COEUR d’ALENE — The Coeur d’Alene City Council agreed with two local internet providers this week to back off a proposal to subsidize a Wisconsin company that wants to provide high-speed internet to the city.
In a unanimous vote, council members stopped short of cutting franchise fees for the use of its utility right of way for Madison-based TDS Metrocom, which proposes building a one Gigabit broadband system in the city within three years.
The proposal asked the city to pay back to TDS part of its franchise fees, a total of $1 million over 10 years, to help the company with the costs of a speedy build-out of its fiber optic transmission system.
But local internet providers who already provide service to Coeur d’Alene objected to the idea of subsidizing a competitor.
Mike Kennedy, president of Intermax Network, asked council members to put the brakes on the TDS proposal.
“It’s a fascinating idea, but it’s an immensely complicated idea,” Kennedy said.
He said the city should first develop a rationale, a clear policy and a “good reason to present to taxpayers and voters why the city should be wading into the private sector on a consumer product where there are local companies already fully engaged.”
Correen Stauffer, the Coeur d’Alene director for field operations at Spectrum, made a similar plea to council members.
“You have providers here today that provide Gig already, and fiber already, and I think there are still a lot of questions that need to be asked,” Stauffer said.
The pleas did not fall on deaf ears.
After a presentation by Drew Peterson of TDS, who emphasized the benefits to the city by entering into an agreement for the high-speed service, council members wondered if subsidizing an out-of-state company’s entrance into the Coeur d’Alene market is the best way to proceed.
Council member Dan Gookin said that if the city chooses to subsidize TDS, it would be unfair to existing providers.
“When they do business here the government isn’t on anyone’s side. They are private industry without us putting our thumb on the table, without giving anyone an advantage,” Gookin said.
Peterson pointed out that his company’s prices, in places where TDS has partnered with cities, are competitive.
“It’s an excellent value-based pricing model,” Peterson said.
But Gookin asked to hear a long-range perspective.
“What happens when the corporate welfare runs out?” Gookin asked. “We represent people who are subscribing to the service.”
When the rebate ends, TDS will continue to have competitive, value-based pricing, Peterson said.
“Our prices remain competitive in the market place and will continue to be the market leader.” he said.
Council members agreed to create an ad hoc committee to further investigate the proposal — minus the subsidy.
“I think there’s a lot of study that needs to be done,” Mayor Steve Widmyer said.
TDS’s plan is to bring high-speed, fiber optic internet to 23,000 households in Coeur d’Alene at a total build cost of $33 million.
“And we’re going to do all that before we go into any partnership with the city,” Peterson said.
The company touts itself as a provider of some of the fastest internet speeds in the country, with 1.2 million connections in 30 states, including networks in Oregon and Colorado in the West.
Peterson said his company’s slowest option of 300Mb is 100Mb faster than what is available in Coeur d’Alene today.
“It’s the technology of tomorrow, built out today,” Peterson said. “It’s the fastest commercial grade in the country.”
From a community perspective, Peterson said, it can increase home values by $6,000.
“And it’s future proof,” he said. “You can have a state-of-the-art network that I think you can be proud of. We intend to create jobs. We want to stand up a workforce here.”