Fiber system to hold steady in 2005

EPHRATA — Access to the Grant County's fiber optic network will remain unchanged in 2005.

The Grant County Public Utility District commission adopted a plan Monday that will keep the fiber optic Zipp system running, but will not create any new "hubs" this year. The plan adopted by the PUD commission also means that telecommunications at the PUD will soon be consolidated with its electric counterpart.

Before voting for the plan, Commissioner Randy Allred said that Monday's action had to happen for the system to stay above water.

The motion to approve the stand pat model passed by a vote of three to two, with commissioners Allred, Bill Bjork and Greg Hansen voting in favor of the model and commissioners Tom Flint and Vera Claussen voting against it.

Flint said after the vote that everyone has a different feel for the fiber system, and he said that he has not been a big supporter of the stand pat model.

"I think ultimately it will result in a lack of service," Flint said of the model.

Commissioner Hansen told members in Monday's audience at the PUD that the accounting system for the fiber optic system would remain separate so the PUD could determine how much it spends on fiber.

Bjork said the PUD commission will again review telecommunications during its budget review process later this year, and the system will continue to operate on a year-to-year basis.

"We're not looking at killing it," Bjork said of the system.

Bjork added that the commission acted on the plan Monday so that the PUD could take care of the situation as soon as possible.

Under the plan, new customers can still connect to the system if they live in existing hubs, but no new construction will happen on the Zipp system in 2005.

In this model, the PUD combines the electric system and telecommunications system under the same umbrella. In financial forecasts given to PUD commissioners, the telecommunications system requires a subsidy of $2.769 million to complete operations for the remainder of 2005. The commission voted unanimously Monday to grant an interfund loan of $2 million to the telecommunications system.

Telecommunications Director Larry Jones said the program will have to make cutbacks to the system to make up funds in the difference, and said the system will look at ways to cut back its operations and maintenance.

To implement the plan, telecommunications operations will have to be cut back, meaning rearranging and reducing staff.

To reduce its operating costs, Jones said the department has to reduce some of its full-time staff and create a more efficient system. Jones said positions that have been budgeted for 2005 but not yet filled, will be eliminated. He said that some employees who work part-time in the telecommunications system will be relocated back to their electric-side jobs.

Jones also said that an estimated three full-time positions would likely be eliminated under the plan, but said those positions have not yet been identified.

The stand pat model does allow for the telecommunications system to provide a 2006 project plan and budget that could allow for potential hub construction in 2006 if excess funding for the system is available. Jones said financial projections will be available later this year.

"It's going to be a year to year venture," Jones said, "as it is defined today."

As part of accepting the stand pat model, the PUD Commission also directed telecommunications staff to surplus its video head-end.

The stand pat model considers an existing market penetration in areas where fiber is available at 45 percent, but the financial forecast refers to the PUD's recent fiber survey that said 60 percent penetration of existing areas is possible.

For the purposes of the financial model however, the stand pat model looks at an existing 45 percent penetration over the next 10 years. It projects an estimated 5,578 subscribers by 2015, with an increased

revenue per subscriber from $34 per month to $46 per month in 2015.

By adopting the stand pat model, the PUD is following the recommendation of the fiber business plan advisory group that met last year.

Former PUD commissioner Bill Judge questioned the PUD Commission and staff after the passage of the loan and model, saying that he worried where the money to repay the $2 million loan was going to come from.

"The greatest asset we've got is our electric system," Judge said, "let's not jeopardize it"

Fiber service provider Craig Jungers however applauded the plan, saying that it was clear that the PUD didn't have the funds for the fiber system itself.

"I endorse this 100 percent," Jungers said, "and I want you to know that we'll be watching."