froze renegotiation talks with Time Warner
following complaints from residents over rising rates.
Frustrated by a lack of choices for both services, governments at all
levels have pushed schemes they hoped would promote competition and
drive down prices. Three years ago, the U.S. Congress passed a
telecommunications deregulation act that has so far only managed to
encourage mergers in the industry but has done little to open markets.
One of the members of Lang's committee is Bill Willis, vice president of
engineering for Interpath Communications in Morrisville. Willis said that
while BellSouth and Time Warner are upgrading their networks to provide
some new services, the high cost is slowing progress.
Willis believes that if the government built and owned a network and
shared the cost among several different companies, the town would get
futuristic communications services quicker and cheaper. And it would allow
the kind of economic development that only government has the power to
encourage, he said.
"Have you ever seen someone build a four-lane road that goes into the
middle of nowhere?" Willis asked. "And you wonder, why did they build
that road there? What happens after that? Stuff builds up all along the road.
They've enabled the development of that area. If you want to enable the
development of a modern economy, you need a network like this."
That's why cities such as Winston-Salem, Palo Alto and Santa Monica,
Calif., and Tacoma, Wash., have built or are are considering building such
networks.
Willis said putting these networks in Cary would make it easier for
people to telecommute, start businesses at home and provide Internet
connections for schools.
To see potential pitfalls in the plan, Cary doesn't have to look far.
Several years ago the state tried a similar experiment called the North
Carolina Information Highway in hopes that it would be a powerful
economic development tool.
The state's major telephone companies agreed to build a statewide
fiber-optic network, and the state signed up to be the anchor tenant to
provide high-speed video and Internet services. But because of some
technical limitations and high cost, no private companies signed up for the
service. The state continues to spend millions of dollars each year to
subsidize the service.
Brad Phillips, vice president of government and public affairs for Time
Warner's Raleigh division, said many local towns that have tried to build
their own cable systems have found themselves losing millions.
"I think it would be in the best interest of the town of Cary to really think
through the process and what it would really mean to the citizens if they
were to enter into such an endeavor," he said.
Still, Time Warner provides the perfect example of the frustrations
driving projects like the one in Cary. The company bought many local cable
systems several years ago, promising fancy new services and more
channels. While some parts of the Triangle have received new channels,
rates have also risen steadily, and a high-speed Internet service using cable
modems that was supposed to debut last summer has now been pushed
back until at least next year.
If the snail's pace of change continues, the incentives that drove Lang will
likely spread, tempting other governments to extend their reach. Already,
officials from nearby towns have discussed Lang's idea with him and plan to
watch Cary's work closely.
"Everyone is irritated by the cable television rates and everyone feels like
they are held hostage by cable company monopolies," said Kevin Foy, a
Chapel Hill Town Council member. "The idea is that if you install this public
asset, you can chip away at some of the monopolistic tendencies that are
going along in the cable service and provide citizens with a better product.
"I think it is really intriguing."
