Eli Pace / epace@summitdaily.com
And then there was one.
Breckenridge is about to enter a lease and network operation agreement with ALLO Communications, a Nebraska-based company that’s poised to operate the town’s soon-to-be-built fiber network and offer services as its lone provider.
That’s because the lease agreement would give ALLO exclusive rights to offer internet and other services over the network once the town’s fiber is up and running. The exclusivity of the agreement represents a significant change from original plans, when the network was envisioned as an “open-access” system that would foster competition by allowing different service providers to all compete over the town’s high-speed fiber lines.
Recognizing that Breckenridge doesn’t have the best internet services around, Councilman Gary Gallagher detailed some of the reasons for pursuing the project that involves millions in taxpayer money.
“It first went on the town’s radar several year ago,” Gallagher said, as he’s been talking to local business owners and residents more recently who are still unhappy with the services they’ve been receiving.
He said people aren’t getting what they’re paying for with upload and download speeds slower than promised. Plus, customer service has been shoddy and Breckenridge voters overwhelming supported a ballot measure in November 2016 that opted the town out of a state law preventing it from creating its own broadband networks. For Gallagher, that landslide vote showed residents’ desire to take matters into their own hands with broadband services, as households are complaining of losing connectivity while businesses can’t even run their credit card machines sometimes.
“Just looking around at the rest of the world, fiber is, I think, the information highway of the future,” Gallagher said.
He explained that communities across the U.S. and beyond are putting fiber in, not only to maintain current applications, but to prepare for connectivity demands of the future, be it smart cars or something else that involves transferring massive amounts of data. Regardless of what the future holds, Gallagher believes that fiber will play an integral role in it, but because Breckenridge is such a small market, there’s no telling when fiber might make its way here without the town stepping in to make it happen.
Gallagher likened the town’s effort to lay fiber to other public infrastructure projects, like water and electric services or new roads and bridges.
Explaining why the town reversed earlier plans to go with only one provider, Gallagher said town leaders decided having only one, at least initially, would give the network its best chance at success. He explained that the town interviewed “quite a few groups” before landing on ALLO, and during this process, it became evident that Breckenridge simply wasn’t big enough for multiple companies to offer service on the town’s network, at least not out of the gates.
“We realized that if we came out of the box with two of these folks, that neither one of them would probably succeed and we would quite frankly fail delivering service — internet, cellphone, video and whatever — to our residents and our guests,” Gallagher said. “It was more important for us to ensure somebody succeeded with this effort, given the fact that we’re going to spend a lot of money putting in the infrastructure.”
Because Century Link and Comcast are already offering services in Breckenridge, Gallagher and other town officials also said the exclusive agreement will promote local competition, not squash it.
“From a point of view of competition, which is something we’ve always kept in the back of our minds, we think we can still create a competitive environment so that, even though ALLO is coming out of the box exclusive for a period of time, they are very much going to have to meet the market,” Gallagher said.
He further explained that for ALLO to be successful in Breckenridge, the company will have to offer packages that are at least competitive with Comcast and Century Link, if not better.
Some prices have been kicked around, and assistant town manager Shannon Haynes said residents can expect a number of options at a variety of price points, not just for internet through ALLO but for cable TV and phone services, as well. Focusing on just the internet, Haynes said ALLO will offer a package featuring 300 megabyte per second upload and download speeds for about $60 a month. Additionally, a one gigabyte package would cost about $90 a month, and a basic package featuring 20 megabyte speeds would cost about $30 month.
In October, Breckenridge Town Council approved spending $8 million on the first phase of construction for the “backbone” of a high-speed fiber network and some connections to the town’s businesses and residents. The budget allocation came after council supported a resolution in September expressing the town’s intent to finance up to $25 million for the entire project.
Asked about the long-term financial implications of the project, including network maintenance, both Haynes and Gallagher said they don’t have a clear read on those figures yet. For Gallagher, it’s not really about making money, though.
“To answer your question, the town made the decision to move forward in laying the fiber infrastructure without really saying, ‘What are the revenues? What are we going to earn from this?’” he said. “We made the decision based upon, ‘Is this something we should do even if we don’t get a dollar of revenue back? Is this something that we really feel is important and is the future?’ And that’s the decision upon which the council said, ‘yes.’”
He anticipates that, at some point, the fiber project will “turn positive,” and Breckenridge will begin collecting more money than what the town’s spending to build the network. However, Gallagher was careful to say he doesn’t know when that might happen, as it will depend on how many people sign up for service and how quickly they do it.
“That’s a bit of an unknown right now, but I do believe at some point in the future the lines will cross and go positive,” Gallagher said. “We’ve gone into this knowing it’s not inexpensive, and it’s going to be quite few years before the lines cross. I think that’s the best way to say it.”
Per the agreement, ALLO would be the network operator and exclusive service provider. The agreement lays out an initial term of 10 years with a chance to renew the lease for two 10-year extensions. ALLO would also have the right to make first offer should the town decide to sell the network.
A separate franchise agreement allowing ALLO to offer cable TV services is expected in town to come before Breckenridge Town Council on May 28. Meanwhile, the town started work on the fiber network this week and has a press conference about the project scheduled for June 3.