Comcast spends $100K fighting Holland's citywide fiber proposal

HOLLAND — On Tuesday, voters in the city of Holland will decide whether to fund the build of citywide fiber-optic broadband infrastructure.

The $30M bond proposal, to be paid back through an up to 25-year property tax of an average of 1.12 mills, has been a hot topic in the city in recent weeks as an opposition campaign filled voters' mailboxes and local airwaves.

If the bond proposal passes on Tuesday, Holland Board of Public Works will lay fiber-optic cable throughout the city, building infrastructure capable of bandwidth up to 10 Gigabits per second, though HBPW expects to initially offer 1 Gbps (1,000 megabits per second).

As an open-access network, private internet service providers will be able to use the city-owned fiber to deliver services to Holland's 16,137 potential customers.

The pitch is that with the infrastructure already built by the community, internet service providers will have a lower barrier to enter the Holland market and will be able to offer cheaper prices than if they had to lay their own fiber in addition to having to compete with one another to offer the lowest price for residents.

Utopia Fiber, often touted as an example of open-access networks promoting consumer choice, has 16 internet service providers offering services on its network today. The Utopia Fiber network serves a collective of nearly 20 cities in Utah.

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"This allows us to build the city's digital streets, if you will, as a community to make sure that it is available as a universal service," said Pete Hoffswell, fiber superintendent for HBPW. "During the broadband task force, when we reached out to the community, one of the principles we learned from that conversation was that it needs to be available to everyone in the community. It needs to be a ubiquitous service that anyone can get."

Hoffswell said partner internet service providers who lease HBPW's existing fiber already to deliver internet to businesses have expressed interest in providing services to the rest of the city if the project is approved.

HBPW is also proposing offering its own internet service option over the open-access network, as it already does in a limited area of downtown Holland for about 200 customers.

The utility's financial modeling projected a monthly internet bill of $42-45 for 1 Gbps service through HBPW.

That price includes the "hook-up" fee to connect a home or business to the common fiber infrastructure. The cost of the hook up is expected to be about $800, but HBPW has presented a plan to Holland City Council under which that cost could be billed in installments of $7 per month over 10 years.

Comcast Corporation (Xfinity Internet), which offers a competitive 1.2-Gigabit internet package to some areas in Holland, has spent $110,193.12 on mailers, radio ads, polling and consulting, according to campaign finance filings for the ballot question committee Protect Holland Taxpayers.

The other donors to the group are the Michigan Cable Telecommunications Association and Leon Drolet, a former Republican state representative and tea party activist who resides in Macomb.

Critics of Holland's fiber proposal point to other cities that have built their own fiber networks and struggled to hit the subscriber numbers needed to pay off the debt incurred to build the network.

"Local governments claim that private businesses are not providing adequate internet access and that they can do better," wrote Park Township resident and economist Ted Bolema in The Sentinel. "They make projections about how cheap the service will be and how many people will want to sign on. And then the actual results don’t come close to the rosy predictions."

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Holland Board of Public Works representatives said the financial model the city has proposed to the taxpayers — using a millage to pay off the debt incurred for the capital investment — means the project is not reliant on reaching a certain number of subscribers to create enough revenue to pay off its debt.

"We don't know exactly what our revenues will be, so it would be risky to borrow money against our future revenues when you're not exactly sure how many people might sign up. That's not a risk the BPW was willing to take without a community commitment, and that is what a millage is, it's a commitment by the community," Hoffswell said. "Our project is not so reliant on future revenue because of that, which reduces our financial risk as a community. We as a public utility run our utilities in a very conservative way. We want to make sure that we're doing the right things, and that they will be successful and sustainable."

HBPW's financial models for cost of HBPW-provided internet service are based on a 51 percent "take rate," or 51 percent signing up for the service.

The Holland Fiber "Yes" Committee has raised $1,500 in donations from Holland residents and has spent about $3,000 on yard signs, according to the group's filings with the Ottawa County Clerk's Office.

"We're fortunate to have internet access, but that doesn't mean we should settle," said Dan Morrison, an advocate for the fiber proposal who runs the pro-fiber website hollandfiber.org. "Since the dial-up days, Holland hasn't been a priority for internet providers. By doing this ourselves, we can leapfrog most of the country with better, cheaper, local service.

"COVID showed us that internet access is not a luxury but a necessity. Work, school, and healthcare are all happening over the internet. The internet is a utility like electricity or water. BPW gives us great reliability and pricing for electricity. They can do the same for the newest utility. They already do downtown, and we want everyone else to experience it."

Another critic of the plan, Thomas Volkema, said it's an unnecessary tax on residents for speeds average users don't need.

"Most complaints about 'slow' internet are due to your own aging personal equipment," Volkema said. "Unless you have 5 or 6 kids all playing high-speed video games at the same time, few residential users ever need 1 Gig speed."

The millage, quoted at 1.5 mills to start but expected to average 1.12 mills over the life of the debt service for the bond, will cost a taxpayer with a home value of $200,000, which is approximately $100,000 in taxable value, $112 per year.

— Contact reporter Carolyn Muyskens at cmuyskens@hollandsentinel.com and follow her on Twitter at @cjmuyskens. 

This article originally appeared on The Holland Sentinel: Comcast spends $100K fighting Holland's citywide fiber proposal